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What are reward credit cards?

A rewards card is a credit card that gives you rewards in return for your spending. Incentives can come in the form of points or cashback and vary depending on the card, so it's sensible to pick one that offers rewards that fit in with your lifestyle or shopping tastes.

What credit card rewards can you get?

The most common rewards cards offer one of the following:

  • Cashback
  • Air Miles
  • Reward points

Cashback is the simplest type of reward, as cash can be spent on anything, but other rewards might be more lucrative depending on how you’ll use them. If you travel regularly you might benefit from an Air Miles card, while if you’re loyal to a particular retailer, a store credit card might be better.

Your rewards rate will depend on the card you choose. For example, you might earn one point for every £1 you spend in one store, but only one point for every £2 spent at another retailer. There might also be different rates for buying petrol.

The level of cashback you earn may also fluctuate depending on the type of purchase or shop. Some reward cards offer generous bonuses when you first sign up and start spending on the card.

The golden rule of reward credit cards is to repay your bill in full each month. If you don’t, you may find the rewards you earn are dwarfed by the interest you pay.

Credit cards by annual income

According to MoneySuperMarket data, correct as of June 2019

Interest rates on rewards credit cards

The interest rates charged by rewards, airline and cashback cards tend to be much higher than standard credit cards. This means they’re only really suited to people who can afford to clear their balance in full every month.

If you allow debts to build up, you’ll almost certainly pay more in interest than you will get back in rewards, which will defeat the purpose of having the card.

What’s the best rewards credit card?

The rewards credit card you choose should depend on your shopping habits and lifestyle.

Frequent flyers and high spenders are likely to be better off with an airline credit card. They offer higher rewards for travel spend, with Air Miles typically spent on flights and travel-related perks.

If you’re a keen shopper you might prefer rewards in the form of vouchers for your favourite shop or supermarket, or even just as cashback.

It’s also worth comparing interest rates and associated fees as this can help you decide if the rewards are worth the cost. If you’re not a regular credit card user, for instance, the higher fees and interest rates providers tend to offer with rewards cards might make them less attractive to you than a low-interest credit card or a credit-builder credit card.

Follow these steps to find the best reward card for your needs:

  • Decide on the type of reward you want to receive
  • Calculate your likely spending on the card each year
  • Compare the rewards you would earn on that amount for a range of cards, keeping an eye on any fees
  • Check application criteria to make sure you are likely to be accepted

How to choose a rewards credit card

Here’s a checklist of some things to consider when choosing a reward credit card:

  • The type of reward on offer
  • Any sign-up bonus that will boost your rewards
  • The card’s annual percentage rate (APR)
  • The card’s annual fee (if any)
  • How and where rewards can be spent
  • Whether you need to spend a certain amount to cash your points in

How to spend your reward credit card points

How you spend your credit card reward points depends on which scheme you signed up to. Shopping points can usually be exchanged for vouchers for particular retailers, while frequent flyer points are redeemed with specific airlines and their partners.

Cashback cards tend to pay cashback monthly or annually, depending on their terms. Some cards allow you to convert the cashback into vouchers you can spend in shops.

Keeping track of credit cards with rewards

It is possible to take out multiple rewards cards to make full use of the different schemes available, but it’s vital to keep yourself organised. You’ll need to keep track of what you’re spending and where, while keeping to your budget.

You should remember that opening multiple lines of credit cam negatively affect your credit score – especially if you lose track of the repayments.

Compare reward and points credit cards

MoneySuperMarket’s Eligibility Checker makes it quick and easy to compare reward credit cards and find the best deal. We have details of all the top offers to help you reach an informed decision and make the most of any rewards.

We're free and independent, and we offer exclusive deals you can't get anywhere else.

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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