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Credit card companies offer many attractive reward schemes for their customers, to make the credit cards stand out among hundreds of them in the market. Because of the fierce competition, the credit card companies have developed a number of streamlined and specific reward schemes to suit the needs of wide range of customers.
The best credit cards offer a well structured reward scheme without increased interest rates or annual fee which negates the benefits of reward scheme. Most common reward schemes are listed below:
Airline rewards: These are popular among businessmen and frequent travelers, since the card gives free air mile points with every purchase made using the credit card. These air mile points can be redeemed to get free air tickets corresponding to the number of miles earned. It is important to choose a card that has multiple participating airlines, to have the freedom to fly to any destination, and still take benefits of free air tickets.
Hotel rewards: These rewards give free hotel stays as a standalone offer or even when combined with air ticket purchases. Participating hotels also give bonus free days of stay for every four days in the hotel. There might be a restriction of using these reward schemes in the non participating hotels, or certain destinations. These cards are most useful for frequent travelers.
Retail cards or Departmental Store cards: These cards are usually a joint venture between the participating departmental store and the credit card company. The card cannot be used anywhere else but the participating store. Attractive cash back rewards, points and instant discounts are rewarded to customers who sign up for these cards. They are very easy to apply for get approved. They work exactly like credit cards, but only work at specific departmental stores.
Gas rewards: This reward scheme provides rebates and cash backs for gasoline purchases. Most credit card companies have one or two participating companies, but these reward schemes are sure to provide benefits, because participating gas stations can easily be found in every locality. The rewards are also straight forward, and give instant cash backs every time the credit card is used in a gas station. It can also be coupled with departmental stores for purchases related to the automobile.
Point system: This reward scheme is very versatile in nature and gives maximum freedom to the customer in redeeming the rewards. For every purchase made using the credit card, the customer earns certain points depending on the amount. Sometimes, the customer gets a point for every dollar spent. These points are accumulated until they reach some specified lower limit, and they can be redeemed for direct cash backs, or purchases of any kind. Some credit card companies have added conditions to redeem the points. An upper limit of certain amount will be set for every billing cycle beyond which, any credit card purchase will not be rewarded with points. Also, there will be a time restriction to redeem these points, after which they become obsolete. These are inconvenient if the customers use their credit card for every small purchase on a daily basis.