You have one. I have one. We all have at least one credit card. They help you simplify your finances and are quite rewarding. Cashbacks, deals, discounts are some perks of owning a credit card. But ever thought about how do you get these rewards and why are credit cards so rewarding? Let’s find out.
Rewards cards give you opportunities to earn rewards on your expenses. You can either get the same amount of rewards every time you buy something. Or you can get bonus rewards on a selection of purchases or activities like groceries, etc. New purchases can get you to earn rewards. Although, cash transfers and advances don’t have this privilege.
Credit cards usually offer rewards in ways like cash backs, discounts, points, miles, etc. All of it depends on the type of card you own. Some cards also provide investment opportunities for the customers to invest their rewards or use their rewards for reducing mortgages.
A lot of credit cards allow you to earn a specific percentage of cash according to your expenditure. These cash rewards can further help you in lessening your credit card balance. They’re quite easy to use. These cash rewards do not necessarily mean that you’ll end up with cold, hard cash in your hand. Some credit card programs allow redeeming the rewards into your credit card accounts.
Other reward cards provide you with the opportunities to cash in your rewards to deposit into your accounts or for checks. You might also be able to redeem your cash rewards for gift cards through the merchant partners of your card issuer. There might be some cutoff amount or a rule to redeem your rewards in certain increases/increments.
Rewards in “points” format depending on the number of your expenses. You might earn a certain amount of points for a specific amount of money which you spend. Depending on your credit card company’s policies, you can redeem your reward points for cash, gift cards, etc. Gift cards in exchange for points is a good deal since many merchant partners give a discount on the gift card prices.
Miles or travel rewards can be redeemed for airline tickets. The number of miles you earn depends on your credit card company, and the number of miles you can buy differs from the frequent flier programs of the airlines. You might be able to convert your miles from one flier program to another, but you might end up losing some of it during the conversion process.
Rewards can either fetch you a cashback or you can get a discount. To be clear, a flat rate of rewards on your purchases. You earn different rewards for different types of purchases. Travel cards may fetch you higher rewards for travel-related shopping while you might earn smaller rewards on other purchases.
Reward programs that provide you with opportunities to earn rewards are designed in a way to cater to the excitement of people, provide them with premium privileges, to achieve positive financial returns, build steady revenue streams and foster connections with their best customers. People like to discover new things, try new products, be part of something “exclusive” and loyalty programs give them a chance to do it all.
These programs give the customers enough compelling reasons to become a member by adding social and inspirational values along which fulfills the need of the customers to be a part of something bigger. All these factors add value to the customer’s experience with the brand.
Satisfied customers can thus become loyal to the business and turn into the brand’s advocates. They increase engagement and sales and also help in gaining new customers through referrals or get a word of mouth going!