All About Rewards Credit Cards

Before the concept of rewards credit cards came about, consumers did not receive anything extra other than interest charges, late fees and annual fees when using their credit cards. Reward credit cards with cash back bonuses and point systems are now a standard feature in the credit card industry. The AT&T Universal Card and the Discover Card were two of the pioneers in the reward card genre. These cards revolutionized the credit card industry with features that included excluding an annual fee and providing a cash back program. With the AT&T Universal Card, the cash acquired through credit card purchases could be put towards a person’s phone bill. Discover Card liked the concept, so they decided to apply it for their own credit cards. Ever since these two credit card companies pioneered the rewards credit card concept, other credit cards have followed suit. Now, it isn’t too difficult for consumers to be able to get their hands on Visa or Mastercard rewards cards. So, what can a person expect when they get a rewards credit card? Well, cash-back reward credit cards work by taking a percentage of purchases, (usually 1%), and setting it aside for the consumer. This cash can be used towards the credit card balance or redeemed through a check. Some cash-back rewards credit cards may also provide cash in the form of store discounts. The other type of rewards credit cards involves a person acquiring a certain number of points with each purchase. These points can be redeemed for airline miles, gas or merchandise. The merchandise that can be obtained is of particular interest, since they can be high-ticket items. Flat-screen televisions, video game consoles and even furniture are some of the things that can be earned through point-based rewards credit cards. Yet, there is a downside associated with rewards credit cards. This downside is in the area of higher annual fees and APRs. Of course, this may not be a problem if a person is getting a point-based rewards credit card. However, if a rewards credit card is cash back, a person may end up paying so much in fees that the measly amount of money they do receive just isn’t worth the trouble. It should also be noted that rewards credit cards are not a good alternative for individuals that do not pay their bills on time and/or those that do not use their credit cards often. People in these categories won’t be able to acquire enough points or cash to make the rewards credit card worthwhile. On the other hand, if a person does pay their bill on time and uses their credit card regularly, rewards credit cards are a great way to get additional perks while buying things or paying bills. The broad-spectrum of reward card programs has benefited both the consumer and credit card issuer. Through the concept creditors are provided given extra incentive to use their credit cards. However, it doesn’t mean that rewards credit cards will work for everyone. The credit card issuer enters this business to make a profit, excessive use and unmanageable spending will only enrich the card issuer and not the credit card holder.