What Are Some Examples of Common Credit Card Reward Program Benefits?

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What Are Some Examples of Common Credit Card Reward Program Benefits?

What Are Credit Card Reward Programs?

There are about as many different types of incentive schemes as there are credit cards. Rewards programs may provide cash back on purchases, tangible services like as airline miles, no interest or cheap interest as an initial period, or discounts and special prices on travel and travel facilities. These and additional incentives are combined in certain credit card reward schemes.

Consider your personal spending patterns while looking for rewards programs—if you don’t travel much, a reward program that gives airline miles is unlikely to be beneficial. If you often purchase online, a card that provides large retail discounts may be more valuable than one that provides reduced fuel.

Remember that choosing between credit card offers should seldom be based just on rewards programs—before signing up for any card, thoroughly analyze the card’s annual percentage yield (APY), fees, and other terms and conditions.

Key Takeaways

  • Credit card rewards programs may be appealing incentives to sign up for certain cards, but it’s critical to review all of the card’s benefits, terms, and conditions before signing up.
  • A common rewards program is cash back on purchases, which provides a set percentage back as a credit on your bill.
  • Many credit cards offer introductory interest rates on purchases and/or transferred balances from other cards; these deals are often 0% interest rates for defined periods of time, typically between 12 and 24 months.
  • Another popular credit card rewards scheme is travel savings. Common incentives include airline miles, hotel or timeshare credits, and rental vehicle savings.
  • Other cards may provide highly specialized incentive systems, such as bitcoin rewards, gift cards, or discounts at certain retail chains.
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Understanding Credit Card Rewards Programs

Air Travel Miles

Many credit cards have agreements with certain airlines and will provide you with more generous air travel points if you fly with them. There are other airline cards available, including the American Express Gold Delta SkyMiles card and the Hawaiian Airlines World Elite Mastercard. Some credit cards, such as the Chase Sapphire Preferred, allow consumers to earn points that can be used to pay for travel-related purchases like lodging or car rentals.1 Some of these cards offer more points during introductory periods or to those who use self-service online tools to apply points to purchases.

Cash Back on Purchases and Payments

Different credit cards provide varying amounts of cash back on purchases or payments. The American Express Blue Cash Preferred Card provides 6% cash back on groceries up to $6,000 per year and unlimited 3% cash back on gas.2The Citi Double Cash Card provides 1% cash back when purchases are charged to the card and an extra 1% cash back when those purchases are paid off.3

Introductory Rate Period: Purchases and Transfers

Many credit cards have introductory interest rates that are frequently 0%. Cards differ in terms of whether they impose a different rate on balance transfers and if introductory prices apply to balance transfers. The Discover it card offers a 0% introductory rate on balance transfers and purchases for 14 months.4

Discounts or Gift Cards

The Amazon.com Visa Card from Chase offers a $50 Amazon gift card upon acceptance; 3% cash back on Amazon.com purchases; 2% cash back on purchases at gas stations, restaurants, and drugstores; and 1% cash back on other purchases.5 The My Best Buy credit card offers 5% back on Best Buy purchases and 10% back on the first day of purchases within 14 days of opening the account.6

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Insurance on Rental Cars and Card Balances

Many credit cards, but not all, provide insurance on leased automobiles if the card is used to arrange the rental. It is also important to decline the rental vehicle company’s insurance. Some cards, even within the same network, provide differing amounts of insurance. Before renting a vehicle, it is usually a good idea to phone a specific business and confirm that the card includes insurance.

Many credit cards include additional insurance that makes payments on the cardholder’s behalf if they are unable to make payments due to a loss of income. The Consumer Financial Protection Bureau (CFBP) has taken legal action against Discover and Capital One for unethical tactics in the selling and distribution of these insurance plans, including multimillion-dollar fines.78

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