3 Main Types of Credit Card Rewards Programs You Should Know

There are several different options out there today for credit cards. Dozens of creditors offer a full lineup of cards for those with excellent credit, good credit, and even poor credit. Many of them also offer rewards programs with some of their cards. These programs are usually one of three varieties: points, cash back, or miles. Each type has its pros and cons and is tailored to different lifestyles and spending habits.

If you are considering a rewards credit card, you need to look at the structure of the card, the program details, and your spending habits in relation to how the card could benefit those. For example, if you aren’t into traveling, a points or cash back card would be a better choice. To help you decide, let’s take a look at how all three types work.

Points

Credit cards that offer points will allow users to accrue points and then trade them in for various items (tangible or intangible). Some cards, for example, will allow you to exchange points for a statement credit, while others will allow you to use points on exclusive purchases or discount offers they have available.

Some “points” cards only allow you to build up points that you can redeem for sweepstakes, gift cards, and other items that may not be of use to everyone. These are usually more focused on the fair to poor credit group, but they are out there. The best thing you can do is to read the full details of the points program, including what they can be used for and more importantly, what they won’t get you, and then decide.

Cash Back

Cash back credit cards are some of the most popular on the market today. Almost all the major credit card brands have some type of cash back rewards credit card. The level of credit required to get these cards will vary from one provider to the next. However, you can generally assume that the better your credit, the better the rewards you’ll be offered.

Make sure that you double-check how the cash earned can be used. A lot of cards will allow you to use them to credit your statement, which is a great way to pay down your balance with free money. If you want to cash it out, there might be some terms and requirements that need to be met first.

Some cards may have different cash back rates for different purchases, such as exclusive partnerships with certain brands, while others may have a flat cash back structure for all cardholders.

Miles

For travelers, miles cards are the best type of rewards credit card. These cards will earn miles for each dollar spent, and many include bonus rewards for travel purchases or frequent fliers. Many cards are sponsored by airlines, such as the Delta SkyMiles Gold American Express card, while others are general travel cards, like the popular Capital One Venture X Rewards card.

With miles credit cards, you have to be aware of limitations and blackout dates on redemptions. For example, some miles cards won’t let you redeem miles for a flight during a holiday or peak travel period. Others may limit the types of flights or destinations for which miles can be used. Additionally, some “miles” credit cards may also offer other travel rewards in addition to accruing miles.

What’s Best?

This is a good question, but it has no easy answer. Now that you know more about the different types of rewards credit cards, you can analyze the options and choose the one that works best for your lifestyle, spending habits, and preferences. Those who have excellent credit will have more options, naturally, but there’s sure to be something for just about everyone.