Reward credit cards

What is a rewards credit card?

A reward credit card is a type of credit card that rewards you when you use it to make a payment or buy something.

Used responsibly and carefully, a reward credit card can provide you with a range of benefits depending on the type of rewards your card offers, how often you use it and how quickly you pay back any money you owe.

How do reward credit cards work?

Typically, a reward card works by giving you a certain number of points or a percentage of what you spend back each time you use it. Some cards reward you for spending in certain sectors, such as travel, and others for buying certain things, such as groceries.

Often you can only spend your reward points when you’ve reached a certain number. If you want to make a large purchase, you may want to build up your reward points.

When it comes to spending your reward points you may only be able to spend these with particular retailers.

What are the different types of reward credit card?

There are several types of reward credit cards available. These include:

Cashback credit cards

Cashback credit cards reward you by paying back a percentage of what you spend on the card, usually as credit on your card balance.

Depending on the card, you may get a flat cashback rate across everything you pay for or differing percentages depending on where you shop. Some cards pay your cashback monthly, some annually. Introductory rates on some cards can offer up to 5% cashback, usually dropping to 1% after a fixed period, while others offer 1-2% for the life of the card.

Travel and air mile credit cards

These cards reward you with points that you can use to get discounts on flights. Popular with frequent and business travellers, you can often use travel and air mile credit cards to get discounts on hotels and merchandise as well.

You can choose a general travel credit card from a bank or if you prefer a particular airline, you may be able to get a co-branded card with benefits specific to that particular company. The number of miles you can earn varies by card, as does the number of miles you need to buy a flight.

General points credit cards

Similar to cashback credit cards, points cards reward you with points that can be cashed in for a wide range of goods and services. These can be anything from groceries to electronics, plane tickets to gift cards. Reward programmes and promotional offers on points cards can change often and the number of points you earn based on how much you spend will vary from card to card.

Retail reward credit cards

Co-branded with specific retailers like Amazon or Argos, these cards reward you in the same way as general points credit cards but usually offer double or triple points for shopping with the co-branded retailer. You can also only cash in your points with that retailer.

How to compare reward credit cards?

You can see which credit cards you’re more likely to be accepted for when you compare with Experian.

Typically, you won’t know if you’ll be accepted for a credit card until you  apply for it, but that will leave a record on your credit report that can affect your credit score. Search for a credit card with Experian and we’ll show you how likely you are to be accepted, based on your credit information and the lender’s criteria – we call this your eligibility rating. You’ll see your eligibility rating next to each card listed when you compare credit cards with us.

Are reward credit cards worth it?

Reward credit cards aren’t right for everyone. They’re generally better for people who can pay back their balance in full every month.  Things to consider before deciding if a reward card is right for you:

• Have a good or perfect credit rating – you may not qualify to get a reward credit card if your credit score needs improving. You can get an idea of how lenders may see you by checking your free Experian Credit Score.
• Pay off your balance each month – reward cards often have a higher interest rate than standard credit cards, so carrying a balance from month to month could cost you more than the value of the rewards you’re earning.
• Be a frequent traveller – with all the travel rewards, air miles and frequent flyer cards available, if you travel a lot then a reward card can give you significant savings across a range of travel costs.
• Be brand loyal – if you tend to shop with one particular retailer or fly with one particular airline, a co-branded card can give you even greater savings and rewards when you shop with that brand.

What are the pros and cons of reward credit cards?

What should I look out for when choosing a reward credit card?

Decide what kind of rewards you want and if they fit your spending patterns to give you real value. So, if you’re a regular flyer, an air miles or travel reward card would make more sense than a points card. If you use your credit card for your everyday spending, a cashback card could give you better value.

Don’t forget to compare APRs if you’re not going to be able to clear your credit card bill each month. The lower the APR, the less interest you’ll pay.

Once you’ve decided what kind of card you want, you can compare cards with us to find the right one for you. But remember, we’re a credit broker, not a lender† – we can help you find deals, but we can’t grant credit.

Can I get a reward credit card with bad credit?

You may be able to get a reward credit card with bad credit, but it may cost you more. You can find out more about credit cards for bad credit in our guide.