“How do I compare different credit card rewards programs?”
Looking for the best credit card rewards program for your needs can be like comparing apples to oranges. There are so many different types of credit card rewards—cash rewards, miles, airline travel, points, gift cards, discounts on products and services.
So where to begin?
First, take a close look at where you are spending the most.
That’s where your best opportunity is for earning the best rewards. Analyze your spending to see where you might be able to earn sizeable cash back rewards, rebates, discounts, miles or points.
While the idea of free airline tickets may be appealing, you may not actually be spending enough in certain categories, or with certain merchants, to earn big rewards. If the only way you earn rewards is by using certain airlines or certain hotel chains, you may not be spending enough to earn those free flight or hotel stays before they expire.
Likewise, if you don’t drive much, and aren’t planning any major cross country road trips, you probably won’t be interested in gas cards.
There are a lot of different types of credit card rewards programs—once you determine your spending patterns you can narrow your search to find the best rewards program for you.
Ideally you would choose a rewards program where you earn rewards at places where you already spend. You may also earn rewards for things like good credit management.
Look for credit card rewards programs that allow you to redeem cash, travel or hotel credit, and for things you could use—including gift cards to your favorite restaurants, clothing stores, entertainment, etc.
Understand the different types of rewards
Travel miles. With airline or miles credit cards you can redeem for free or discounted travel, and may be able to redeem for other options. Branded airline and hotel credit cards often provide free or discounted rewards only at their specific airline or hotel. Check to see if there are restrictions on travel, blackout dates or seat restrictions. Many travel miles cards include an expiration date on the credit card rewards.
Points. When you choose to earn points for your purchases you can typically earn 1 point for every $1 you spend, with more points awarded for purchases in specific categories or with specific merchants. You can often redeem your rewards starting at 1,000 points for brand name gift cards and merchandise. With some credit card programs you can accumulate points and use them towards a rebate or cash off your next car purchase or hotel stay. Be sure to check to see if there is an expiration date for when your points must be redeemed and how often you have to use your credit card.
Cash Rewards. With this type of rewards program, you can redeem your rewards for cash back or different types of brand name gift cards or merchandise. If you’re interested in getting cash back you can usually choose to get your cash rewards in the form of a bank deposit—or as an account credit to pay your credit card bill.
Next, crunch the numbers.
You’ve figured out your top spending categories and decided what type of rewards program you want—but if you don’t have a great credit card offer with a low interest rate, or a no annual fee card, you may not actually be coming out ahead.
Compare the various credit card offers. Is there a low APR offer? Is there an intro balance transfer offer? Will you have a low interest rate after the intro APR expires? Does the card charge an annual fee or is it a no annual fee card? What other fees are involved?
Consider the many ways in which you can earn rewards—as well as the various costs and fees that may be involved. If you’re charged a fee every time you make a same-day payment, for instance, you may not be getting the best value out of your credit card.
By understanding the different types of credit card rewards programs available you can find the credit card program that gives you rewards your way—as well as the best terms and interest rate.
Discover card believes that consumers should be armed with the information they need to help them make informed credit decisions.
Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.