Credit Card Rewards

If you're going to be using your credit card anyway, you might as well get something back, right?

With a reward credit card, users get incentives for making purchases on their credit card. And these rewards can be just about anything, from discounts and rebates, to gifts or gift certificates, to getting actual cash back.

Before applying for a reward credit card, you should decide what type of "reward" will benefit you the most.

A Cash Back Credit Card

Cash back is probably the credit card incentive you run across the most. And who wouldn't want to spend money and make money at the same time.

With this type of credit card, you actually get cash back for making purchases on your credit card. The more you buy, the more money you get back. For example, users of one cash back credit card will get one point for every dollar they charge. For every hundred points they accumulate, they will get a dollar back. Once they have accumulated 2,500 points on the credit card, they will receive a $25 cash back reward. However, to start them off, they receive 1,000 bonus points for making their first credit card purchase, no matter how big or small that purchase is.

Those who are likely to make a lot of purchases on their credit card will benefit the most from this type of reward program.

Other Credit Card Rewards

You can find a credit card that will offer just about any kind of reward you can imagine. As with cash back programs, most credit card rewards are based on a point system. You get a certain amount of points for every dollar you charge. And you can use those points to get other things in return. Like:

• Cell phone minutes.
• Discounts at certain retail stores.
• Rebates on certain merchandise.
• Gasoline rebates.
• Gift certificates, that you can use to rent movies, eat at your favorite restaurant, or shop at your favorite department store.
• Discounted shipping and handling charges on online purchases.

An airline mile credit card might benefit those who do a lot of traveling. Whenever you make a purchase with an airline mile credit card, you accumulate points that can be redeemed as airline travel miles. So, the next time you buy an airline ticket, you can get a discount based on the number of points you have accumulated on your credit card.

Are There Disadvantages to Having a Reward Credit card?

Sometimes, a reward credit card can carry a higher interest rate than a standard credit card. Some might also require you to pay an annual fee. Also, you have to read the terms of a reward credit card very carefully before applying. On some, the points you have accumulated could expire before you get the chance to use them, often because you didn't charge enough to accumulate the amount of points you need to get the reward before the expiration date.

However, if you are able to find a reward credit card with no annual fee, a relatively low interest rate, and favorable terms, you just might find the benefits of having a reward credit card worthwhile.