Credit card companies offer various benefits to attract new customers and to keep existing customers happy. Some offer ongoing benefits for as long as you keep the account. In contrast, others offer sign-up bonuses and introductory offers before returning to standard rates, bonuses, etc. The better you understand these expected credit card benefits, the wiser choices you can make when selecting credit cards that best match your spending habits, lifestyles, and benefit goals. Here's what you need to know to get more from your credit cards regarding benefits and special offers.
Types of Credit Card Benefits
Most credit card benefits fall into one of two categories:
- Rewards
- Rates
Rewards programs vary in their offerings and methods of awarding points or miles. Each card has its own set of redemption requirements and payout options. Exploring the benefits available on a card is crucial to find the most suitable program for your needs. For example, if you frequently travel for business, a rewards card that provides free upgrades or personal travel based on points earned from business travel could be an excellent fit for you.
Some cards will offer rewards for signing up and meeting specific criteria during the first three, six, or even 12 months. Others will offer lower interest rates during an introductory period or balance transfer rewards for consumers who transfer balances. The key is to match the right credit card benefits to your needs and credit card spending preferences.
Rewards and Cash Back Benefits
For many, the appeal and cash back for purchases are all it takes to attract them to a new card. However, if you take the time to read the small print first, you'll discover that not all rewards and cash-back benefits are created equal. Some do not even put cash in their pockets. Instead, they issue statement credits which allow you to apply the "cash back" to your bill. Some of the rewards have tricky qualifications or hoops you must jump through. First, to earn the rewards. Then, to redeem them.
The key to maximizing cash-back benefits is to explore redemption options. You want to ensure their option works best for you, whether it's a statement credit, bank account deposit, etc. Also, check to see if there are set amounts you must have available to obtain your rewards. Some cards require specific points or dollar amounts before you can redeem your rewards, while others allow them at any time.
When it comes to rewards, make sure the options available are options you find appealing. For instance, if there is specific merchandise this applies to, make sure the merchandise is something you want, will use, or can give to others as a gift. Otherwise, it isn't worth it for you.
Travel Rewards
Travel rewards deserve an entire category to themselves. They can be pretty straightforward in some cases and infuriatingly complicated in others. Consider reading a few reviews if you're considering a card to use for travel rewards. Travel rewards can be for anything from car rental rewards, hotel rentals, airline tickets, or upgrades on any of the three. Read the terms and conditions and double-check about blackout dates, travel restrictions, and any other fine print associated with your rewards card. The key is to maximize the benefits while reducing any risks and expenses on your part. You want to ensure the airline in question, for instance, services your area and most areas where you travel (or wish to travel).
Introductory Offers and Sign-Up Bonuses
These are often the most lucrative and restrictive rewards – at the same time. They are lucrative because they aim to entice people to obtain and use a particular credit card. However, these offers often come with their restrictions, including limited time for introductory interest rates or the requirement to charge a certain amount of money on the card within a specified period. Take the time to learn about all the restrictions and choose a card that you can use to accomplish your goals first and foremost.
Balance Transfer Benefits
If you aim to pay off other credit cards (and save money in the process), this might be your card. Balance transfer offers allow you to transfer the balance from other high-interest-rate credit cards to a new credit card. The key is that the new card often carries a considerably lower interest rate (sometimes as low as zero during the introductory period). The potential downside is that you may face balance transfer fees and experience misleading advertisements for grace periods and other charges.
Additional Common Credit Card Benefits
There are various credit card benefits, from hotel rentals, car rentals, and airline tickets, to credit cards that allow you to earn points for new vehicles, concert tickets, theme parks, and more. There is likely to be something for everyone. In addition to knowing the rewards or benefits, you also need to learn how to earn the points, miles, or other "tokens" to receive those awards. Plus, you'll need to learn what kind of hoops you need to jump through.
Choosing a Credit Card Based on Benefits
The problem isn't choosing any reward card. The challenge is finding the right balance of price and value when choosing a credit card with benefits. Consider paying off the balance monthly, so you never pay interest and enjoy the benefits the way most credit cards never intended – genuinely free of charge.