For every dollar you spend on a rewards credit card, you get
some "reward"—usually cash-back, points, or travel miles—up to a
specific limit. Depending on the card, you can then spend your points in
What are the different types of
credit card rewards programs, and how do they work?
What is a reward card, exactly?
Before diving into credit card rewards programs is crucial to
understand what constitutes a rewards card. A rewards card allows you to earn
cash-back, points, or miles when you purchase.
These cards can give you the same amount of rewards on every
purchase (known as flat-rate rewards) or provide you more rewards in specific
categories (for example, higher earning rates on dining out or grocery).
Credit card rewards schemes
come in a variety of shapes and sizes:
Cash-back, points, or miles are the most common reward
mechanisms offered by credit cards.
The majority of cash-back cards allow you to earn a set
proportion of money based on you’re spending, such as the Citi® Double Cash
Card, which offers 2% cash-back: 1% on all transactions and 1% after you pay
your credit card payment.
On the other hand, some cash-back cards earn points that may be
exchanged for cash. The Chase Freedom® and Chase Freedom Unlimited® credit
cards, for example, are advertised as earning cash-back, but the rewards are
given in Chase Ultimate Rewards® points. The worth of the points varies
depending on how you spend them.
Other reward cards that don't pay cash-back provide points or
miles instead. The Chase Sapphire Preferred Card, for example, gives you
Ultimate Rewards® points, while the American Express Gold Card gives you
Membership Rewards® points.
Most co-branded airline cards give miles as part of the brand's
unique membership rewards program. Co-branded Delta cards, such as the Delta
SkyMiles Blue American Express Card, offer SkyMiles (Delta Airlines' membership
points) as a reward.
the value of incentives varies from program to program, redemption choices are
frequently the same. Here are some frequent choices:
Credit on the
Deposit to a bank
account that is linked to your PayPal account.
For certain online
websites, you can pay with points at the checkout.