Some credit card issuers charge interest for using their products, while others offer great benefits and incentives in the form of rewards. There are different forms of rewards you can earn by making purchases using your credit card and each type provides different benefits. Let’s take a look.

Definition
Credit card rewards are incentives that you earn when you shop or make reservations using your credit card. The common forms of such rewards are cashback, points, and air-travel miles. The form of reward that you earn depends on the issuer and the type of credit card you use.

Types of credit card rewards
There are three different types of rewards that you can earn: cash, points, and air-travel miles.

• Cash rewards
  This type is the most straightforward and easiest to understand. Some credit card reward programs allow you to use your cashback as a statement credit, which reduces the total bill. However, this transaction does not count as a cash reward. Other cash rewards give you the option to turn the reward into cash or direct deposit.
• Points rewards
  The rewards you earn are based on how much you spend. For example, you might earn 1 point for every $2 you spend using your credit card. Depending on your reward program, you may be able to redeem your points for gift cards, booking air tickets, or buying merchandise.
• Air-travel rewards
  Travel rewards are commonly known as “miles” and can be redeemed for booking airline tickets. Depending on the reward program and the type of credit card you use, the miles earned vary. Many issuers are in contract with airlines that allow you to earn points for that specific flight.

Comparison between flat and tiered rewards
Credit card rewards are structured in two different ways: tiered and flat rewards. In flat rewards, you earn the same percentage of cashback or points on all your purchases. For example, you may earn 2% or 2 points for every dollar you spend. In tiered rewards, you earn different reward amounts that are based on the categories. For example, if you are using a travel credit card, you will earn more points on booking tickets and earn fewer points for other transactions like groceries and fuel.

Ways to redeem your rewards
The process of redeeming your rewards is fairly simple. Every credit card company has an online portal wherein you can check the status of your reward points. To do this, you may create your account and log in. Once you have logged in, you can see the dashboard where you can find all the information such as total cashback earned or total points earned. There, you can find an option to redeem your points. You can choose to buy gift cards, merchandise, booking tickets, credit statement, and more. Select the reward, click on “Redeem,” and you’ll receive a code that can be used for your next purchase.

Where you can redeem your rewards?
These programs offer some of the many different options where you can spend your reward points:

• Book air tickets
  If you’re using a travel card, you can earn miles for every transaction you make for travel reservations. These air miles can be redeemed to buy tickets, get lounge access, and avail of special discounts.
• Discounts on gift cards
  Some cards offer a discount on certain stores. For example, if you opt for a Best Buy card, you will earn up to 5% cashback on all your purchases.
• Credit statement
  This allows you to use your cashback or points to pay your credit card bill. Wiith the help of a credit statement, you can reduce your overall bill.

Earning credit card rewards is a great way to save money and get some bang for your buck. You not only earn cashback and buy products at discounted rates but also get to enjoy lucrative benefits.