Due to the fact that credit cards are popular financial vehicles, it is not uncommon for companies to offer their clients rewards and cash-back deals as incentives. In recent times, such plans have become very popular. As the terms hint, there are various types of rewards that can be offered. To understand how these systems work, let us take a closer look at the different varieties available.

The Types of Cash-Back and Rewards Credit Cards

Most programmes can be broken down into two different sectors. The first is known as a cash-back system. From a general standpoint, the cardholder will receive anywhere between one and two per cent of the total number of purchases (net expenditure) each year. This may be credited to the card or given to the client separately (in the form of a cheque, for example).

The second type is a general “rewards” system. In this case, any benefits will be enjoyed when the customer settles their monthly statements on time. The most common rewards are “points” that can be viewed as credit towards a certain purchase (such as a product offered by the company itself). Airfare miles are another popular option. As opposed to cash-back schemes, rewards can accrue on a monthly basis. Thus, the customer can experience substantial benefits over time.

Things to Take into Consideration

It should be apparent that different credit card providers will offer equally different rewards programmes. From the point of view of a consumer, the benefits of these strategies depend upon the usefulness of the scheme in question. For example, an international businessman would greatly benefit from frequent flyer miles; these will equate to a substantial amount of savings over time. The standard consumer may be better taking advantage of the “points” system, as the ability to obtain high-quality products for free can be a reality. Of course, general considerations such as associated interest rates and credit limits should be examined carefully.

How to Get the Best Deal

Each credit provider will offer its own set of cash-back or reward programmes. So, a simple comparison is likely the best way to appreciate the amenities that can be enjoyed. However, some basic metrics of the company itself still need to be taken into account. Some of the most important will include (but are not limited to):

• The associated interest rates (as mentioned earlier).
• The number of locations that the card can be used.
• How long it will take to accumulate a certain amount of points.
• The percentages associated with any cash-back programmes.

These schemes are quite advantageous to the cardholder. Appreciating their mechanics can offer consumers many unique benefits.