In today’s world, there are a large variety of cards available that offer rewards. As a consumer, you should learn about these types of card programs so that you are able to take full advantage of the rewards offered.

Cards that offer rewards are offering you incentives on the amount of money that you spend on the card. Rewards come in a variety of forms, but they all offer you some type of advantage for using that card. In this guide, you will learn about card reward programs. In turn, this knowledge will help you to maximize the benefits associated with such programs.

What are Card Rewards?

As stated previously, rewards are special type of incentives for using a card to make a purchase. While rewards are most often offered on credit cards, debit cards may also offer rewards to consumers.

In most instances, the units of such reward programs exhibit value in terms of points, miles, and even cash. These rewards must be built – over time – and are governed by various conditions and terms. These rewards are typically distributed based on the amount that you spend.

In many instances, certain types of spending offer more rewards. For example, if you purchase fuel on your card, you may earn a small percentage back.

Reward Categories

While card reward programs offer different types of rewards, the following outlines the most common, along with a brief explanation of each:

  1. Cash Back – If your card offers cash back as a reward, you may use that money to get a monetary amount or you may redeem it as a credit on your account.
  2. Co-Brand Rewards – If your card company is in a business partnership within a retailer or certain type of company, the rewards you earn may be put towards what is being offered by that company. For example, if your card partners with Amazon, you may earn $10 or $25 towards a purchase with them. If they partner with an airliner, you may earn “miles” that you may place towards traveling.
  3. Points – If your card has a reward program that offers points, you may be able to place those points towards the purchase of certain services and goods. In many instances, you may also be able to convert your points towards a cash-based reward.

Understanding the Functionality of Rewards Programs on Cards

When you use a card that is part of a rewards program, there will be three main components to the program; that is, earning the rewards, redeeming the rewards, and the expiration or forfeiture of those rewards. Below, we have outlined each of these components and a brief overview of each:

  1. Earning the Rewards – In order to earn rewards on the card that offers a rewards program, you must use the card to make purchases. This may involve spending in general, making certain types of purchases, or buying from certain merchants. For new card users, the program may involve a sign-up bonus. With this, you get the rewards fast, but you must follow the criteria outlined within a specific amount of time.
  2. Redeeming the Rewards – Once you have built up your rewards, you will want to redeem them. Some programs require you to specify the fact that you want to redeem while others just automatically redeem your rewards. You will generally redeem for cash, points, or miles.
  3. Expired Rewards or Forfeiture – If you use a card that does not automatically redeem your rewards, you may lose those rewards as a result of expiration/forfeiture if you do not redeem them in time. The same holds true if there is no activity on the card for a long amount of time. All reward programs outline certain conditions that you must follow to avoid using your rewards. Make sure you read all of the fine print.

Maximize the Benefits

There are different rewards programs offered with different cards. If you have an interest, you should make certain that you carefully research these programs in order to opt for one that works for you.

You should do this by opting for the card that offers the best interest rate, the lowest amount of fees, and the highest number of rewards.

The card reward program that you opt for should match your spending habits. If it does not, you will likely not reap ANY rewards.

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