Choosing Between Cash Back Credit Card and Rewards Credit Card

Would you like to apply for a a reward credit card but not sure which one to get? Some reward credit cards offer cash back while others offer non-monetary incentives such as free airline ticket, free hotel stays, gift certificates, merchandise, etc. This article compares cash back credit cards and non-monetary reward credit cards to help you decide which one best complements your lifestyle.

Cash Back Credit Cards - Cash Incentives for Your Spending

Credit cards that offer cash back rewards pay you in cash or cheque based on your monthly or annual spending. Typically, a $1 worth of purchase would be equivalent to $1 cash back point. That means the value of rewards you can get will match the amount of your spending. Thus, if you spend $500 on purchases, you will get $500 cash back rewards in return.

Some cards may even offer double points for every dollar you spend using your cash back card. You will often get more points if you purchase from merchants that are affiliated with your chosen credit card. Nonetheless, most cash back credit cards will give you a point from general purchases regardless of where the purchase was made.

Reward Credit Cards - Thank You Bonuses from Merchants

There are credit cards are sponsored by different merchants such as department stores, drug stores, supermarkets, boutiques, airlines, hotels, etc. Merchants sponsor with credit card companies as a way to boost their businesses, increase their sailes and get better market recognition.

Sponsored reward credit cards offer generous points or rebates (2% to 5%) for every dollar spent as long as the purchase was made from their shop or branches. When the cardholder has collected the minimum required points, he/she can choose to exchange points for rewards.

Let's say for example that you own an airline miles reward credit card. Since your card is sponsored by an airline, you can exchange your points for a free travel. Credit cards that are sponsored by gasoline companies usually offer free fuel, auto service repairs, etc. Meanwhile, credit cards that are sponsored by department stores and boutiques will often giveaway merchandise or gift certificates in exchange for credit card points.

Which One Is For You?

Should you get a cash back credit card or a non-monetary rewards card? The right choice would depend on your personal spending style and lifestyle. If you have a favorite shop where you regularly make purchases, then find a reward credit card that is sponsored by that merchant.

On the other hand, if you only use your credit card occasionally, a cash back reward credit card is a practical choice because it gives you the freedom to earn points, regardless of the type of purchase you make. Furthermore, you will have the flexibility to spend your cash rewards on your leisure.

Before signing up for your chosen reward credit card, see to it that you have read the Terms & Conditions. Don't forget to check the APR as well as the fees associated with the credit card and understand the rules of the reward program.