Reward Credit Cards

What Is A Reward Credit Card?

Reward credit cards are credit cards that offer you an incentive or reward for every time that you spend using your credit card. The type of reward depends on the lender, but it will usually be based on the amount spent and will come in the form of cash back, rewards points or air miles to mention just a few.

There are many types of gifts and incentives offered so if opting for a a reward credit card look for a lender that gives you the reward most suitable for your needs.

Why Do Lenders Offer Rewards?

The simple answer is to make you spend more money. The more money that is spent the better, especially as the interest rate is usually higher than the standard credit card rate.

Credit card issuers know that many people who have reward cards will not pay back the balance before interest is charged, also they take a small percentage from the retailer for the transaction when you use your reward credit card.

Is A Reward Credit Card Right For Me?

The only people that reward credit cards are usually suited to are those who always pay off their balance in full each month before incurring any interest charges. The reason for this is that the minute you start paying interest it can negate the rewards benefit.

If you are disciplined and financially secure enough to be able to pay off your balance in full then reward credit cards may be ideal. The more you spend the more rewards you get, if you do all your monthly spending on your credit card, and pay it off at the end of each month you could benefit in more than one way.

You would benefit from the rewards being greater because you spent more, also your money would remain in your bank for longer allowing you to increase the amount of interest you receive on your bank account. In addition to this you would benefit legally from the protection of the "Section 75 Consumer Credit Act" where purchases over £100 are protected providing part of the purchase was made on your credit card. Ask your credit card provider for more information on this, or an independent financial advisor.