Rewards Credit Card Tips
Some credit cards let you earn rewards like miles, points or cash back when you make certain types of purchases with your card. These type of cards are known as rewards credit cards.
When you make a purchase at a store or other merchant and pay using your credit card, the store pays the credit card company a merchant fee. Because the credit card company makes money every time you use your credit card to pay, it's always on the lookout for ways to get you to use your card to pay more.
Letting you earn rewards every time you make a purchase with your card is a good way to encourage you to use your card more. You save by earning rewards, the bank or credit card company makes money off merchant fees, and the merchant makes a sale that they might not have made if they required cash.
Credit Card Rewards Programs
A payment card rewards program is a scheme that lets you earn rewards when you make certain purchases using your card, and then redeem those rewards for something you want.
Earning points on all your spending is great. But the way you can redeem those points makes a big difference in how much you are really getting for your money. When you pick a rewards credit card, it's important to have some understanding of the rewards program that powers it.
Some rewards programs are pretty simple, because you always earn rewards when you make certain purchases (at your favorite shop, for example) or because the rewards you earn can only be redeemed for one thing. For example, a rewards program may only let you redeem rewards for gift cards, or for meals at a certain restaurant.
Other rewards programs are more complicated because they give you more flexibility. Some programs let you earn rewards on many different kinds of purchases, or let you redeem rewards for many different things like travel, cash, merchandise, and much more.
Rewards programs are not all equal, and the points (or miles) you get in one program may get you a lot more (or less) than the points you earn using a card with a different program.
Here's a quick summary of the major rewards programs in the US:
1. Chase Ultimate Rewards®
This solid rewards program from Chase is used by popular rewards cards like Chase Sapphire Preferred® Card and provides a lot of flexibility in how you earn and redeem your rewards. You can earn rewards when you make purchases using an eligible credit card from Chase, as well when you shop on Shop through Chase SM at more than 200 popular retailers online.
When it comes to redeeming rewards, you have several options. You can redeem for merchandise, unique experiences (concerts, sporting events and more), and even redeem for cash back at the rate of $.01 for 1 point into your Chase checking or savings account.
But the real power of this rewards program is reserved for travelers. You can redeem points for flights, hotel accommodations, car rentals, cruises and activities.
When you redeem points for travel booked through Chase Ultimate Rewards®, you get 25% more then if redeemed for cash. For example, you can get a $625 flight for just 50,000 Ultimate Rewards points (worth $500 if redeemed in other ways) if you redeem through Chase Ultimate Rewards®. When redeeming points for travel, you can also combine points with cash to make up the difference.
You can move points from another Chase card that earns Ultimate Rewards, as long as those cards belong to you or your spouse (or domestic partner). All things considered, this is a flexible rewards program with a lot of travel perks.
2. Citi ThankYou® Rewards
This rewards program from Citi® lets you earn ThankYou® points using rewarding Citi cards.
Points can be redeemed towards online bill payment, merchandise or travel bookings. You can also redeem points as donations to charitable causes. One nice perk is that you can redeem points as a statement credit to cover purchases you make with an eligible Citi credit card that fall under the gas, dining, entertainment, utility bills, drug store and grocery categories.
You can also give your points to other ThankYou® members. If you like to redeem rewards as cash, you can redeem Thankyou points for cash in $50 or $100 denominations. On the whole, Citi ThankYou® Rewards is a very flexible and rewarding program.
3. Capital One® Rewards
This is a pretty simple and straightforward program. Unlike other rewards programs that use points which can then be redeemed for various things, this program lets you earn either cash back or miles, depending on which Capital One® credit card you use.
Miles cards like Capital One® Venture® Rewards Credit Card and Capital One® VentureOne® Rewards Credit Card earn travel rewards, while cash back cards like Capital One® QuicksilverOne® Cash Rewards Credit Card earns cash back.
