Credit card perks can be valuable ways to earn rewards by spending money you were already going to spend. There are a few different types of rewards you can get though and it can be pretty confusing trying to navigate all that on your own. If you’re interested in getting a new credit card you’ll still need to do some research but this can be a good place to at least get started.
There are three main credit card perks that are available in the US. Cash back programs, airline mileage programs, and point programs.
They all work pretty much the same way. You will receive more rewards by using the card more and spending more money. You can only rack up rewards by using your card to purchase things. Sometimes you can earn more rewards by purchasing items in certain categories that vary depending on the type of card you have and who your credit line holder is.
Credit card perks can be valuable ways to earn rewards by spending money you were already going to spend. You can get a few different types of rewards, though, and it can be pretty confusing trying to navigate all that on your own. If you’re interested in getting a new credit card, you’ll still need to do some research, but this can be a good place to at least get started.
There are three main credit card perks that are available in the US: cash back programs, airline mileage programs, and point programs.
They all work pretty much the same way. You will receive more rewards by using the card more and spending more money. You can only rack up rewards by using your card to purchase things. Sometimes you can earn more rewards by purchasing items in certain categories that vary depending on your card type and who your credit line holder is.
The first credit card perk I’ll review is the cash back card.
From the name alone, you would think that your bank or credit line is giving you free money whenever you make a purchase. The commercials certainly make it seem like that, anyway.
You can look at it that way, but more accurately, it’s like you get a discount on certain purchases when you use that card. Most cashback cards come with restrictions or only have cashback rewards on certain purchases. The exact terms will depend on your specific card, but generally, you’ll get somewhere between a 1.5% and 5% discount on things like food or gas.
At the end of your billing cycle, you’ll receive a lump sum of all the cashback rewards you earned during that cycle.
Basically, it’s a rebate. You get a little bit of money back after spending a lot more.
Why you might not want one
Having a little discount for buying stuff, you were already going to get is definitely a nice way to save some money but cash back cards aren’t really free. They can have high annual fees or higher APRs.
Not all cash back cards have fees and high-interest rates, of course (and if you pay your bill on time, interest rates aren’t an issue in the first place), but you’ll still want to do your research before getting one.
Cash back cards are pretty good for making repeated purchases, though. They can be a nice little bonus to treat yourself or put away in savings just for buying things you were already going to get.
The best way to describe airline points or airline miles regarding credit card perks is that they’re sort of like prize tickets at an arcade.
Using your credit card to buy things will earn you tickets (or miles). You can then redeem those at the prize counter (or, in this case, at an airline). The more points you have, the better your prize will be. Most of the prizes you can get will be free flights to various destinations.
One mileage point does not directly translate to one free actual mile traveled. Most of the time, you’ll get one mileage point for every $1.00 spent, but depending on your card, that can change. Some cards have better rewards than others or offer more miles for purchases related to travel.
Why you might not want one
Racking up miles for free flights sounds like a pretty attractive credit card perk. And it can be worth it… If you’re already going to be spending a lot of money.
It usually takes a lot of miles before you can redeem them for flights, like at least 6,000 miles just for a short one-way domestic flight. Longer one-way flights can cost upwards of 20,000! That’s before a return trip is even considered, too, and forget traveling internationally.
Credit cards with mileage programs, like cash back cards, can also have high annual fees and interest rates. Sometimes your miles can even expire unused! Granted, they usually won’t expire out of nowhere. Usually, you’d need to stop using your card for 1-2 years straight.
Unlike cash back cards, the rewards you get from mileage programs are usually restricted to travel-related costs. Most programs will want you to spend them on flights. You can sometimes also use them for other travel-related expenses like hotels or car rentals though.
The bottom line is that you’ll probably not see a lot of return on your investment with a mileage program unless you can use the card a lot. You’ll also want to compare your options before applying for them so you can get the best perks.
Less restrictive but with the same general idea are credit cards with non-airline affiliated points programs.
They work pretty much the same way. You use the card to buy things and rack up a certain number of points. Points are based on the money you spend. $1.00 usually means 1 point, just like the miles programs we reviewed earlier.
The main difference between airline miles and points is that points are not directly tied to travel rewards like miles are. The types of rewards you can get after redeeming your points will vary. Usually depending on the type of card you have and who you have it through. You won’t be limited to just airline tickets or other travel expenses though.
Why you may not want one
Cards with point programs have pretty much the same drawbacks as those with airline miles programs. It can take a ton of points to get anything good out of them, and they’re not worth it if you don’t use them a lot.
Credit cards attached to any reward program will usually have higher annual fees and interest rates. This is so that credit line holders can recoup the costs of their rewards programs from those who don’t use them often.
At the End of the Day
Credit card perks are great if you’re going to use your card a lot or if you know you’ll have a lot of expenses coming up soon. You may as well get something out of spending money you were already going to spend.
If you don’t plan to use it often, you shouldn’t get one. It’s just not worth it.
Getting a card with a good rewards program can also be hard if you don’t already have good credit. This means they aren’t great for people getting their first credit card, either. It’s also easy to get duped into sub-par rewards programs where the rewards are worth less than the amount of points you need to spend to get them.
Do your research and be smart about it before you sign up for a credit card. Sign-up bonuses can make some cards and their rewards look a lot more attractive than they actually are.
If you’re interested in signing up for a credit card, but you’re worried your credit score is too low, don’t stress. We’ve got some advice for you all about that here.
Which credit card perk do you think is the best?