Credit Card Rewards Options
One of the key factors you face in picking a credit card
One of the key factors you face in picking a credit card is the rewards program. After you've found a good interest rate or decided the interest rate doesn't matter because you don't plan to carry a balance and have found a provider you expect to offer you a high credit limit, the rewards program will probably be the deciding factor in the card you choose. Here are some of the different options available:
Cash back is the simplest rewards program and a favorite of many people. In a cash back program, you receive a certain percentage of your purchases back after they clear. Programs vary widely in how they pay and how much they pay. Some pay by check or bank deposit, while others only allow statement credits.
Typical cash back percentages are around 1% with bonuses for certain categories of items. These bonuses can either be permanent or part of a short-term promotion. Some providers place a cap on how much cash back you can earn, and others have a tiered program that require a minimum spending level to earn higher rewards.
This kind of reward program is slightly more complicated, but still provides much flexibility in what you can earn. On most cards, any spending will help you earn rewards points. Some companies use a dollar to point system where every dollar equals a point, while others use a different conversion ratio. As with cash back, additional points may be given for certain kinds of purchases.
Rewards points are usually redeemed for products in a special online store run by the credit card company, but many issuers also have deals with major online retailers that allow you to spend your points directly at those stores. In many cases, gift cards, or even cash are redemption options in case nothing in the available stores appeals to you.
This type of reward feature is used for travel benefits. A standard implementation of this type of reward system is based on points. Once you've earned the required number of points, you can redeem your points to have travel expenses covered.
Airlines miles programs often have very favorable redemption ratios, which makes them great for frequent travelers. Additional benefits such as free rental car damage protection and airport lounge access are often included as well.
If you find yourself traveling a lot for work or leisure a credit card with a gas reward system can prove useful. A lot of these cards will offer a percentage back on every gas purchase you make that is more favorable than with generic cash back or points cards.
Gas reward systems tend to come in two types. One is a purchase rewards credit card that gives back a higher percentage for consumables like gas and food. The second type is a specialty card that pays you back only for gas. These more specialized cards are often associated with a specific gas chain, but may come with the benefit of even higher rewards.
Barclay Card Ring
Barclay offers this unique reward plan. Instead of giving cash back or points, Barclay gives its cardholders a share of its profits based on how much they've spent on the card. Bonus payments can be taken as cash or a charitable donation. Barclay markets this card as a member-driven card and asks for feedback on all issues such as how to set fees.
This in turn leads to higher rewards as cardholders are less inclined to oppose things like higher late fees when they feel some of the money will be returned to them, and it especially benefits the cardholders who never incur fees.