What are Rewards Credit Cards and How they Work?
It’s always tricky to select a credit card that best suits your requirements. This is due to the increasing number of credit card companies. Sometimes credit card companies offer attractive packages to customers to compel them to use a credit card at different outlets. They may offer a welcome bonus, cash-backs, and rewards to lure customers.
You, however, should select the best credit card that suits your requirements. A reward credit card is among the options for people as this card offers multiple reward programs to users. Reward credit cards are gaining investor’s confidence over the past couple of years. According to the Experian survey, almost 45% of Americans are looking to get a reward credit card.
When you apply for Rewards Credit Cards?
Rewards credit cards are one of the excellent options for users amid its wide uses and attractive packages. Below are the reasons why you apply for this credit card:
- When you have a strong credit score
- When you have sufficient traveling plans
- When you don’t want to carry a big amount of money
- When you frequently spend on categories like gas, restaurants, and groceries
How do Reward Credit Cards work?
Credit card companies always like clients to use their card for all the purchases frequently. Therefore, by offering incentives and discounts and other packages, companies encourage the customer to do so. Below are some forms of rewards:
Cash Back: Credit card companies return some percentage of the amount spent in the form of cash back reward system. This means that clients are likely to receive 1% to 2% of the cash that they spent from credit card at the end of the billing period. These cash backs are also tax-free. Taxation authorities consider these rewards as rebate instead of income.
Travel Credit Cards: These credit cards are perfect for people who have huge traveling expense. This is because travel credit card offers insensitive on both air and auto traveling. Sometimes incentives are based on per mile.
Bonuses: Credit card holders like to receive bonuses from issuers. Bonuses do not only improve the financial flexibility of reward credit card holders, but they also encourage users to make all purchases through these cards. Some companies offer welcome bonus to users while others offer bonuses on a monthly or quarterly basis depending on the volume of usage.
How to Maximize Rewards?
You can easily maximize your rewards by frequently using your cards at outlets, gas stations and for traveling purposes. If you believe your most of spending bill comes from the grocery, you should choose the reward credit card that offer better incentives on grocery purchases. On the other hand, if you believe you could have a high traveling expense in the future, you should opt for a card that gives extra miles along with discounts on ticket purchases. Therefore, it’s important for users to select the credit card that helps in decreasing their expenses.