Welcome to the world of credit cards! When used wisely, credit card rewards can help you get more out of your everyday purchases. Whether you are getting cash back on your groceries or collecting travel points for your next vacation, credit card rewards can be a game-changer.
The best credit card for you will vary based on your financial goals. Regardless of which credit card you are using, it is important to use your credit card responsibly.
How Do Credit Card Rewards Work?
When you make purchases with your credit card, you are given “rewards” as an incentive. Reward types include cashback, points, and miles:
Cashback: a percentage of your purchase given back to you (free money).
Points: redeemable for benefits including travel discounts, gift cards, and more.
Miles: redeemable for airline tickets or other travel-related expenses.
For every dollar spent on your credit card, you are getting rewards back. That’s a win-win!
In addition to earning rewards by spending on your card, you are typically given sign-on bonuses for opening up your credit card. Welcome bonuses can increase the value of your credit card for the first year. Bonuses can include no annual fees for a year, or cash-back for opening your card or spending a certain amount.
How to Find a Credit Card with the Best Rewards
The perfect rewards credit card for you will depend on your lifestyle and financial situation. Ask yourself, do you tend to spend more on groceries, dining out, or travel? Are you a frequent flyer or do you prefer road trips? Understanding what rewards would best complement your lifestyle can help you find the perfect card for you.
Consider your goals when it comes to your credit card rewards. Are you looking to earn more on your spending with cashback or save up for a dream vacation? Knowing what you want out of a credit card rewards program can help tailor your search.
Once you know what type of rewards you are interested in, Navient Marketplace can help you compare credit cards from different credit card issuers. Search by reward type and compare annual fees, welcome offers, and the rewards rate. Navient Marketplace makes it easy to find a credit card with your goals in mind.
Different Types of Credit Cards Have Different Rewards
Now that you know about the different types of rewards, you may be wondering how different credit cards work. Let’s explore the different types of reward credit cards.
Travel Credit Cards
Travel credit cards are best for those who enjoy traveling and can take advantage of travel rewards. Your points or miles can be redeemed for flights, hotel stays, rental cars, travel experiences, and more.
If you are interested in a travel credit card, there are two different card types to choose from:
Co-branded cards are specific to a particular airline or hotel chain. When you earn rewards using a co-branded card, you can only redeem your rewards with that chain. Co-branded cards can offer higher rewards rates and exclusive perks such as priority boarding. However, this type of travel card limits your flexibility to travel with different chains and earn rewards. This type of card may work for you if you prefer to travel with one brand.
General travel cards offer a wider range of rewards and benefits for travel-related expenses. They are not tied to a specific travel brand and can be used across different airlines and hotels. This provides greater flexibility and more opportunity to earn rewards. However, unlike with co-branded cards, you likely will not have airline specific perks such as priority boarding or airport lounges.
When looking for a travel credit card, you should consider airline partnerships, redemption flexibility, and annual fees. Some travel credit cards offer perks like airport lounge access and travel insurance. If you are a frequent traveler, using a travel credit card may be of great value.
Points Credit Cards
With a points credit card, you earn ‘points’ for spending money on your card. Typically, you will earn at least 1 point per dollar spent on eligible purchases. Different cards will have different monetary values of their points. Some cards may offer more points for certain purchases like travel or specific merchandise.
You can redeem points for various rewards, including travel, gift cards, merchandise, statement credits, or cash back. With such a wide variety of perks, point credit cards may be perfect for you if you like to have options and flexibility with your rewards.
Some potential downsides of this type of card include annual fees and high interest rates. While earning points can help you get more out of your spending, accruing interest on your card will negate the value of your rewards.
While searching for a points credit card, look at the card’s point value, any restrictions on point redemption, and point expiration dates. Cards will also have different sign-on bonuses, typically offering large amounts of points when you first open your card.
Retail Credit Cards
Retail credit cards are offered by retail stores or online retailers. Retail chains may have credit cards that work only at their stores, or major credit cards which will work everywhere. Rewards for retail credit cards are usually discounts, cash back, or points specific to the retailer.
This type of credit card is used to incentivize loyalty with its customers. If you frequently shop at a retailer and can take advantage of the discounts and rewards, it may be worth getting a retail credit card. However, remember to look at the terms and conditions. Retail credit cards often have higher annual percentage rates than other credit cards.
Other Types of Rewards
Other more niche credit cards include:
Cash Back Credit Cards: Gives cardholders a percentage of their purchase back as a cash reward.
Dining and Entertainment Credit Cards: Best for individuals who frequently dine out, go to concerts, or other types of entertainment. These cards may have higher reward rates at restaurants, bars, and entertainment venues.
Gas Rewards: Offers increased rewards at gas stations. Some cards may also offer discounts on car maintenance or other car expenses.
Credit Card Best Practices
Credit card rewards can have great benefits when used responsibly. Remember to follow these tips while earning your rewards:
Pay Your Balance in Full and By the Due Date: Paying your entire balance on time each month avoids interest and late fees. This practice can also raise your credit score by showing responsible credit usage. Get the most out of your rewards without any interest or fees and look out for your credit history.
Understand the Rewards Program: When you get a new credit card, make sure you know how earning and redeeming your rewards works. This will help you make the most of your rewards. Keep an eye out for expiration dates or special promotions.
Monitor Your Spending and Stay within Budget: Keep track of your spending and credit limit. Reviewing your credit card spendings every month can help understand how you spend your money and budget for the future.
Regularly Review Your Credit Card Terms: Credit card terms can change from when you first open your card. Stay on top of any changes to interest rates, fees, or the rewards program.
Find a Great Credit Card Today with Navient Marketplace
With Navient Marketplace, finding great credit card offers has never been easier. Search by reward type and compare card offers from different card issuers all in one place. Apply for a credit card today!