How Do Credit Card Rewards Systems Work?

Hotel stays, weekend getaways and free gas are just a few of the things you can earn with credit card rewards. These programs reward you for every dollar you spend, often saving you money on travel and other expenses. With so many different reward programs to choose from, it’s not always easy to spot the best ones. The key is to select a card that offers rewards that give you what you need in the present and will continue to give in the future. Read on to learn everything you need to know about credit card reward programs and how they can work for you.

What Are Credit Card Rewards?

Credit card rewards are bonuses you earn every time you make a purchase. All major credit card companies offer a wide range of reward programs. Rewards vary by the type of credit card and the card limit. Some award points redeemable for frequent flyer miles, while others reward cash. Most fall within the following three categories:

Cash Rewards

Cash back reward programs either offer cash back on all purchases, a percentage back when spending a certain amount or a combination of both. In some cases, you can earn anywhere from a few hundred dollars to several thousand dollars by spending a required dollar amount within the first few weeks or months of opening an account.

Point Rewards

Point reward programs give you points every time you use your credit card. The number of points you earn varies, depending on the amount you spend, where you spend it and what you purchase. You may also receive thousands of points upfront by spending a specific dollar amount within a timeframe specified by the credit card company. Credit card issuers offer a wide variety of point programs to earn everything from movie tickets and dinner to stays at five-star hotels. Point values are often just cents on the dollar, but you can redeem points for cash value or toward other purchases in some cases.

Travel Rewards

Travel reward programs give you points, free miles or cash back for every dollar spent, miles flown or gas tank refilled. You can redeem these reward points for travel, travel-related expenses or other perks, depending on the credit card issuer.

Travel Rewards with Branded Credit Cards

Travel reward programs associated with branded credit cards offer an assortment of perks at a specific retailer or brand. For example, you can redeem flight reward points and frequent flyer miles on major airlines to purchase flights, preferred boarding privileges and discounts on in-flight purchases. Credit cards linked to specific gas stations, such as the Speedy Rewards Mastercard, earn you Speedy Reward Points you can use for food or gas with every purchase made at Speedway.