Rewards credit cards have become increasingly popular in recent years, as they offer consumers the opportunity to earn rewards on their everyday purchases. By simply using a rewards credit card for your regular spending, you can accumulate points, miles, or cash back that can be redeemed for a variety of rewards, such as travel, gift cards, merchandise, and more. In this article, we will explore what a rewards credit card is, how it works, how to choose the right one for you, what credit score you need to qualify, and how to maximize your rewards.
What is a rewards credit card?
A rewards credit card is a type of credit card that rewards you with points, miles, or cash back when you make purchases with the card. These rewards can typically be redeemed for a variety of benefits, including travel, statement credits, merchandise, gift cards, and more. Rewards credit cards come in two main categories: travel credit cards and cash-back credit cards.
Travel credit cards typically earn points or miles that can be redeemed for travel-related expenses, such as flights, hotels, and rental cars. These cards may also offer additional travel benefits, such as airport lounge access, travel insurance, and concierge services. Cash-back credit cards, on the other hand, offer a percentage of cash back on your purchases, which can be redeemed as a statement credit, direct deposit, or a check.
How to choose a rewards credit card
When choosing a rewards credit card, it is important to consider your spending habits and preferences. Think about what you spend the most money on and what type of rewards would be most beneficial to you. For example, if you prefer cash back and want flexibility in how you can redeem your rewards, a cash-back credit card may be the best option for you. On the other hand, if you travel frequently and want to earn points or miles that can be used for flights and hotels, a travel credit card may be more suitable.
It is also important to consider the annual fee associated with the card. Some rewards credit cards charge an annual fee, which can range from $0 to several hundred dollars. Cards with higher annual fees often come with additional perks and benefits, such as travel credits, airport lounge access, and elite status with airlines and hotels. Evaluate the potential rewards and benefits against the annual fee to determine if the card is worth it for you.
What credit score do I need for a rewards card?
Most rewards credit cards require a good to excellent credit score to qualify. A good credit score is typically considered to be 670 or higher, while an excellent credit score is usually 800 or above. However, the specific credit score required to qualify for a rewards credit card can vary depending on the card issuer and the card itself. Some premium rewards credit cards may require an excellent credit score to be approved.
If your credit card application is declined, you may have the option to call the card issuer’s reconsideration line to request a reevaluation of your application. Keep in mind that some cards have application restrictions that could prevent you from being approved, regardless of your credit score.
How to maximize credit card rewards
One way to maximize your credit card rewards is to use multiple rewards credit cards to take advantage of bonus earnings in different spending categories. For example, you could use one rewards credit card that offers bonus points on dining and groceries, and another card that earns bonus points on travel and gas purchases. By strategically using multiple rewards credit cards, you can maximize your earnings and redeem your rewards for a variety of benefits.
It is also important to pay attention to any bonus categories or promotions that may be offered by your rewards credit cards. Many cards offer rotating bonus categories that change every quarter, allowing you to earn additional rewards on specific types of purchases. By keeping track of these bonus categories and planning your spending accordingly, you can earn even more rewards on your purchases.
In conclusion, rewards credit cards offer consumers the opportunity to earn rewards on their everyday purchases, which can be redeemed for a variety of benefits, including travel, cash back, merchandise, and more. When choosing a rewards credit card, consider your spending habits, preferences, and the annual fee associated with the card. Aim for a good to excellent credit score to qualify for most rewards credit cards, and consider using multiple cards to maximize your rewards. With careful planning and strategic spending, you can make the most of your rewards credit cards and enjoy the benefits they offer.