Credit cards are now being offered by scores of banks and other financial institutions in order to attract more customers. These cards offer a variety of promotional schemes and discounts to present and prospective customers. Of these the most attractive and talked about are the rewards offered by credit card companies in the form of cash or kind or redeemable points. Let us look into five of the most common rewards offered by credit cards.
Many cards offer frequent flier points or free tickets based on the usage frequency and volume on the card. To start earning such rewards, the card must be used for a certain minimum number and volume of transactions. Some companies offer an introductory bonus of a certain number of airline reward points to the applicant once he gets a new card. But one must be careful to redeem those points within the stipulated time and on the specified sectors, after which they lose their validity.
Some credit cards offer a free night at certain designated hotels after the user reaches a certain minimum number of points on his card. Generally these rooms will not be available on weekends and holidays, so the card holder must plan his stay accordingly. Like airline reward points, these types of cards are useful for people who travel frequently.
Some credit cards allow you to get the fuel costs reduced by partially or fully waiving the fuel surcharges every time you use the card at a gas station for refuelling your car or bike. Given the ever increasing price of fuel, this card is a smart move for people with high mileages on their bike or car.
This is a facility that most cards provide because the maximum usage of credit cards is at shops and restaurants. These cards offer progressively increasing slabs of discounts on purchases as the card holder keeps on increasing his purchases. These cards if judiciously used can make the pocket pinch much smaller when one goes on a shopping spree.
Instead of reward points, many credit card companies offer 2 to 5% cash back on purchases and timely payments. Suppose a card is offering cash back of 5% on a card whose bill for a particular month is $100. If the customer pays $100 within the last date of payment, then he will have a credit balance of $5 in the next billing cycle, which would be adjusted against future purchases.
At the time of applying for a credit card, a customer would do well to clearly understand the rewards program of that credit card and compare it with those of other cards, to derive the maximum benefit out of the credit card.