Rewards cards give you a plethora of rewards and perks, though you should ensure that they are suited to your lifestyle and spending habits before applying for one. You’ll generally have to have a good credit score and credit history before applying for one, as higher interest rates will usually apply and steep annual fees will usually be applied. Some credit cards do offer rewards programs for free, but most will inevitably charge fees or come with other strings attached. Below, we highlight some of the main types of rewards credit cards available.
Airline miles & frequent flyer credit cards
Some general points-based reward credit cards allow you to use your points on plane tickets. However, many reward cards are specifically geared towards air travel and frequent flyers. Airline-based cards allow consumers to earn air travel points whenever they make everyday purchases. Some cards will be co-branded with a specific airline, while some will be generic and can be used to redeem tickets with a variety of participating airlines. This is similar to frequent flyer programs where airlines offer “air miles” points to their loyal customers. However, it is often quicker and easier to accrue free airline trips with a credit card that has an airline rewards scheme, as most people will spend more on everyday purchases than they will accrue through flights.
Cashback credit cards
These cards reward you with around 1% cashback on your total purchases. The more the card is used, the more cash rewards you subsequently receive. Many of these cards have an annual fee attached that can vary from around $50 to $100.
General reward points credit cards
With these cards, cardholders accumulate points toward a reward structure as they spend money. These points can later be exchanged for a selection of things such as electronics, gift cards, hotels, jewelry, and more. Most of these cards come with no annual fee attached.
Retail rewards credit cards
These cards are usually co-branded with a major retailer, and cardholders earn points with everyday purchases. Cardholders may earn double or triple points, however, for spending money at the specified major retailer. Your reward points must be spent with your chosen major retailer.
Travel or hotel points credit cards
These cards are often co-branded with major hotel chains. With these cards, you can earn points for all your purchases, and may earn additional or bonus points for purchases at selected hotels. You may eventually be able to earn free stays at some hotels. Many of these come with an annual fee, and some can also be used for further perks such as theme park admission.
Gas cards
Gas cards come in 2 different types, general and brand-specific cards. General gas rebate cards may reward you with 1% cashback for everyday purchases, but higher rates of cashback for gas and auto-repair purchases. Gas-company-specific cards often offer 1% to 2% cashback on everyday purchases, and 5% to 6% cashback for using their specific gas stations. Gas companies may be prevalent or rare in certain states or areas, so take this into account before purchasing a company-specific card if you’re planning on driving around unfamiliar territory.