When cards are used for making payments then in most cases the companies that provide the cards give an incentive to the customer in the form of a reward. This reward is not a direct gift but an incentive that collects or builds up as and when the person uses the card. In simple terms, the usage of the card will help in building the rewards of that person. However, that does not mean that using the card often will provide a person with a huge reward because there are specific areas which are chosen by the associations providing the payment cards. If the cardholder uses the card for making purchases through the appointed outlets, then the rewards will increase substantially. Other purchase fields might not be equally rewarded so using the card in those areas for making purchases won’t provide the person with a lot of benefits.
The categorization of rewards
In the case of credit cards which are used for making payments the reward program is carried out in multiple ways. These methods are discussed below:
Giving Cash rewards
In case of some credit cards, the rewards can be given in a cash form by the concerned credit card or payment card issuer. However, there is a procedure for getting cash rewards, and all card providers do not give the option of encashment of rewards. Hence if a person is looking for cash rewards, then it is important to know if the reward that is collected by using the payment card can be acquired in a cash form or not. The direct payment of cash is usually not done in case of encashment of rewards. The reward amount that has been collected by the cardholder is credited in his/her account or is paid in the form of a check. There is another option which is present for redeeming the rewards, and this can be done by acquiring a gift card with the reward amount. This means that the amount which has accumulated in the card account for using the card at specific locations will be loaded in the gift card. However, it should be known that the encashment of rewards is not possible until the balance reaches a certain threshold as prescribed by the card issuing company.
Turning rewards into points
This is a common practice of giving rewards on the use of payment cards like credit cards. In this method, the spending of each dollar using the card provides the user of the card with reward points. For instance, spending one dollar with the credit card earns the card owner one point. These points can be collected over time and then good scan be bought with the collected points. There are shopping malls which are present online where redeeming of reward points is accepted for purchasing specific goods. If the card issuer has tie-ups with travel agencies, then the reward card can also be used for lowering traveling expenses. The points can also be used for getting another gift card from the same issuer because.
In most cases, the associate partners that work along with the card providing company will provide the gift card at a discounted price if gift points are redeemed for buying the gift card. Rewards card using point system include some examples like hotel cards, auto reward card, etc. For knowing the specific benefits of rewards card, a person can search for CITGO Rewards Card to know the details about the usage of rewards card given by CITGO.
Rewards in the form of miles
If rewards are converted into miles, then these are generally categorized as traveling cards. This means that a person can redeem the miles which he/she has gained while purchasing traveling tickets like booking airline tickets. The miles needed for purchasing a particular flight depend on the flier program. The card issuing company decides the method in which card usage reward will get converted to miles, so if mile option of reward is there, then the cardholder should know the method in which reward miles are calculated.
There is also a possibility to convert one category of rewards into another, but in that cases, the reward can get reduced because of the conversion.
The possible uses of rewards card
There is no doubt about the fact that people love to have additional discounts and bonuses for spending money using a card and there are multiple avenues for intelligently spending the collected rewards. The options present for using the collected rewards are enlisted below:
- The reward can be used for reducing the outstanding balance of the credit card.
- With the help of travel incentives provided by rewards card, a person can get a few free tours and can enjoy such trips with his/her family.
- The reward which is accumulated by using the payment cards can be used for purchasing gifts. Birthdays and holiday planning require funds and a considerable portion of funds can be acquired from reward card.
- There is the option to invest the rewards by opening an investment account. There are card issuing companies that have this option so if a person wants to invest rewards then choosing cards from the companies that provide this option is a sensible idea.
- Paying for one’s mortgage is an important aspect, and in this case, the rewards card can be used for effectively reducing the mortgage amount.
Therefore, it can be understood that there are multiple methods for using the rewards and according to one’s suitability appropriate redeeming option for rewards should be chosen.
It is important to remember that rewards are not formed if the payment card is not used and the maintenance charges for such cards is also a factor that should be taken into consideration before rashly choosing a payment card for gaining rewards. The frequent usage of cards solely for collecting rewards is also not a good idea and expenses should be carried out sensibly so that rewards do not lead to outstanding balances on cards.