In the last 20 years, rewards for using your credit card – starting with frequent flyer points and then growing from there – have become very much standard. Because so many of us get offered these cards by banks, it’s important to understand how credit card reward comparisons work.
The best way to compare credit card rewards is not to focus on a simple points-per-dollar measure. The more important thing to look at is how the points translate back into real dollar value. Here’s a simple way of thinking about it. Let’s say the reward you have your eye on is a $50 gift card. Credit cards reward comparison will allow you to figure out how many points each different card will require in order to get that $50 card.
For example, one card might require 10,000 points in order to get the $50 card. That means you’ll use 200 points to get $1 worth of value. You can then figure out how much you’ll have to spend to get those points – if you get 1 point per $1 spent, then the number’s the same – you’ll need to spend $200 to get $1 worth of gift card value. Another card offering the same points per dollar might be much better value if you only needed 7500 points to get the $50 card – that would mean 150 points for each $1 of gift card value.
Another important aspect of credit cards reward comparison is the type of reward.
The three main types of rewards are:
- Cashback: a cashback card rebates you an amount of cash in return for your spending. Some credit cards offer a percentage of your total spend back (typically 1 percent).
- Frequent flyer miles and travel rewards: airline rewards are perhaps the most popular, with points either allowing us to purchase seats or upgrades directly, or to be added to existing frequent flyer accounts. Again, the important aspect of credit cards rewards comparison is to see how many points you’ll need for a specific travel itinerary, and then calculate how much you’ll need to spend to get that number of points.
- Merchandise: most credit card rewards programs have access to a wide range of merchandise – exercise gear, kitchen equipment, DVDs and music are all typical.
It’s nice to be rewarded so make sure you compare credit card rewards to find out how you can cash in on your own rewards. Use the RateCity rewards comparison tool to carry out an extensive online search.