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What are the different kinds of credit card rewards programs?

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Whether you are looking for cash back, free hotel stays, free flights, gift cards, or merchandise, there’s a credit card rewards program just right for you. You’ll find credit cards geared toward frequent flyers, shoppers, students and business owners – but there are really three main types of cards:

  • Cash back cards – These cards give a percentage of cash back on each purchase. Typically, they give 1% on all purchases – that is the standard rate. Many of them offer extra cash back in rotating categories that change each quarter. Discover cards, Chase Freedom cards, and the Citi Dividend Preferred card all work this way. Every three months they give 5% cash back in a certain category, such as movies and restaurants, online shopping, gas and fast food, department store purchases, etc.  Most cash back cards also offer the option of shopping through an online mall to earn a higher percentage of cash back on purchases.
  • Travel rewards cards – Offerings include airline co-branded cards geared toward frequent flyers or hotel rewards cards that award points in a hotel loyalty program. Often you can use the miles you earn (they might also be called points) toward either hotel stays or flights. In fact, some cards marketed as travel cards let you redeem rewards for merchandise or cash as well as travel rewards.
  • Points cards – Cards like the Citi ThankYou card give points instead of cash back or miles. One point per dollar is the equivalent of 1% cash back, so keep that in mind when you look at different reward card options. Many points cards let you earn up to five or even 10 points per dollar on certain purchases, and also offer online shopping portals to earn more points. Points can be redeemed for gift certificates (usually the best value), cash, merchandise or even charitable donations.
All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.
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