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Daily Definition – Reward Credit Cards

Posted on 22. Jul, 2009 by emilythomas in Daily Finance Definitions

Reward credit cards usually reward cardholders with incentives, rebates and even cash back for purchases made with their cards. Users can get additional airline miles, cash-back rewards or discounts on merchandise for each pound spent. Rewards cards usually require a better-than-average credit rating.

These cards are similar to cash-back cards in that users can accumulate points toward rewards, based on how much the card is used. Reward programmes vary and offers often change, so look over the terms thoroughly before applying.

As with cash-back cards, reward programmes for reward cards are costly to credit card companies. Therefore, annual fees are charges by many reward credit cards. This type of card is particularly good for people who always pay off their balances monthly. People that do this are able to realise more benefits by minimising their charges.

Typical rewards may include:

• Petrol rebates
• Entertainment rewards
• Shop discounts for store cards
• Airline miles or travel rewards

A very popular type of reward credit card is one that gives cardholders airline miles and other travel incentives. Airline mile or frequent-flyer cards rewards users with airline (or frequent flyer) miles credits whenever the card is used. Once enough points are accumulated, they may be redeemed for airline travel. These cards are great for people who travel frequently or for people who want to use their cards to plan vacations. However, airline rewards cards may also require annual fees.

All travel programmes are different so be sure to read any card’s terms and conditions to find out how many miles you gain for where you spend and what you spend on. Additionally, a key consideration is how many miles are needed for a free plane ticket. You should also find out how soon the miles expire and about any blackout dates (certain times when you cannot use rewards points).

Tags: credit card advice, Daily Definition, rewards credit cards, types of credit cards