Rewards credit cards

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What is a rewards credit card?

A rewards credit card is designed to help you earn when you use it for normal everyday spending.

Each time you use your card to make a payment you’re rewarded with points that will give you discounts, or you’ll receive a percentage back of the amount you spend.

The more you spend, the more rewards you’ll receive.

Some credit cards provide more rewards when you use them to spend money on certain goods, services or retailers, like supermarket shopping or buying flights.

Person using rewards credit card to make purchase in a shop

What types of rewards cards can I get?

There are several types of rewards credit cards available, designed to appeal to different people and their spending habits.

The main types of rewards cards include:

Cashback credit cards

These cards reward you by paying back a percentage of what you spend on the card - usually between 1% and 5%.

You might get a flat cashback rate across everything, or a different amount depending on where you shop. The cashback is credited to your balance either monthly or annually.

Retail points credit cards

Typically these cards are linked to and co-branded with specific retailers like supermarkets or department stores.

When you spend money with the retailer using your card, you’ll earn points that you can redeem with them.

Travel and air miles credit cards

You can earn reward points, like Avios, that you can exchange for flights, travel-related services and experiences.

They’re ideal for people who travel often and you’ll usually earn extra points when you buy flights, but some will charge an annual fee.

General reward points credit cards

Working in a similar way to cashback cards, these cards give you points whenever you use your card.

The points can be redeemed on a wide range of goods and services from different retailers. Sometimes you’ll receive bonus points when you use your card for certain types of shopping.

How to choose the best rewards card for me?

When you’re looking at the different cards available, you’ll need to consider which type of reward you’ll get the most use from.

The best card for you will be one that suits your regular spending patterns with rewards that you can redeem easily.

For example, if you’re a frequent flyer, an air miles card could be a good option.

But if you don’t travel often and want to use your credit card for everyday spending, a cashback card or one connected to a supermarket you use regularly may be better.

As well as the rewards on offer, you should always check the interest rate, annual fees (if applicable) and any introductory period to get the full picture of whether a credit card is right for you.

Multi-purpose reward credit cards

While reward credit cards can help you earn cashback or discounts on your travel costs or shopping, they can also be helpful to you in other ways.

Some reward credit cards have 0% interest offers on purchases or balance transfers for a limited time, which can help you to pay off debts more quickly.

The best way to use a rewards card is to pay off your balance every month – not only will you avoid paying interest, but you’ll also demonstrate that you’re capable of managing your finances, which can improve your credit score.

Is a rewards credit card worth it?

If you use your rewards card responsibly it can earn you hundreds of pounds in freebies and cashback each year.

But whether a rewards credit card is worth having will really depend on your personal situation and spending habits.

To get the most from your card you should:

  1. Pay the balance off in full

    Do this each month to avoid being charged interest. If you don’t the interest could cancel out the value of your rewards

  2. Use it for all your normal spending

    This will help you build up the most rewards, but be aware that some cards impose a minimum spend before you can start earning points or cashback

  3. Check what fees apply

    Some cards have annual fees, so you’ll need to make sure the rewards are worth more than the amount you’re paying for the card

  4. Use rewards before you lose them

    Some rewards expire after a period of time - typically between 12 months to three years - so make sure you use them before you lose them

  5. Avoid overspending

    It might be tempting to spend more to earn more rewards, but if you can’t pay it back comfortably you could land yourself in financial trouble

What type of card has the best rewards programme?

This will really depend on how you intend to use the card.

An air miles card can be a great option for a frequent traveller but may not provide the best value if you’re more into staycations.

Similarly, if you spend a lot on a weekly food shop, a rewards card that provides vouchers and discounts for your favourite supermarket might be more useful.

The deals between cards and providers vary greatly. Some may offer a higher rate of rewards, whereas others might have introductory offers where you can earn more rewards in the first few months.

To help you decide which card you’ll get the most value from, shop around and compare cards carefully.

Do rewards credit cards build your credit score?

Yes, if managed correctly they can help.

It’s always best to pay off the balance of your rewards card in full every month, so you can avoid interest being added on top of the amount you owe.

To keep your payments on track you can set up a direct debit to make sure you pay at least the minimum payment each month - this can help to improve your credit score.

It’s generally recommended that you don’t use more than 30% of your available credit. So, if you have a credit limit of £2,500, try not to spend more than £750.

Following this rule of thumb and making your payments on time each month can help to boost your credit score.

FAQs

With some reward credit cards, like air miles and travel credit cards, you can use your points to get money off hotel stays as well as flights and other travel-related expenses.

There are also specific hotel rewards cards, where you can earn points to redeem at hotels with every pound you spend.

Some cards offer better value than others, so if your rewards goal is to fund a future hotel stay, it’s best to compare cards to see which will get you the best deal.

No, you won’t get rewards with every credit card. This is because different cards are designed to suit different needs and offer different benefits.

For example, you may not earn rewards with a balance transfer card, but you’ll have an interest-free period on any debts you transfer to it which can help you to pay them off more quickly.

Similarly, with a credit builder card, you won’t earn points for every pound you spend, but as you make your payments each month you can gradually improve your credit score.

Yes, but instead of having several, it’s generally better to stick to choosing a single card that you’ll get the most from.

You can then avoid having multiple cards that you need to manage and pay off simultaneously. Plus, bear in mind that having too many credit cards can negatively affect your credit score.

You should avoid applying for lots of credit cards if you think you might need credit for something important in the future like a mortgage or loan.

With most reward cards you’ll need to have a good credit rating to qualify for one.

If you haven’t built up enough credit history or have a poor credit score, you could think about a credit building card to help improve your rating.

Whatever type of credit card you’re looking for, applications can affect your credit score, so before you apply try using our smart search.

This performs a soft credit check which won’t affect your score but will let you know which cards you’re more likely to be accepted for before you apply.

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