Everything You Want To Know About Rewards Credit Cards
Kirti Bhargav
Isn’t it overwhelming to choose a credit card among the various types? You can find a credit card of each type that fits your needs and spending habits. But the most confusing part is choosing the right rewards credit card.
Rewards credit cards are bifurcated into three types namely, cashback, points, and miles. Each type has its own rewards program and is different from the other. In this article, we have covered everything you need to know about the rewards credit cards, how they work, and how you can maximize the benefits. Without any further ado, keep reading to kick start your research.
What is a rewards credit card and how do they work?
Rewards credit cards entitle you to either cashback, reward points, or miles on making an eligible transaction. The reward type depends on the credit card you own. You can either earn a flat rate reward or an accelerated reward that entirely depends on your credit card's rewards program.
When choosing the right credit card you need to evaluate your needs and spending habits with the rewards program of the credit card. The one that matches your requirement is the right fit for you. Keep reading to understand clearly each type of reward and how do they work:
● Cashback rewards: There are credit cards whose incentives revolve around the cashback percentage. These types of rewards are evergreen, they never expire and you do not have to worry about the redemption process as well. On making a transaction using a cashback credit card you earn a percentage of your spending back. The cashbacks are directly credited to your account.
● Reward points: On using a rewards credit card you earn either a flat rate of reward points or earn accelerated reward points. It depends on your credit card’s rewards program. You need to accumulate reward points in order to redeem them. The reward points can expire after some period of time. In order to maximize your credit card benefits, you need to redeem them before the expiry date.
● Miles: This type of reward is usually earned on travel credit cards. They are the most rewarding credit cards. On making travel transactions or other specified transactions you earn miles. There are two types of travel credit cards generic ones and co-branded ones. You earn miles and other travel benefits on both types.
How you can maximize the benefits of rewards credit cards?
● You need to first choose the right rewards credit card. Once you know your needs and spending habits it becomes easy for choosing the right type of credit card.
● Earn the rewards. Use your credit card for making those transactions that let you earn rewards. And on accumulating the rewards redeem them timely in order to maximise its benefits.
● Adhere to the timely repayment cycles. Never ever miss the due date as it can impact your credit score negatively.
● Maintain a low credit utilization ratio. It is advisable to maintain the utilisation ratio between 30% - 40%.
In case you have lost your credit card then immediately report the same to the credit card issuer to save yourself from the fraudulent activities.+
Additional Reading - Tips For Using Credit Cards Overseas