Making purchases with a rewards credit card allows you to earn cash back, points or airline miles you can then use to pay down your balance, book travel or for other purposes. This benefit makes rewards cards a smart choice for getting added value from your everyday spending.
What Is a Rewards Credit Card?
Rewards credit cards offer you some type of “reward”—typically cash back, points, or travel miles—for every dollar you spend, sometimes up to certain limits. Depending on the card, you can then use your rewards in a variety of ways.
How Rewards Credit Cards Work
Rewards cards represent a large portion of the credit card market today, and they seem to offer something for everyone. In addition to different rewards structures, the cards vary in terms of how your rewards can be redeemed and what kinds of things they may be redeemed for.
Typically, you can redeem your rewards for checks, statement credit, merchandise purchased through the card company, gift cards, and/or travel perks. At the end of each billing cycle, you can see your current rewards balance on your credit card statement.
Many credit card companies also offer introductory bonus rewards to try to entice you to sign up. Those offers may involve hundreds of dollars in incentives once you reach a certain spending threshold, along with an introductory 0% APR for the first several months, and no fees for the first year.
