Guide to Credit Card Reward Programs

Credit Cards & their associated reward programs abound these days. It can be difficult to sort through the various options and discover the right program. Use these quick and easy tips to help find the right reward program.

The first question to answer is whether or not you carry a balance on your credit card. If you do, saving money on interest and finance charges should be your primary “reward.” Look for a card that has a low interest rate and finance charges. Many cards offer a 0% introductory rate, which can be a great thing to take advantage of while the low interest rate lasts. However, make sure to pay attention to when it will end and what the rates will be then.

If your credit card house is in order, congratulations! Now you can pick a credit card based on earning other types of rewards. There are two basic types of reward cards to choose from: cash back cards and point rewards cards.

Cash back cards offer a fixed percentage of total spending back as cash. Some cards mail you a check at the end of the month, quarter, or year, while others simply put it on your statement as a credit. Some people prefer receiving a check because it allows them to accumulate the rewards more simply. The Discover card is the tradtional cash-back card, but every type of credit card (Mastercard, Visa, Discover, American Express) is now available in a cash-back variety.

Rewards cards offer a fixed ratio of rewards to dollar spent on the card. There are many types of cards in this category, including cards earning frequent flier miles, points towards gift cards or merchandise, and points that can be converted to money in a very specific way. For example, the Citi Driver’s Edge Card for Students allows students to earn rebates toward the purchase of a car.

With either type of card, some important questions to ask are:

1. Is there an annual fee? If so, how much is it and does it outweigh the possible rewards of the card? Some people find that an annual fee is worth it for the rewards that they will earn. A classic example of this is the Starwood Preferred Guest Credit Card; folks that travel find the points earned towards free stays or frequent flier miles are well worth the $45 annual fee. A recent trend has been to offer the first-year of a credit card fee-free; this has been true with American Advantage Citibank Mastercards and US Bank Northwest Worldperks cards.

2. Where do you earn extra? Many cards offer extra rewards for shopping at certain places, such as grocery stores, drugstores, home improvement stores, or the co-branded company. Again, you should consider your own earning patterns. If you are about to remodel your house, a card that earns extra points for a home improvement store would earn you extra rewards. Some canny shoppers even carry multiple cards that they can use based the types of extra rewards offered.

3. How much do you have to earn before you can redeem a reward? Find out and compare how much you would have to spend in order to redeem the reward. A related question is: Are there any caps on earning rewards during a year? Many programs cap rewards after a certain level of spending. Are you likely to go over them, and should you consider a second card to get around these caps?

Do some research with the help of sites like and settle on a card that works for you!