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A Beginnerís Guide to Credit Card Reward Programmes

 article about A Beginnerís Guide to Credit Card Reward Programmes
The credit card industry is extremely competitive. To attract more business, lenders need to offer more to their customers than just a regular credit card. Many companies now offer generous rewards programmes that are a much better deal than regular credit cards.

How do Reward Programmes Work?
When you have a rewards credit card, you'll earn some sort of benefit just for using your credit card. Every time you buy something, the purchase will add points to your account that you can eventually exchange for cash or travel bonuses. These rewards can be quite lucrative especially since you collect them just for shopping as usual.

A good strategy with these programmes is to always pay off your purchases in full so you won't owe interest on your balance. If you can do that, then you're earning these extra rewards for free. While each reward programme is designed differently, you'll find four main types of programmes on the market today: cash back, airline, hotel, and low fee.

Travel Rewards
Airlines such as Virgin Atlantic often partner up with credit card companies to offer travel reward programmes. When you use one of these cards, your purchases earn air miles or points. Once you've earned enough miles or points, you can redeem them for free flights with the participating airlines.

These cards also sometimes give free perks with the participating airlines. Just by holding one of these cards, you may be eligible to check a free bag, get early check-in, receive discounts on inflight purchases, and receive automatic status with the airline.

Cash Back
One of the simplest ways to earn rewards is through a cash back rewards programme. Every time you buy something on one of these cards, you get some of the money back. For example, it's common to see a 1% cash back rate. Once you've earned enough on your account, you can transfer the money out to your bank account or use the rewards to pay down your card balance.

Some programmes offer bonus categories that earn cash back at a higher rate. For example, you might find a card that earns 5% at petrol stations and 1% on everything else. A good strategy to maximize cash back is to find a card that offers bonuses for things you buy regularly. Make sure you shop around for the best programme for you, using a free system to compare lenders.

Hotel Rewards
Most major hotel chains also participate in credit card reward programmes. When you use these cards, you'll earn points that are good for hotel rewards. Once you've earned enough, you can redeem them for free nights at the participating hotels. With these cards, you also could receive hotel bonuses like late check-in, status with the hotel chain and free access to hotel gyms and Wi-Fi. These cards work well if you especially like a certain line of hotels.

Low Fees
Another type of reward you could get from credit cards is low fees. While these cards don't give you something, the monetary benefit is you end up paying less in interest and fees. One common bonus is an introductory 0% APR. If you sign up for one of these programmes, you can keep a balance on your card and not owe any interest for the introductory period which is typically around a year. This works great if you are planning on making some big purchases in the near future.

There are also cards that charge low interest rates and card that avoid fees like missed payment fees, foreign transaction fees, or overdraft fees. If you want to keep your costs to a minimum, these programmes could be worth considering.

Qualifying
Qualifying for a credit card rewards programme is the same as qualifying for a regular credit card. You apply and the credit card company will make a decision based on your credit history and income - you can check your credit history here. Rewards credit cards are a bit more difficult to qualify for than normal credit cards. Generally, the more generous the rewards programme, the harder it will be to qualify.

Some cards also charge an annual fee. You'll need to pay this fee each year to remain in the programme. Once you qualify for a card, there's not really much else to do. You'll be participating as long as you keep your card active.

A rewards credit card can be an easy and effective way to save money on your purchases. Between these choices, you should be able to find one that makes your life a little easier.


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