Types of Credit Card Rewards
While most financial experts agree that using a credit card frequently could be a bad financial decision, those that use them wisely could benefit greatly through the receipt of credit card reward plans. For those that are interested in getting a card that offers rewards as a perk, there are several different types of rewards that credit card issuers offer new and existing customers.
One type of reward plan that you could receive would be one that provides you with air miles based on the amount of money that you spend. Various airlines will partner with the major credit card companies to provide a perk to credit card users. In most cases, a person will receive between one and two miles for every dollar that they spend. These miles can later be used to receive free airline flights, or other products or services provided by the airline frequent flyer programs. People will normally receive an even bigger bonus of miles if they use their cards to purchase tickets directly through the airlines.
Another common type of credit card reward that is offered is a cash back incentive. This type of credit card benefit is frequently becoming more and more common with consumers as it gives more flexibility as to how they can use their perks. The cash back incentive that someone will receive typically varies between 1—2% of the total amount of money that they spent. However, many credit card programs will give much higher cash back percentages of 5—10%if the card is used at certain merchants or if the purchase falls into certain expense categories. Those that use the card wisely could end up accumulating a significant amount of rewards each year.
In order to entice a new customer to sign up for the credit card, many credit card providers also offer a signing bonus to qualified customers. For people with decent credit scores and enough income to support the credit balance, getting a signing bonus of a couple hundred dollars is somewhat common. These bonuses are normally offered by credit card providers sporadically throughout the year. They normally come coupled with other benefit programs, which can make them even more lucrative. However, they do tend to have higher annual fees and interest rates, so users need to be aware of the potential costs.