Your guide to rewards credit cards
Whether you're looking to earn travel rewards or cash back for your shopping, you may benefit from choosing one of many rewards credit cards out there. Their selling point? Credit card rewards programs, which are great ways to leverage your everyday expenses and make the most of your lifestyle.
What are rewards credit cards and how do they work?
A rewards credit card is more than just a regular credit card. When you use your card to make purchases, you're earning some type of “reward" for every dollar that you spend. Using a rewards credit card is a great way to earn a little extra on purchases that you would've made anyway. Cash back, points and miles are the main types of credit card rewards you'll earn.
Rewards programs do have rules on how you can redeem your rewards. Depending on the card you have, the points can be used in a variety of ways. There may also be a specific selection of what you can redeem your rewards for. Some credit card issuers require you to redeem your rewards through their portal.
How to earn rewards points
Rewards points are one of the most common ways credit card rewards are counted, and cards typically offer points per dollar spent on all purchases. Depending on the card, you may earn more points for your spending in certain purchase categories. Common categories include dining, travel and gas stations. Some rewards cards may offer more points for purchases in certain categories, so make sure that your card fits your spending habits.
Another popular way to earn points is through a sign up bonus. When you get approved for the card and meet the spending requirement, you may be rewarded with significant rewards.
Types of credit card rewards
As mentioned above, credit cards with rewards usually accumulate points when you make purchases with your credit card. Some credit card rewards programs offer higher rewards points for spending in certain categories, like dining, travel, gas stations and more.
Cash back rewards are earned when you make purchases, usually a small percentage of the purchase amount. You may receive a percentage of cash back for every purchase you make, but this depends on the card. While you usually earn a flat rate of cash back on your purchases, your card may offer more cash back on certain purchases or categories.
Some cash back cards have rotating categories that change each quarter, while some offer the same rate year-round. Flat rate cards earn you a set percentage of cash back per purchase, whereas other cash back cards include accelerated rewards depending on the category. Common options for redeeming cash back include a statement credit and a deposit to a checking account and a gift card.
Some credit cards partner with airlines and offer rewards points in the form of miles. Airline miles can be used on future travel purchases. You might earn airline miles through purchases made using your credit card, but rewards could be accelerated on travel purchases. Dining and everyday spending could also earn you miles at an accelerated rate.
Miles are often redeemable either online or by speaking with an agent over the phone. Your card's rewards program may have several redemption options for your miles, such as flights, hotel stays, cash back, gift cards and merchandise.
Picking a credit card with good rewards
Picking the right rewards card is like finding the perfect pair of gloves: you want a perfect fit. You'll want to try to find a card that gives you the best value based on your everyday spending habits. If you're a frequent traveler and want to put earned rewards towards flights, hotel room upgrades and other travel-related expenses, a hotel or airline credit card may be a good fit for your lifestyle. If you're looking to earn general rewards and not focus on a specific category, a credit card that earns cash back on your purchases may be the better choice. Think about the categories where you spend the most to help pick the right card for you.
If you're considering getting a rewards credit card, there are plenty of options out there, but credit card rewards programs might seem complicated. Feeling stuck when it comes to choosing which type of rewards card you're looking for? Use the Chase Card Finder to find the card that's right for you.