Besides Points, What Are The Most Common Credit Card Perks?

If you’re looking for ways to save money, credit card rewards are a great way to do it. Not only do credit cards offer incredible consumer protections, but you can earn valuable rewards for purchases you were planning to make anyway.

This article will review how credit card rewards work, and what some of the best credit card perks are. That way, you can make the most of your credit card rewards.  

How Do Credit Card Rewards Work?

Many people take out credit cards because they’re interested in accessing the rewards. But you may be wondering how these rewards actually work, and how you go about redeeming them. 

In general, credit card rewards are given either as cash, miles, or points. Let’s look at the different credit card perks you can earn more closely below.

Cash Rewards

Cash rewards are usually the easiest to understand and the most straightforward to redeem. However, the term is somewhat of a misnomer since these rewards aren’t always available to redeem in cash. 

Depending on your credit card company, the rewards may show up as a credit on your statement balance. Other companies will mail you a check for the cash or deposit the money directly into your bank account.

And some credit cards may let you redeem the cash rewards as a gift card for one of their merchant partners. Gift cards are a great redemption option since these retailers will often give you additional perks or discounts. 

Miles Rewards

It’s no secret that traveling can be expensive, especially for families with multiple children. But you can stretch your money a lot further by taking advantage of credit card miles. 

When you earn credit card miles, you can redeem your miles for airline tickets or cover your hotel stay. The number of miles you receive will vary depending on your credit card. Many people choose to use points rewards toward travel rewards.  

Points Rewards

You’ll typically earn rewards points for each dollar you spend on your credit card. These can usually be redeemed for merchandise, gift cards, cash, or travel. One of the unique things is that you can often earn additional points for meeting certain spending thresholds or spending money in certain categories. 

For instance, the Chase Sapphire Preferred Card will give you 60,000 additional points if you spend $4,000 within the first 3 months of opening the card. It also gives double the points on all purchases spent on dining and travel.

However, credit card points are more confusing to redeem than cash rewards. For most cards, one point is worth $.01. So in the example above, 60,000 points convert to $600.

What Can I Do With Credit Card Rewards?

By this point, you’ve probably gathered that there are many things you can do with credit card rewards. Listed below are the four best credit card benefits:

1. Cash

If you’re looking to fund a big expense or just have a little extra spending cash, you may want to redeem your credit card rewards in cash. Look for a credit card company that will deposit the money directly into your bank account. Doing this will save you from having to wait on the company to mail you a check. 

2. Travel

If you love to travel, then credit card rewards can be a great way to save money on airfare or hotels. However, you will need to accumulate a large number of points for this to be possible. And you should check to see what travel sites your credit card company partners with. 

3. Gift cards

Gift cards are a great way to redeem your credit card rewards because the point-to-dollar value is often more favorable. And if you choose a gift card through one of the company’s retailer partners, you could earn additional points or discounts. 

4. Statement credit

You can also redeem your rewards for a credit on your monthly statement. A statement credit isn’t the most exciting option, but it can be a good way to pay down your balance. But if you do choose this option, a statement credit will not replace your payment for that month. 

How To Maximize Your Credit Card Rewards

To make the most of your rewards, look for cards that offer generous signup bonuses or extra points for spending money in certain categories. For instance, if you spend a lot of money on dining and travel, you should look for cards that offer double or triple the points for those categories. 

But you should be careful not to take out too many cards at once. Not only will this make your balances harder to keep track of, but if your credit card rewards are spread out across multiple cards, it’ll be harder for you to maximize your rewards.

And finally, make sure you pay off your credit card balance in full every month. Credit cards are a great tool, but they do come with hefty interest rates. The rewards you earn won’t matter as much if you’re paying hundreds of dollars interest every month. 

Bottom Line

If you use them wisely and pay your balance every month, credit cards can be a huge financial asset. Essentially, you’re using your credit card as a short-term, interest-free loan and earning free money and travel rewards in the process. 

Keep in mind, credit card companies will offer the most generous rewards to consumers with high credit scores. If you’re unsure about where you stand in this area, you can check your credit score for free at Rocket Homes^SM.