3.3 What are cash back and reward credit cards?

A.k.a

• Cashback credit cards
• Money back credit cards
• Cash rebate credit cards
• Air mile credit cards
• Advantage credit cards
   

If you are one of those people who pay their credit card bill off in full every month, you could benefit from a cash back or reward credit card.

Reward credit cards are a great way of getting the most from the credit card in return for being a loyal customer and using the card.

There are several forms of reward offered by credit card companies but they generally work on a percentage or points based scheme where you will earn a certain number of points for each pound spent on the card or a percentage of your spend back.

Providers will generally credit the cash back straight to your account or you will be able to choose your rewards based on how many points you have earned through the points-based scheme.

The basis on which the rewards or cash back reaches you varies between providers - some will do it instantly whereas others will do it monthly or yearly. It is worth considering this when you compare reward credit cards.

There are occasions where the better reward credit cards come with higher interest rates however, if you pay your bill off in full each month this shouldn’t be of any major concern to you. If you don’t pay your bill off in full each month, the higher interest rates may mean you end up paying more in interest than you earn in rewards.

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