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Generally, credit cards are tailored to suit any situation. Some cards are ideal for individuals looking for a balance transfer, rewards points, cash-back, and more. The best reward credit card is all about the perks you will receive in return. 

Generally, the most suitable credit card gives you benefits including:

      • Profitable rewards 
      • Long APRs (Annual Percentage Rate) on purchases 
      • No interest financing
      • Welcome offers

Reward credit cards can help maximize your expenses every day. Each time you use your reward card, you receive compensation such as travel or cash-back.  

As the name suggests, a cash-back reward credit card offers a certain cash percentage rebate on purchases. The standard rate is usually between 1% and 2%. The value of the reward offered by a cash-back credit card is quite clear. These cards vary in significant ways based on the reward program and particular card. 

How Cash-Back Rewards Work

There are reward cards that offer a fixed rate on the rewards on every purchase. Others will provide an elevated rate in certain spending sections like dining or traveling. 

Cash-back rewards on cards are possible since traders pay an exchange charge on every transaction done using a credit card. For instance, when you spend $300 with a reward credit card, the seller will only get $291.  

An appliance going for $700 will save you $14 with a 2% cash-back reward card. The trader would pay a fee of approximately $21 when you use your card. 

Deals made between the specific trader and the credit card issuer also finances rewards. An example is card-linked offers that can see you earning cashback rewards.   

What Determines Your Bonus Rewards?

Card issuers determine which types of purchases qualify for which percentage of cash-back through Merchant category codes. These are 4-digit numbers that indicate the type of business like a grocery store, restaurants, airlines, or gas station. The IRS publishes these codes to assist consumers in distinguishing the categories of any business.

 

Traders also use the Merchant codes to monitor customer habits, report taxes, and select the purchases that qualify to earn bonus points. 

The credit card company determines which category a trader falls under, even though it is usually upon the trader to notify their classification to the issuers.

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How to Redeem Cash-Back Rewards

There are different ways to redeem your cash-back rewards, including:

          • Receiving a check via mail
          • Directing a deposit to your bank account
          • Via gift cards for famous department stores
          • Giving a charity donation of your choice

Varying credit cards have different requirements on the number of options you qualify for, and criteria met before cash-out. When you are ready to redeem your cash-back rewards, you can easily contact the card’s customer service or visit their website. 

Certain credit cards have a minimum limit you need to hit before you cash out. Cash-back can expire after some time. You need to pay attention to whether a card has a forfeit or expiration policy.

Some cards will offer a cut-off time of one to five years before you can redeem points. If the card has an expiration date, you can inquire if your card company can automatically deposit the reward to your bank account. 

Before you close your card or change to another, you should redeem all accumulated points.

Travel reward cards offer miles or points when you make a purchase using your credit card. The more you use your card, the more points or miles you accumulate. You can redeem these points through hotel stays, airplane tickets, and other travel charges.

 

Some credit card companies allow you to redeem travel points options not related to travel and statement credits.

How Travel Rewards Work

The number of points you gain from each dollar spent depends on the card and the type of purchase.

 

In some cases, card issuers partner with certain hotel chains in hotel credit cards. These cards earn a high reward rate when you book hotel stays. Marriott Bonvoy Brilliant American Express Card is one example of such a co-branded hotel credit card. 

It earns six Marriott Bonvoy points for every dollar you use at a hotel in the Marriott Bonvoy scheme. You also get 3X points when using the card in U.S. restaurants and book flights through the airline. 

Bank of America Travel Rewards credit card is an example of a non-branded travel reward card. It earns an unlimited 1.5 points for each dollar spent on every purchase, including the non-travel ones.

What Is a Credit Card Point or Mile Worth?

One credit card mile is approximately worth one cent, and this is the benchmark. For every 10,000 miles, you earn $100 rewards. 

To maximize the rewards, opt for a high rate per mile. A fan favorite is a Chase Sapphire Preferred Card, as it offers a 25% bonus to redeem points through Chase Ultimate rewards. It also awards 5x points on travel-related purchases via Chase Ultimate Rewards, 3x points on dining, and 2x points on every other travel-related purchase. 

This increases the rate to 1.25 cents per mile. With this card, you can also move points to frequent hotel programs. To compare Chase Sapphire and Bank of America travel rewards, the former is for frequent travelers, whereas the latter is popular with occasional travelers.

