Pros And Cons Of Three Common Credit Card Rewards Programs

Written by Lindsay Meredith on November 25, 2013

shutterstock_79429900

Aside from the convenience factor, one of the best things about shopping with credit cards is that you’re able to earn some pretty great rewards. From cash back, to airline miles, to hotel rewards, it seems like incentives to use your card are everywhere.

If you’re shopping for a new card, though, it’s worthwhile to consider the benefits and drawbacks of these three common rewards programs to be sure you’re applying for the right cards for your needs and spending habits. But searching out all that information can be time-consuming and difficult – who has the time?

To help you choose the best card for your lifestyle, we’ve aggregated the benefits and drawbacks of each type of card here, so be sure to check out the details below before applying for your next card:

Cash-Back Cards

These types of credit cards allow you to earn a percentage of your purchases back in the form of cash.

Benefits of cash-back cards:

  • Flexibility – you can use the cash on anything you want
  • Rotating bonus categories – most cash-back cards offer special programs throughout the year that will allow you to earn extra rewards
  • Easy to qualify – cash-back cards usually don’t require outstanding credit to obtain

Drawbacks of cash-back cards:

  • Rewards are slow to earn – cash-back cards usually provide only 1% back on each purchase, making rewards slow to earn
  • Limits to rewards earned – these types of cards typically limit how much you can earn back each year

Airline Miles Cards

These credit cards provide rewards in the form of airline miles that can be used to purchase plane tickets.

Benefits of airline miles cards:

  • Sign-up bonuses – airline miles cards usually provide initial bonuses worth several hundred miles
  • Rewards earned quickly – one dollar is typically worth one mile, so if you charge a lot, rewards will add up fast
  • Other travel perks – these cards often come with other travel-related perks, like no foreign transaction fees or free checked bags

Drawbacks of airline miles cards:

  • Black-out dates – most cards set limits on the flights and dates you’re able to book with accrued miles
  • Inflexible – these cards usually only provide travel rewards, so if you don’t travel a lot, the rewards will be useless

Hotel Rewards Cards

These credit cards provide free nights and discounts at hotels.

Benefits of hotel rewards cards:

  • Lots of freebies – these cards often provide users with lots of free stuff in addition to hotel stays, like restaurant credits, free Internet access, etc.

Drawbacks of hotel rewards cards:

  • Annual fees – many hotel rewards cards carry an annual fee
  • Inflexible – most of these cards only allow you to use your rewards at one hotel chain, so your options are limited

Picking the right credit card for you is about having the right facts – use the information above to choose a card that will reward you richly.

Posted Under: Credit
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About Lindsay Meredith

Lindsay is a high school teacher and personal finance blogger. She lives, works, and plays in the Washington, D.C. area.


Nov25

shutterstock_79429900

Aside from the convenience factor, one of the best things about shopping with credit cards is that you’re able to earn some pretty great rewards. From cash back, to airline miles, to hotel rewards, it seems like incentives to use your card are everywhere.

If you’re shopping for a new card, though, it’s worthwhile to consider the benefits and drawbacks of these three common rewards programs to be sure you’re applying for the right cards for your needs and spending habits. But searching out all that information can be time-consuming and difficult – who has the time?

To help you choose the best card for your lifestyle, we’ve aggregated the benefits and drawbacks of each type of card here, so be sure to check out the details below before applying for your next card:

Cash-Back Cards

These types of credit cards allow you to earn a percentage of your purchases back in the form of cash.

Benefits of cash-back cards:

  • Flexibility – you can use the cash on anything you want
  • Rotating bonus categories – most cash-back cards offer special programs throughout the year that will allow you to earn extra rewards
  • Easy to qualify – cash-back cards usually don’t require outstanding credit to obtain

Drawbacks of cash-back cards:

  • Rewards are slow to earn – cash-back cards usually provide only 1% back on each purchase, making rewards slow to earn
  • Limits to rewards earned – these types of cards typically limit how much you can earn back each year

Airline Miles Cards

These credit cards provide rewards in the form of airline miles that can be used to purchase plane tickets.

Benefits of airline miles cards:

  • Sign-up bonuses – airline miles cards usually provide initial bonuses worth several hundred miles
  • Rewards earned quickly – one dollar is typically worth one mile, so if you charge a lot, rewards will add up fast
  • Other travel perks – these cards often come with other travel-related perks, like no foreign transaction fees or free checked bags

Drawbacks of airline miles cards:

  • Black-out dates – most cards set limits on the flights and dates you’re able to book with accrued miles
  • Inflexible – these cards usually only provide travel rewards, so if you don’t travel a lot, the rewards will be useless

Hotel Rewards Cards

These credit cards provide free nights and discounts at hotels.

Benefits of hotel rewards cards:

  • Lots of freebies – these cards often provide users with lots of free stuff in addition to hotel stays, like restaurant credits, free Internet access, etc.

Drawbacks of hotel rewards cards:

  • Annual fees – many hotel rewards cards carry an annual fee
  • Inflexible – most of these cards only allow you to use your rewards at one hotel chain, so your options are limited

Picking the right credit card for you is about having the right facts – use the information above to choose a card that will reward you richly.

About Lindsay Meredith
Lindsay is a high school teacher and personal finance blogger. She lives, works, and plays in the Washington, D.C. area.