The miles you earn can be transferred to participating airline partners or they can be redeemed as a statement credit towards travel purchases you make at a rate of 100 miles to $1 in travel purchases. That means you have a lot of flexibility in the way you redeem miles for travel, as you can pretty much just book travel the way you want, and then redeem miles for a statement credit to cover the purchase.
You can earn unlimited rewards with this program. Cash back can be redeemed for a check, statement credit, or gift card, so you do have some options. A nice perk is that you can redeem any amount of cash back, anytime. Most other programs only let you redeem rewards for cash back in certain denominations.
4. American Express Membership Rewards®
This is a very comprehensive rewards program from American Express that may appeal to you if you prefer redeeming your points for more exclusive rewards. You can book travel including flights, cruises, vacation packages and hotel accommodation using your points, or a combination of points and cash at amextravel.com.
You can also redeem points for rental car certificates (Avis, Hertz, Enterprise), Express Rewards prepaid gas cards, or even towards a Mercedes Benz service, lease or purchase.
One of the strong points of this program is that you can redeem points towards purchases on site at certain American Express partners.
This program also offers a long list of events and experiences that you can redeem points for. If you prefer gift cards, you will have a lot of different gift cards to choose from when it comes time to redeem your points. Points can also be redeemed towards Ticketmaster (event tickets) and Telecharge (Broadway and off-Broadway events) purchases.
You can also redeem your points towards Uber services right in the Uber app (100 Membership Rewards® points = $1 charged by Uber). If you have at least 1,000 points in your account, you can redeem points toward eligible charges (retail, dining, groceries and more) made with your eligible American Express card. That gives you a lot of flexibility as you can redeem points towards the cost of certain purchases you make.
5. Discover Cashback Bonus
This rewards program is used by Discover cards. You earn rewards as a Cashback Bonus that you can redeem in different ways. This program works very well if you like redeeming rewards for cash. You can redeem for cash anytime, starting at just 1 penny.
Most other programs only let you redeem for cash in set denominations, so you may have to save enough points for $50 or $100 before you can redeem. But that is not the case with this program, as you can redeem any amount of points you want and get cash.
You can also use Cashback Bonus points to pay at the counter when you shop at certain retailers. The Pay with Cashback Bonus lets you use your cash back to pay at online stores, including Amazon.com.
You also get very good value by redeeming your Cashback Bonus points for gift cards (starting at $20), as you can redeem your Cashback Bonus for higher value gift cards from many Discover partners. You can also donate your rewards to charitable organizations.
6. Upromise® By Sallie Mae®
If you want to earn rewards that you can redeem towards education, then you will probably find this rewards program interesting. The program works through a huge network of partner merchants.
You can earn 5% (or more) cash back when you make eligible online purchases at over 850 popular retailers (Groupon, Sears.com, Macys.com, Staples.com, and more) when you shop through Upromise.
You also earn 5% cash back at thousands of Upromise partner restaurants. Another way to earn up to 5% cash back for college is to book travel with Travelocity, Expedia, Budget and other travel merchants through Upromise. You can use any Visa or Mastercard credit card to shop through Upromise, but you will have to link your card to your Upromise account.
This rewards program from U.S. Bank lets you earn FlexPoints that can be redeemed for travel, gift cards, statement credit and merchandise (including Apple®, Sony®, Bose®, North Face® and more). This program is exceptionally rewarding when you redeem for travel.
You can redeem for hotel accommodation, car rentals and cruise lines. But you get exceptional value when you redeem your FlexPoints for airline travel because FlexPerks works with a tier system.
For example, 20,000 points can get you up to $400 in airline ticket travel, because the first tier (20,000 points) can be redeemed for flights that cost up to $400.
The second tier (30,000 points) can be redeemed for up to $600. That means you can basically double the value of your points when redeeming this way.
There are 14 different tiers so you get a lot of flexibility. Of course a $450 flight will already fall under the second tier, because it's over $400. But you can pay part of your flight with points and charge the difference to your card, so you always get the best value.
More Than One Program
Some credit card companies have more than one rewards program, and the rewards you earn will depend on which card you have.