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Types of Reward Credit Cards

Types of Reward Credit Cards & Programs...Learn about the different types of reward credit cards...

Start earning extra incentives by using your credit card on daily purchases! Credit card companies offer a wide range of reward programs that make plastic very appealing. Although they tend to carry higher interest rates than standard cards, if used wisely, reward credit cards can be a great way to earn special bonuses from your everyday spending. Here's the basics of rewards:

Here's how it started:

While your "standard" credit card has been around for over 50 years, the reward credit card is a relatively new creation. Starting out as a simple cash back program offered by Discover about 15 year ago, reward credit cards have transformed into a variety of different programs which include airline miles, product rebates, reward points, shopping discounts, free gasoline and more.

Types of Reward Programs:

  • Airline Credit Cards: Airline credit cards allow you to earn frequent flyer miles you can redeem for free flights, hotels, rental cars and more. Most airlines have combined these offers with their frequent flyer programs so that you can accumulate even more airline miles when you charge flights and other purchases. Great for travelers!
  • Cash Back Credit Cards: Very popular reward system. Cash back credit cards allow you to earn a flat percentage (normally 1%-5%) on your total credit card purchases. This amount will be paid in the form of a check or statement credit at the end of the year. Many times, higher bonuses will be rewarded when you shop at particular locations.
  • Rebate Credit Cards: This is the similar to the cash back system but instead of actually receiving a check in the mail, you'll see rebates on your credit card for future purchases or you'll receive cash rebates at authorized locations.
  • Point Credit Cards: Point programs allow you to earn points for your daily purchases. These points then accumulate and allow you to earn a variety of rewards. In most cases, you need to reach a minimum point value (i.e. 2500 points) to earn a bonus.
  • Gasoline Credit Cards: Gasoline credit cards are either tied to a specific gasoline brand that rewards loyal customers or they're targeted towards general gas consumption at multiple locations. Rewards are usually in the form of monthly cash rebates applied to the credit card for future gas purchases. Normally, they operate in a tiered fashion (i.e. 6% for gas purchases, 3% for grocery store purchases, and 1% for all other purchases).
  • Retail Credit Cards: Retail credit cards are tied to specific merchants like Target, Wal-Mart, Home Depot and more. Shopping cards operate like cash back, rebate, or points cards, but bonuses are targeted towards a particular merchant.

* See a complete list of  reward credit cards >

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