How Credit Card Rewards Work

By Stephen Fisherton on July 18, 2012

Credit Card RewardsCredit card rewards are gifts, free products, and even cash that you get just for using your credit card. A credit card rewards system provides you a small amount of money on each purchase you make, usually as a percentage of your total credit card spending.

Some companies give you better credit card rewards on particular purchases. For example, travel rewards cards give the user a larger cash back amount on travel spending than regular credit cards. A branded gasoline card provides a larger cash back amount when you buy gasoline at a particular store than does your average credit card.

In general, movies, restaurants, and groceries are included with gas and travel spending for larger rewards. Whereas the average card gives customers 1% cash back on any purchase, special purchase may qualify the user for up to 5% in cash, points, or airline miles.

Rising Rewards

Previously, credit card rewards were limited only to special purchases or a fractional percentage point of each dollar spent. Today, with more competition in the market, credit card companies continuously provide more and more rewards for each dollar that a customer spends. Those who spend the time to keep up with the credit card industry can collect 5% or more for a majority of their spending.

Additionally, those who are comfortable with annual fee credit cards can get a much larger percentage of their spending back in the form of cash. It is not at all uncommon to see the average person collect $1,000 in cash back rewards, especially for those who travel or fuel their car frequently.

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