Over the last few years, you may have noticed a significant rise in the number of reward credit cards on the market. This is no coincidence! There has been a general increase in the number of ways in which customers can earn money, or rewards, for their purchases. This has proven to be beneficial for the end consumer - and this is what we’re going to look at.
Just what is a reward credit card?
The typical system works in such a fashion that you get rewarded for your loyalty to a company. Whether this be my taking out a subscription or shopping there regularly, a reward credit card encourages the card holder to maintain or increase their activity in a certain chain of retail.
For example, you may have heard of the Tesco Clubcard. This is an extremely popular card for people who regularly do their shopping at Tesco, and by talking out the loyalty reward scheme, they can gain a return on the money that they spend shopping with the company. Tesco benefit from having your regular custom, and you benefit from getting a cashback return.
Some companies will offer a special 0% purchases deal to compliment their store loyalty packages. These are usually offered with an introductory period where customers can take full advantage of the interest-free rates, and providing they make the repayments in the given time period, the cards can be put to perfectly good use.
If you fail to keep up with your repayments on the debts, you’re likely to find yourself lumbered with a hefty APR.
But they’re not called reward credit cards without due reason and the good news is that these packages are generally pretty well adapted for the modern day customer. If you’re a regular customer at a particular store, you can save a great deal by signing up to their credit card schemes. Many are fully fledged credit card accounts and when combined with the loyalty scheme, you can enjoy the luxury of interest-free purchases and cashback at the end of the year.
Cashback rates vary quite dramatically. Exact figures may depend on the type of product being purchased, or the provider’s individual account policies. You can expect between 1% and 3% in cashback from your purchases. Does it sound a lot? Not really. But the whole point of a reward scheme is that the pennies soon turn in to pounds. You’ll rack up money on your reward credit card and in some instances, it’s even possible to gain interest discounts based on how active you are with the store in question.
Don’t make the mistake of spending for the sake of cashback gain though. It should go without saying that as wonderful a creation as cashback is, it isn’t fantastic enough to justify purchasing something that you don’t actually need or want! Think before you buy, and avoid cashback motivated purchases!
