Pick the Right Credit Card: 8 Types of Rewards for Your Specific Needs
Credit cards have a notorious reputation for growing into a major financial crisis if you don’t know how to use them to your advantage. The smart use of this budgeting tool requires knowledge about how you can make it work for you and avoid falling into a debt trap.
Aside from being wise about your purchases, it is important that you know how to manage your credit limit well and maximize repayments to avoid paying excessive interest charges. You should also take advantage of reward programs that banks use to show their appreciation to consumers for being loyal to their product.
Today, credit card features include different types of rewards that you can benefit from. Some of them—particularly those that have a target market in mind—even cater to specific spending needs that range from online shopping to traveling.
Credit Card Rewards: 3 Ways to Earn
Credit card rewards are more than mere promotional offers to convince new clients to apply for the service— they also provide many benefits to customers. As an incentive system, this credit card feature offers three ways to earn:
Bonus-based rewards are those that provide an incentive for using the card for purchases under specific categories. These usually come with cards that are tailored to a particular target market such as shoppers and travelers, among others.
Tiered cashback cards provide higher returns for priority categories and lower for others, with an assigned cap on the amount that can be earned. This is perfect for people whose type of spending leans more toward a specific category (like groceries, accommodation, transport, or gas) but still want to enjoy rewards for their other expenses.
Flat-rate rewards, as the name states, provide a standard rebate rate for every type of purchase. It also has no limit as to how much you can earn, making it the perfect choice for consumers who spend higher in general.
Credit Card Rewards: 5 Forms of Redemption
Aside from the ways of how you can earn from reward programs, you should also understand the different incentives you can get in terms of redeeming them. Below are five of the most common types of reward redemption forms you should consider before deciding on which credit card to apply for:
1. Statement Credit Cashback
Most, if not all, Platinum credit cards offer cashback through statement credit on the primary card enrolled to the account. This form of reward redemption is generally set as the default by most credit card companies.
If you’re after hassle-free reward redemption, it shouldn’t be too difficult to look for a credit card that suits your preference. However, you might want to consider other forms of redemption available if you want to get higher value for your credit card expenditures.
2. Points-Based Cashback
Some credit card companies offer cashback for credit card use through a point-based system. Under this program, the consumer gets to earn a point for a certain amount of purchase. Most banks that offer this kind of rewards program make shopping through e-commerce websites as their main form of redemption, making it the perfect choice for those who are fond of buying products offered online. Some credit card issuers offer other forms of redemption under this program, including cash, gift coupons, and even travel miles.
3. Gift Card Cashback
Gift card cashback rewards come in the form of prepaid coupons from the credit card provider’s partner companies. These can be used for either a single purchase or multiple spends, depending on the type of reward your provider offers. Credit cards that offer rewards like these are best suited for people who patronize specific brands or those who have a particular hobby they spend a lot of their money on.
4. Hotel or Travel Rewards (e.g. Miles)
In this era where social media and photo-sharing websites are front and center of most people’s attention, travel has become one of the most sought-after commodities there is. Because of this, banks and other credit card providers have tailored some of their products based on this trend by teaming up with travel and tourism companies. In fact, some even name specific cards after a particular brand of hotel or other travel vendors.
If you’re a “dedicated wanderer” or tend to travel a lot for work, getting a credit card with this type of reward can be beneficial for you. Generally, this type of card allows you to earn additional points or get discounts on plane tickets and accommodation when used with your bank’s or credit card provider’s partner brands.
However, if you’re not very particular about the brand and just stay or fly with whichever company offers the best deal, then it may be best if you get a generic travel credit card rather than a co-branded one.
5. Gas Rewards
Gas is another important commodity that has earned enough attention and patronage among credit card users to be considered a significant category to earn rewards from. Like travel credit cards, you should choose between a general and a brand-specific card based on your preferences.
Typically, general gas cards offer rebates for all types of purchases with a higher rate for gas procurement. Some also offer high-tiered cashback for using the card for the maintenance of an automobile.
Brand-specific gas cards, on the other hand, are sometimes co-branded and will get you more points or rebates when used with the company the card provider has teamed up with—much like the travel credit cards mentioned earlier.
Get Rewarded by Choosing the Right Kind of Credit Card
When choosing a credit card, it is important that take your time to consider all your options to determine which one offers the best mix of features.
Aside from the convenience of payment, annual fees, and interest charges, you should also consider looking into the different rewards you can get to maximize the benefits you can gain from your credit card.
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