The current lifestyle of people gives importance to electronic mode of payments and work. Being a part of the digital ear, we all understand the need for online payments. Debit and credit cards are the oldest and the safest mode of online payment. Apart from this, there are many other online payment options, such as internet banking and UPI’s.
This article will discuss credit cards, reward credit cards and its working. Read on to know more about them.
Meaning of credit card
Credit card is a card issued usually by banks to its account holders or members. This card enables the holder to buy different things without cash. Credit card acts as a short term loan, which is highly required for small businesses. Credit cards are of different types. One such credit card that is famous among users is rewarded credit card.
In the next part of the article, the meaning of reward credit card will be shared. In addition to this, the article will also talk about working on reward credit cards.
What is a reward credit card?
A reward credit card is similar to traditional credit cards. But the difference between the two is that the reward credit cards come with points for using it. Reward credit card carrier incentive to encourage the cardholder to use it. It usually carries an annual fee for availing the service.
Credit card rewards are one of the popular types of the card used by people all over the world. As per the survey conducted, it was found out that more than 45 percent of people use a reward credit card. The points added to the card are the most attractive feature for using this card. The working and other details of the reward card will be shared further in the latter part of the article.
How does a reward credit card work?
Credit cards, as mentioned earlier, are a type of unsecured loan given by the bank issuing it. They give access to the user a line of credit. Similarly, in addition, the above-mentioned features a rewards credit card that gives you additional benefits. These cards are of various types, cash reward credit card is the most used one.
The credit card rewards allow the holder to earn extra cash. How much you can earn from a reward card varies. It mainly depends on the spending on the cardholder. The issuing authority of the credit cards converts the spending of a person into reward points. The points so earned can be redeemed by the cardholder.
What are the different types of earning reward points?
There are mainly four different types of credit card reward program. Or in other terms, four types of earning points. They are as follows:
This is the most common type of earning reward points by the cardholder. In this earning the holder gets certain points on each purchase. The rate of earning my reward card is determined by the bank and informed through the credit card document.
Under this type of reward credit card points, you can earn extra cash. The issuing authority of the credit card or bank will allow you to earn some extra points. The extra points are given only for a specific type of purchase. These purchases can be online shopping, travel charges or grocery. The credit cards with accelerated reward points when used wisely can help you earn more.
The next type of credit card points that you can earn is sign-up points. Certain types of credit cards allot bonus points as a part of joining benefits. But the bonus points are allotted only when you fulfil a certain condition. The condition specified by the bank can be meeting a certain spending amount.
On the other hand, certain reward credit cards give you bonus points for paying the joining fee.
The last type of earning points with reward credit cards is milestone benefits. Under this category of earning, you are allotted points for reaching a threshold. The card issuing authority or banks set the threshold. At the time of allotting the credit card holder is informed of this milestone benefits and the condition they need to fulfil.
For instance, to avail, the milestone benefits the cardholder may have to spend around 50,000 rupees in one year.
The article on the meaning and working of the reward credit card is concluded here. Reward credit cards are considered as the best type of credit cards. This is mainly because it enables the holder of the card to earn while they spend. Yet, credit card reward program vary from bank to bank.