If you're like most people, you probably have a few credit cards in your wallet. But have you ever considered getting a reward credit card? These cards offer extra benefits and rewards for spending money on everyday items. In this article, we will discuss everything you need to know about reward credit cards! We'll cover how they work, the different types of rewards available, and some of the best deals currently available. So read on to learn more about this exciting type of credit card!
Reward Credit Cards: Everything You Need to Know Table of Contents
What is a Reward Credit Card?
A reward credit card is a type of credit card that offers rewards to cardholders for using the card. Rewards may include cash back, points, or miles that can be redeemed for travel or merchandise. Some reward credit cards also offer discounts on purchases made with the card.
What Are The Benefits of a Reward Credit Card?
The main benefit of a reward credit card is the rewards that you can earn. With most cards, you can earn points for every dollar that you spend.
You can then redeem those points for travel, merchandise, or cash back. Some cards also offer bonus points for spending in specific categories, such as gas or groceries.
Another benefit of a reward credit card is that it can help you save money on your everyday purchases. If you use your card for all of your purchases, you can quickly rack up points and redeem them for discounts on future purchases.
Additionally, many cards offer 0% APR introductory periods, which can save you money on interest if used correctly.
Finally, a reward credit card can provide peace of mind by offering valuable perks, such as travel insurance and extended warranty protection. These perks can save you money and provide peace of mind, which is priceless.
What Are The Different Types of Reward Credit Card & Details?
There are four types of reward credit card: cash back, travel, points, and store. Each type has different benefits and drawbacks that you should consider before signing up.
Cash back reward cards give you a percentage of your purchase back in the form of cash or a statement credit.
Travel reward cards give you points or miles that can be redeemed for flights, hotels, car rentals, and other travel expenses.
Points reward cards give you points that can be redeemed for merchandise, gift cards, or cash back.
Store reward cards give you points or discounts at specific retailers.
Before choosing a reward credit card, it's important to consider your spending habits and what type of rewards you value most.
Cash back rewards are great for everyday spending, while travel rewards are best for people who frequently fly or stay in hotels.
Points and store cards can be good for people who shop at specific retailers or who want to have more flexible redemption options.
Do Reward Credit Card Have Any Risks?
Yes, there are a few risks associated with reward credit cards. The biggest risk is that you could end up carrying a balance on your card from month to month and accruing interest charges.
This negates the value of any rewards you might earn.
Additionally, if you miss a payment or two, you could lose your rewards. Finally, some reward credit cards have annual fees that can eat into your rewards earnings.
How Do You Apply For a Reward Credit Card?
You can apply for a reward credit card online, over the phone, or in person at a bank or credit union. The application process is similar to that of a regular credit card, but you may be asked additional questions about your income and spending habits.
Once you're approved, you'll receive your new credit card in the mail along with information on how to activate it. Once activated, you can start using your card to make purchases and earn rewards.
Most reward credit cards require good to excellent credit for approval. If you have bad or fair credit, you may still be able to qualify for a secured reward credit card. These cards require a cash deposit that acts as collateral and helps reduce the risk for issuers.
How Does APR Work on Rewards Credit Cards?
The APR, or annual percentage rate, is the interest rate you'll pay on your outstanding balance if you don't pay it off in full each month. For rewards credit cards, the APR is usually higher than for other types of credit cards. That's because rewards cards typically have higher credit limits and offer more perks and rewards than other types of cards.
If you're carrying a balance on your rewards card, it's important to understand how APR works. The higher the APR, the more interest you'll pay on your outstanding balance. And the more interest you pay, the less money you'll have to spend on actually enjoying your rewards.
Fortunately, there are a few things you can do to minimize the amount of interest you pay on your rewards credit card. First, always try to pay your balance in full each month. This will help you avoid paying any interest at all. Second, if you can't pay your balance in full, make sure you at least make your minimum payment on time each month. This will help keep your interest charges to a minimum.
Finally, remember that some rewards cards offer 0% APR introductory periods. If you're planning a big purchase, it may be worth considering a card with one of these intro periods. Just be sure to understand how the intro period works and be sure you can pay off your balance before the intro period ends. Otherwise, you'll be stuck paying interest at the regular APR rate.
What Are The Best Reward Credit Cards in 2023?
Now that we've gone over the basics of reward credit cards, let's take a look at some of the best options currently available. In 2022, there are a few clear frontrunners when it comes to rewards credit cards.
Chase Sapphire Preferred Card
The first is the Chase Sapphire Preferred Card. This card offers a generous sign-up bonus worth $625 in travel expenses when you spend $4000 in the first three months. On top of that, you'll earn double points on all travel and dining purchases, and one point per dollar spent on everything else. The annual fee is $95, which is waived for the first year.
Capital One Venture Rewards Credit Card
If you're looking for an even more rewarding card, the Capital One Venture Rewards Credit Card might be a good option for you. This card offers a sign-up bonus of 50,000 miles (worth $500 in travel expenses) when you spend $3000 in the first three months. You'll also earn double miles on all purchases, and there's no annual fee.
Discover it Cash Back Card
Finally, if you're looking for a card with great perks and no annual fee, the Discover it Cash Back Card is a great option. This card offers five percent cash back on rotating categories each quarter (on up to $1500 in spending), and one percent cash back on all other purchases. Plus, at the end of your first year as a cardholder, Discover will match all the cash back you've earned.
Can You Get a Reward Credit Card With Bad Credit?
If you have bad credit, you may still be able to get a rewards credit card. However, your options will likely be limited and you may have to pay a higher annual fee or interest rate. If you're looking for a rewards card with bad credit, it's important to shop around and compare your options carefully before applying.
The best way to rebuild your credit is by using credit responsibly. That means making on-time payments and keeping your balances low. If you can do that, you'll eventually qualify for a better rewards card with more perks and a lower interest rate.
What Are The Other Types of Credit Cards?
There are many different types of credit cards on the market, and each has its own set of perks and benefits. Some of the most popular types of credit cards include cash back cards, travel rewards cards, and business credit cards. Each type of card offers different rewards and features, so it's important to choose the right card for your needs.
If you're a frequent traveler, a travel rewards card may be the best choice for you. These cards offer points or miles that can be redeemed for free or discounted travel expenses. Many travel rewards cards also come with added perks like free checked bags, priority boarding, and airport lounge access.
Business credit cards are designed for business owners and offer exclusive benefits like 0% intro APR periods, rewards for business expenses, and annual bonuses. These cards can help you save money on business expenses and earn rewards that can be used to offset the cost of travel or other business-related costs.
Cash back credit cards offer a simple way to earn rewards on your everyday spending. These cards typically offer a higher rewards rate on specific categories like gas, groceries, or dining out. Some cash back cards also offer bonus categories that change each quarter, so you can always earn more points on the things you're already spending money on.