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Rewards credit cards 2021
Learn how you can earn points and redeem rewards while you spend with a rewards credit card.
Do you regularly make purchases with your credit card? A rewards card can help you get something back from your spending. Whether you’re a frequent flyer, loyal customer or big spender, you can find a rewards credit card to suit almost any lifestyle.
As these cards can often come with fees and restrictions, compare your options to determine which card offers more rewards and more bang for your buck.
How do rewards credit cards work?
A rewards credit card is just like a standard credit card. The only difference is that when you spend and make purchases on a rewards credit card, you can earn points or rewards. The value of each point or reward will differ depending on the card. Only once you’ve built up a certain number of points will you be able to redeem your rewards.
The more you spend on these cards, the more you can potentially earn.
Types of rewards credit cards
- Retail rewards. These cards offer benefits and rewards tied to a particular retailer such as gift cards or discounts. Consider where you shop the most and see whether the retailer offers a card to reward your loyalty.
- Cashback rewards. Some credit cards let you redeem your accumulated reward points as cashback. Depending on the card, you can use this cashback to pay credit card fees or to reduce your outstanding balance.
- Airline rewards. Are you a regular jet-setter? Then frequent flyer credit cards could be a wise choice. You can use these cards to earn points or air miles for everyday purchases and can redeem them for rewards such as airline tickets and flight upgrades.
- Travel rewards. Cardholders can earn points for both travel-related and everyday purchases. Depending on the card, you can redeem your rewards for travel perks (such as flights, upgrades and accommodation) as well as other rewards (such as gift vouchers, gadgets and homewares).
- Hotel credit cards. If you use a particular hotel chain on every trip, you could rack up rewards for your loyalty. The points you earn for staying at the hotel can then be redeemed for discounts and vouchers.
You may be able to earn bonus points when you spend but this will vary from card to card. Some may offer bonus points on certain purchases, while other cards may offer them for simply spending during a certain timeframe or spending a specific amount in one transaction. Check the terms and conditions carefully to ensure you meet the spending requirements and to see if your points will expire.
Why should I consider a rewards credit card?
The major appeal of this type of card is earning points that can be redeemed for rewards. Depending on the card you use and the promotions in place, you may be able to earn bonus points when making certain types of purchases or shopping with a particular retailer. Additional cards linked to the account can also earn rewards points as well. What you can redeem your points for will vary from card to card as we highlighted above in our list. If you’re a frequent flyer, you may be better suited to a rewards card that gives you air miles as you’re more likely to use these. Similarly, if you regularly shop at a particular supermarket or eat at a certain restaurant, getting discounts and vouchers to use in these locations will be more beneficial than say, hotel rooms that you have no intention of booking.
Some rewards credit cards come with extra benefits beyond the rewards program. Some, for example, may offer low interest on purchases, while others provide extra warranty or complimentary insurance. Compare the features of the card to discover which will work best with your lifestyle.
How do I compare rewards credit cards?
- Annual fee. While some rewards cards don’t charge any annual fees, others may charge higher annual fees than standard cards. The more features the card has, the higher the fee is likely to be.
- Rewards program. Choose a rewards program based on your lifestyle, and select the one that will offer greater rewards value. If you’re a loyal customer to a particular retailer, you could benefit from its rewards card. A frequent globetrotter might get more from an airline rewards card. While you can sign up for multiple rewards cards, using a single card for all purchases is generally the fastest way to earn points.
- Earn rate. This refers to how many rewards points you earn per euro spent, and generally varies. The earn rate lets you calculate the monetary value of your points and how much you’ll have to spend to redeem a particular reward.
- Bonus points. Cards that offer bonus points to new customers can help you kickstart your rewards points. You may need to meet some eligibility requirements before you can claim the points (such as spending a certain amount in the first three months), so make sure to confirm these conditions before applying.
- Limitations and restrictions. Most rewards cards limit the way you can earn and redeem points. You’ll often only be able to earn points with particular retailers or airlines. If the card comes with a cap on the number of points, you’ll only be able to earn up to a certain number of points. If you’re a big spender, this could reduce your points earning potential. Keep an eye out for expiration dates on your points, too.
- Interest costs. Interest rates will vary from card to card. Comparing these in conjunction with your spending habits will help you calculate how much you’ll have to repay over time.
- Balance transfer. Some rewards cards offer promotional balance transfers that allow you to repay existing debt at a lower rate. As balance transfers are designed to help reduce your debt, using the same card for purchases to build up points isn’t advisable.
What are the pros and cons of using a rewards credit card?
- Rewards for spending. You can choose a card that fits your lifestyle and earn rewards on purchases you would have made anyway.
- Global acceptance. Most rewards cards are affiliated with Visa or Mastercard, and you can use these cards in over 200 countries and territories worldwide. While American Express credit cards aren’t as widely accepted internationally, they can still be used in many locations around the world.
- Extra perks. Many rewards cards offer extra perks. Compare your options to see which features work best with your lifestyle and spending habits.
- Cost. Rewards credit cards aren’t free. For instance, you may have to pay an ongoing annual fee or the card will attract a higher APR than your basic no-frills card.
- Limitations. Your card provider might not let you earn more than a given number of points in a calendar year, and your points can also expire after a set time frame.
A rewards credit card can be a useful way to earn extra benefits on everyday purchases. The variety of rewards credit cards available ensures that there is an option to suit almost every lifestyle. As there are so many cards on the market, and each comes with separate terms and conditions, you should compare your options to determine which one offers you the most value.
Frequently asked questions
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