Who can benefit from rewards based credit cards?

There are many different types of credit card available on the market today, and this includes 0% credit cards, interest free credit cards, credit cards for balance transfers, and rewards based credit cards.

Rewards based credit cards can be quite lucrative if used correctly, as they allow the consumer to actually make money or earn rewards from the credit card company simply for using the credit card. So, in addition to the convenience and ease of credit card use cardholders can enjoy a little extra on top.

There are a number of different types of rewards based credit cards, and it is important that you select one that offers rewards that will actually benefit you. For instance, some rewards based cards offer air miles as a rewards, but if you don’t tend to travel abroad then it is pretty pointless having the card. Amongst the different rewards that you can enjoy on this type of credit card are cash back on purchases, retail rewards, loyalty points towards discounts or goods, air miles, and travel rewards.

The way that these credit cards work is to offer the reward, such as a certain level of cash back or a certain number of points, per pound spent on the card. It is important to remember to compare credit cards when looking for a rewards based card, as the level of reward offered per pound spent can vary from one card and provider to another. For example, one provider may offer one loyalty point per pound spent whereas another may offer two points per pound spent on the card.

The level of cash back or reward offered on these cards is not very high, but if you use your card regularly these can soon mount up, and it is certainly better than getting nothing at all. These cards are best suited to those that tend to use their cards regularly or are making an expensive purchase, as the more money that is spent on the card the better. Do remember, however, you will not receive any reward for cash transactions or withdrawals made on the card.

In order to benefit from a rewards based credit card you need to be the type of person that uses the card regularly or for large purchases, and always repays the balance in full within the interest free period. This is because the rewards levels are low, and if you do not repay your balance in full you will be charged hefty amounts of interest, which will more than counteract any reward you may earn. For those looking to spread their repayments a 0% purchase card is a more suitable option.

In short, cardholders that do not make cash withdrawals or transactions on their cards, do use the card regularly or for large purchases, and always repay their balance in full will benefit from these cards. Those that use their card to make cash withdrawals and transactions, do not use their card very often, and like to spread their repayments should look for an alternative. 

Tom Smith
20th January 2008