Skip to main content

What Is a Rewards Credit Card and How Do I Use It?

By: Sarah Maher, Vice President Payments

Posted on 2/24/2023 10:14:47 AM

Woman enters her pin into the credit card reader as she pays for her items

If you’re looking to make the most of your spending and maximize your rewards, then a rewards credit card may be exactly what you need. A rewards credit card is designed to help users take advantage of discounts and cash back offers for their everyday purchases. It can be a great way to save money or even earn additional income from the purchases you already make. To get an understanding of how it all works and start receiving those amazing perks like exclusive deals, bonus points, frequent flyer miles, and more – keep reading! We'll discuss how rewards cards work as well as provide some tips on using them so that you can make the most out of your hard-earned money.

How Do Rewards Credit Cards Work

Rewards credit cards are designed to help users take advantage of discounts and cash back offers for everyday purchases. When you make a purchase with your rewards card, you typically earn points, cash back, or travel miles for every dollar you spend. Depending on the type of card you have, you may even be able to earn extra rewards by visiting certain retailers or making specific purchases in categories such as groceries or travel.

Once you accumulate enough points, they can be redeemed for checks, statement credit, gift cards, merchandise purchased through the card company, and even travel perks. Your rewards balance will show up on your billing statement each cycle and can usually be checked online at any time. Many cards also offer introductory bonus offers once you meet a certain spending threshold and/or low-rate APRs for the first 12-18 months.

Tips for Getting the Most Benefits Out of Your Rewards Credit Card

If you want to get the most out of your rewards credit cards, there are a few things that you should keep in mind. The most important: pay off your balance in full each month so that you don't incur any interest charges that would negate your cashback earnings. During your initial search, you should always compare different cards and their rewards structures to find the best one for your needs. Additionally, look out for bonus offers and special deals when you sign up for a card or make certain purchases.

To maximize your rewards, use your card regularly and keep track of spending. Make sure to read all the fine print when signing up for a card so that you know exactly what to expect from your rewards program. If possible, look for cards with no annual fees, as this will help you continue accumulating rewards without having additional costs. And if there is an annual fee, make sure the rewards program is worth the charge. A lot of times, the fee will end up paying for itself with the amount of cashback you can earn. You can also look out for special deals on travel and entertainment, as these often provide additional discounts or promotions.

Don’t just sit on your points—actually redeem them! After all, you earned them with purchases you would have made anyhow, so you don’t want to pass on free money. Some rewards will expire, so be sure to note any special rules and expiration dates concerning your rewards program. Stay informed about any changes in credit card policies or new offers so that you can adjust your spending accordingly.

The Best Rewards Credit Cards for Different Spending Habits

Choosing the right rewards card for your spending habits is key to getting the most out of your rewards program. For frequent travelers, look for credit cards that offer bonus miles or points on your travel purchases. If you're more interested in savings, a cash back rewards card would be an ideal option.

If convenience is important to you, you can look into cards with digital wallets that make transactions quick and secure. Those looking for exclusive offers should consider cards that offer special benefits such as discounts on luxury goods or access to VIP events. Students who are looking to build their credit should start with a student-specific credit card.

For those who make everyday purchases on their cards, look at cards that offer points across all categories, such as qualifying credit cards in Community First’s CURewards Program. Members earn 1 point for every $1 spent on a qualifying credit card and can redeem points for gift cards, products, activities, event tickets, and travel. This way, you’re earning rewards on every purchase you make, no matter the category. You can also pair different types of rewards cards to take advantage of multiple rewards structures simultaneously.

Woman faces camera with her hand in one pocket as she refuels her car at the gas station

How to Redeem Your Rewards Points for Maximum Value

To get the most out of your rewards points, it's important to evaluate the terms and rewards structures of each card and find one that aligns with your spending habits. Some cards may offer more points for certain purchases, so make sure to read up on the fine print. Use your card company's travel portal when booking flights, hotels, or rental cars as this will help you earn more points.

Additionally, consider transferring your points to partner companies or airlines—this can give you more value for your points and allows you to get even more bang for your buck. You should also use your card for all purchases so that you're earning rewards on every dollar spent; just make sure to pay off the full balance each month to avoid any interest charges.

A good rule of thumb is to have a rewards card with a fixed rewards system where you earn 1 or 1.5% cashback on all purchases regardless of what category they fall in. When creating a credit card portfolio, make sure to diversify cards with different reward systems. For example, you may want one with great travel benefits and another with a high percentage cashback on gas and groceries.

Keep an eye out for bonus caps and limits as well as promotional offers or special deals by regularly monitoring emails about changes in credit card policies. Lastly, make sure that you're earning enough rewards to cover the annual fee on your card otherwise it might be time to switch things up.

Tips for Using a Rewards Credit Card Responsibly

When considering a rewards credit card, it’s important to remember that they are a form of borrowing and should be treated like any other type of loan. As we mentioned beforehand, you should pay off your balance in full each month if possible, so you won't incur interest charges that will negate the value of your rewards.

It's also essential to compare different reward structures before choosing one as not all rewards cards are created equal. Read up on the card's terms and conditions to understand when you can expect bonuses or incentives. Keep track of your spending and set up automatic payments if necessary, so you don't miss any deadlines and incur late fees. Don't forget to check for discounts or promotions regularly and use your rewards points within the allotted timeframe — otherwise they may expire.

Finally, make sure you take advantage of all the features that come with your card, and don’t just focus on the rewards program itself. Look for things like purchase protection and extended warranties which can help protect you from unexpected expenses down the line.

With the proper research and responsible usage, rewards credit cards can be a powerful financial tool to improve your credit score and earn rewards on everyday purchases. For more information on Community First’s credit card rates and our CURewards program, give us a call at 904.204.3326.

Don't miss another article

Stay up to date with the latest financial tips and news. Subscribe to our blog.