Before the advent of the credit card the only convenient way for a consumer to get money loaned to them was to go to the bank and enter into an agreement for a traditional loan. Under the terms of this agreement the consumer agreed to put up a certain something as collateral on the loan and if they ended up being unable to pay the loan back then the bank would liquidate the collateral and use that to cover their losses. It was perhaps not that great an agreement for the consumer but at the same time it was the only way they could get money. They didn’t like it, but they dealt with it.
Then came the credit card. Instead of collateral the consumer had to accept higher interest rates. Credit card companies regarded their loans as investments and the riskier the investment they made the bigger they wanted the reward to be. With people that had bad credit they charged higher interest rates and soon enough the concept of the unsecured credit card came to be commonplace across the country. Today over half the world’s population either owns or has used a credit card and most stores in the world accept at least one kind of card.
Credit card companies are diverse and with their ever-present desire to expand their bottom line they turn to different tactics in order to entice new customers over to their company. One tactic that started a long time ago but has only recently become very popular is the concept of a rewards program attached to a credit card. These types of programs are great for consumers because it allows them to get rewarded for doing something that they would normally do anyway; use their credit card.
A good introduction to credit rewards is to briefly discuss the different kinds of reward programs available in the market today:
Cash Back Credit Cards: These types of credit cards do exactly what the name implies; they provide cash rebates to their holder’s dependant on how much the holder spends on the credit card over a specific period of time. Cash back rates are usually around 1% up to $600 a year (i.e. a person will get credit for up to $60,000 worth of purchases on their card each year) although some plans use a tiered system instead.
Air Miles Credit Cards: These are the most classic reward cards around. Every purchase a person makes with an air miles credit card earns them some credit towards purchasing a plane ticket or booking a vacation. Many people hate putting aside money for vacations and because of that many people love the idea of being able to do this while they go about their normal business; such is the popularity of the air miles credit card.
These are the two main kinds of credit card rewards available on the market today but other cards that give shopping rebates, gas rebates, hotel rebates and even things like car rebates are also used by many consumers each day of the week. The key to getting a good rewards credit card is to understand what it is you want to work towards and then get a credit card with a rewards program that will eventually help you achieve that goal.