KNOWLEDGE OF CARD PROGRAMS
PROVIDES THE BEST REWARDS
Wondering how to get cash back or
free airline tickets by using a debit or credit
card? With the variety of card rewards
programs on the market and the restrictions
that may accompany them, it’s important to
know the details and choose the card that’s
right for you.
WHAT ARE REWARDS?
Rewards are incentives to use a debit
or credit card to make purchases. Card
rewards programs share several key charac-
teristics:
• Rewards typically have units of value
such as cash, miles, or points.
• Rewards can be accumulated over time
and are subject to different terms and
conditions.
• Rewards are often based on a
percentage of your spending and
can vary by what is spent in different
categories. For example, you might
get 5 percent back on gas purchases
with your card. There may also be a
lump-sum rewards bonus for spending
a certain amount within a defined
period of time.
Card rewards can take a variety of
forms, but most fall within these major cate-
gories:
• Cashback, which you can redeem for a
statement credit or a cash payment.
• Points, which you can use to purchase
goods and services, including travel,
•
gift cards, and discounts or rebates on
goods or services, or convert to a cash-
back reward.
Co-branded card rewards, in which a
card issuer partners with a business,
such as a retailer or airline, to allow
you to earn rewards in the business’s
rewards program.
HOW DO REWARDS WORK?
Earning
Earning rewards is generally deter-
mined by your spending volume. In some
cases, you earn a fixed quantity of miles,
points, or cash in proportion to the amount
you charge to the card, like one point
per dollar spent. In other cases, you earn
according to different conditions, like
making purchases at a particular merchant.
The other major form of earning is the
sign-up bonus, which is meant to encourage
you to both sign up for the card and use
it right away. Sign-up bonuses give you a
substantial lump of additional rewards, but
to receive the bonus, you must purchase
a certain amount with your card within a
specific time period, usually no more than a
few months.
Redemption
Once you have accumulated your
rewards, you will want to exchange them for
the best value. Rewards programs are gener-
ally categorized by different types of goods
and services available. In some cashback
and co-brand rewards programs, redemp-
tion can occur automatically when you have
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