The value of a mile comes down to the way you opt to redeem them. You increase the worth per mile when you reclaim first-class or business seats and long-haul flights. Credit card miles used in first-class seats are worth approximately $0.05 or more per mile.

 

How to Redeem Travel Rewards

To get the most value out of your earned results, you need to know how to redeem them. Some of the options include:

          • Statement credits
          • Gift cards and cash-back
          • Travel purchases

Determining the Correct Type of Rewards Card For You

There are different types of rewards credit cards, including some that we have already mentioned. Cashback cards, points-reward cards, travel rewards cards, airline credit cards, and many more.  

There are certain factors to consider when determining the best reward credit card for you, including:

      1. A travel reward card or a cash-back
      2. Pay attention to how to earn rewards with the card.
      3. Pay attention to the redeemable options of the credit card.
      4. Ensure to hit the minimum spending requirement of the card.
      5. Available annual fee
      6. Welcome bonuses
      7. Foreign transaction fees and policies

Different people have different needs, and so when comparing, you need to consider what’s most significant to you. There is no one best credit card for all. However, everyone can get the perfect credit card for them.

Your best reward card can be the Discover it Cash Back credit card because of its no annual fee. You might also select Citi Double Cash Card as your best rewards card since it offers great cash-back rewards. 

Some of the characteristics to consider when comparing rewards cards include;

      • The type of the card
      • Required credit score
      • Annual fee
      • Bonus offer
      • Rewards rate
      • Ingoing and outgoing APR 

Pros and Cons of Rewards Cards

Pros

      1. It is a reward program where you can potentially earn hundreds of dollars in travel, cash-back, travel, and other rewards to redeem later.
      2. Reward cards may offer up to a $25 sign-up bonus activated enough to purchase a pair of domestic round-trip flights within the U.S. 
      3. They offer travel, dining, shopping, and protection perks, including baggage insurance, emergency cash replacement, and unrestricted Global Entry, to mention a few.
      4. Some cards like the Discovery credit card have lower interest rates, no foreign transaction fees or annual fees offer benefits to the cardholder.
      5. Reward cards can help you build your credit when you maintain good credit habits. 
      6. You can also earn rewards from referral bonuses when you refer a friend to apply for a card and get approved. Are our referral bonuses taxable? No, they are not, and so you can maximize the rewards from this type of card.

Cons

      1. You need a remarkable credit score to earn rewards. There are, however, cards that build your credit, like the Discover It Secured Credit Card. It matches all the cash-back made within the first year! 
      2. Reward cards charge high interest of up to 20% APR than non-reward cards/
      3. Some reward cards charge a high annual fee.
      4. They can damage your credit when you are unable to pay the high monthly fees.
      5. Rewards can reduce depending on the card. Some cards will force your bonuses to expire or put a limitation on the maximum rewards you can earn.

 

Understanding your rewards credit cards can help you maximize all their profits. 

      1. Get the right card.
      2. Charge everything to your card. The more you use it, the more rewards you accumulate.
      3. Using multiple cards can be pretty complicated, but it is easier to capitalize on the rewards. For instance, a card like the Citi Double Cash Card can be for daily purchases as it offers 2% cash-back on every purchase. You can make this better with the Chase Freedom Flex, which earns 5% cash-back on up to $1,500 for each quarter in rotating bonus levels. 
      4. You will want to pay off your balance fully to maintain the value of the card’s rewards.
      5. Redeem your rewards as soon as possible, especially when it comes to travel compensations.

 

 

Rewards credit card Best for Credit score
Chase Sapphire Reserve Best premium travel crest card Excellent
Hilton Honors Aspire Card from American Express Best hotel credit card bonus Good – excellent
Chase Freedom Unlimited Very easy to earn a bonus Good – excellent
The Platinum Card from American Express premium travel Good – excellent
Bank of America Unlimited Cash Rewards credit card unlimited cash-back Good – excellent
United Quest Card Best for Miles Compensation Good – excellent
Hilton Honors American Express Surpass Card Hilton benefits Good – excellent
Chase Ink Business Preferred Credit Card Business travel Good – excellent
Chase Freedom Unlimited Flexible rewards Good – excellent
Blue Cash Everyday Card from American Express Best for U.S. department store rewards Good – excellent
Wells Fargo Active Cash Card Easy to learn cash rewards bonus  Good – excellent

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