Coronavirus Update: Credit card providers may have temporarily stopped offering credit cards to customers due to the current Coronavirus (COVID-19) pandemic. This may result in a limited choice available to you.
Last updated October 2020
A reward credit card is a card that rewards you with points based on your spending. These points can be redeemed for free gifts, shopping discounts, restaurant vouchers, subscriptions, cashback or air miles. Some reward cards can even collect supermarket loyalty points.
Rewards credit cards usually credit your account with a certain number of points per every £1 you spend. These points can then be redeemed for free gifts, experiences or cashback.
As it costs the credit card provider to offer this reward programme, reward cards usually have annual or monthly fees. Some will also charge higher interest rates.
That means you must work out whether having a rewards card is worth the cost. If the rewards card has high-interest rates, then paying it off in full each month will be key to making the card worthwhile.
The advantages of having a reward credit card are perhaps more tangible than any other type of credit card. You will receive rewards directly related to your spending, which can help your money go further. Here are some of the main benefits of a reward credit card:
Briefly mentioned above, the main downside of a reward credit card is that it usually costs money, whereas other regular credit cards are free.
We have listed out some frequently asked reward card questions.
If you know you will get a lot of use out of a reward credit card and are confident you can make repayments, it could definitely be worth it. If you know you will be unable to pay off your balance each month, it’s best to avoid a reward credit card. That’s because the rewards you earn may not be enough to justify the interest rates and annual fees.
This depends on the card, but some reward credit card points will expire. How long you have before they expire will vary, so it’s worth checking the expiry and making a note of it.
Most reward credit cards will work with points and free vouchers. However, there are cashback reward credit cards out there as well. These types of cards will generally reward you a percentage of what you spend on the card. This amount is typically deducted from your annual fee, or it can be converted into vouchers instead. Not all reward credit cards will offer this though so you will need to do some research to find one.
This will depend on your usage and whether the rewards offered are useful to you. A reward card may not be worth it if you struggle to pay your balance or you would get more use on a different type of card - such as a 0% balance transfer or 0% purchase card. If you find a card that helps you regularly save money on your shopping, travel or entertainment - and you can pay your balance - it could be well worth the investment.
There’s not one credit card that’s best for rewards. All card providers offer different reward incentives, so it’s best to choose one with a reward scheme that you will use. For example, if you travel a lot, it may be better to select a card that offers air miles.
Why not compare now to find the best reward credit card for you.