What Are Reward Credit Cards And What Makes Them Different From Cashback Credit Cards?2 min read
What makes a certain credit card the best credit card for you? Is it the number of establishments where you can get discounts? Or is it the low-interest rate that allows you to prolong your payments without worrying about skyrocketing interests? What about lifetime zero annual fee programs? Sure, these things may be enticing for credit card applicants.
However, if you are craving for exciting features killer discounts from your favorite shops, free airline tickets, or even simple rewards for every simple swipe of your credit card, then a reward credit card should definitely your weapon of choice.
What is a reward credit card?
Reward credit cards are exactly what it says on the tin: the cardholder earns reward points for every purchase made using the credit card. Whenever you swipe your credit card, your account rack up points based on the amount of the purchase you made. Once you have enough points, you can use those points to exchange them for products and services such as gift certificates, freebies, services, and other products.
In most cases, credit cards offering reward points accumulation have specific shops tied to them. For instance, female-oriented credit cards have a reward point system tied to lifestyle shops like salons, boutiques, beauty clinics, and others establishments catering to women’s lifestyle. Meanwhile, others have points that are only usable with single establishments, especially co-branded credit cards.
What is the difference between reward credit cards and cashback credit card
Unfortunately, some people tend to confuse cashback cards and reward cards a lot, and making this mistake when applying for one may not allow you to maximize your credit card you get. For starters, these two credit card types offer different types of perks for the cardholders.
In credit cards, a cashback rewards program is a type of incentive that allows users to get a certain percentage of net spending. Usually, cashback rewards can either be deposited to your savings account or you will be issued with a check. Unlike cashback credit cards, reward credit cards offer non-monetary perks to credit cardholders for using their credit cards.
Read: (Is Learning Financial Literacy Lessons Possible With Credit Cards?)
Tips for maximizing your reward credit card
- Apply for a type of reward credit card that suits your needs. There are tons of reward credit cards out there in the market, each card catering to a specific type of consumer. Get the type that suits your lifestyle and consumer habits, and you can rake in more reward points than you ever imagined.
- Do not make point accumulation your goal. Getting tons of reward points can be exciting; after all, you can use these points in exchange of some products and services. However, making this your primary goal in your credit card use can put your finances at risk.
- Weigh if the annual fee is worth it. Some credit cards have huge annual fees, but they have tons of perks to offer you like smaller peso-per-point equivalent, more options for rewards, and others. Just because the annual fee is huge doesn’t mean it’s not worth it.
Earning rewards from purchases can be a good thing. When picking the best reward credit card, find the one that suits your personality best and points will follow you with every purchase.