What is a reward credit card?

Find out what advantages there could be to taking out a rewards credit card.

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Reward credit cards give you bonuses on top of your spending, like loyalty points, airmiles, and cashback. They are best used for everyday spending in order to maximise the benefits you can earn, but you should  pay off your balance in full every month to avoid your interest payments offsetting any rewards gained.

Reward types

Applying for a rewards credit card

Providing you’re happy replacing your day-to-day spending (be it with cash or debit and credit cards) with a rewards card, you could be in line to earn added extras on top of your monthly spend.

Before you apply, it’s a good idea to check your credit score. Credit Monitor shows you your score for free, plus you’ll get handy, personalised tips to help improve it. Building up your score could give you a wider range of options to choose from when you’re looking for a credit card.

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Before you choose a rewards credit card, it’s worth thinking about the following considerations:

Repaying in full every month: The interest rates on rewards credit cards are not normally very competitive, so they’re only worth it if you can afford to pay off your balance in full every month.

Translating points into money: If you earn loyalty points on your spending, find out how much these points equate to, for example one point earned could be the equivalent to 1p to spend in store.

Is the spending limit realistic? If your card stipulates you need to spend a certain amount annually to earn rewards, make sure this is compatible with what you actually tend to spend month-to-month. Spending beyond what’s affordable can risk you getting into debt and diminishing the real value of your rewards.

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