Credit Card Point Programs

Credit card rewards provide an incentive to buy.

Credit card point programs are often a big enough incentive that consumers are willing to put thousands of dollars in purchases on their cards. These credit card point programs can provide you with additional goods and services as an added bonus for making a purchase with your card. Some programs are not worth the trouble while others are very rewarding.

Function

Many credit card companies offer some type of points system for purchases made with their cards. When you make a purchase with their card, they will generally credit your account with a certain number of points. The number of points can be equal to the number of dollars that you spent or can be a multiple of that amount. After points are accumulated, you can use these points to make purchases from many different spending categories.

Travel Rewards

One of the most common types of rewards that credit card companies offer is travel benefits. Points can be used to purchase travel related products such as hotel rooms, flight tickets, or attraction tickets. Some credit card companies have blackout dates on the times that you can use your points for travel, which can sometimes make it difficult to find a time to get a flight or a hotel room.

Cash Back

Many credit cards offer cash back as an incentive with these programs. Instead of using your points for merchandise or travel, you can elect to receive cash back on your bill. Some credit card companies will apply this as a credit to your balance while others will provide a prepaid gift card. Some purchases that you make will trigger a larger percentage of cash back than others.

Savings Programs

Some credit card points programs provide you with the ability to save for certain items. These programs will put aside a certain amount of cash for each purchase you make. With these programs, you may be able to save money towards the purchase of a new car or pay down your existing mortgage balance. Other programsset up a savings account and make a deposit to it periodically depending on how much you spend.

What to Look For

When choosing a rewards credit card, there are several things to look for. Consider all the rules on the points program to avoid the programs that don't meet your needs. Look at the rewards that are offered and determine if any of them interest you. See how quickly you can accumulate points. Determine if blackout periods cover the times you normally like to travel.

References

• MSN Money: 20 credit cards that pay you back