10/28/2022
One of the many reasons consumers want a credit card has to do with rewards programs. This benefit, promoted by banks and plastic issuers, is a popular strategy to invite more spending and create greater loyalty.
If you want to know what they are and what they offer, we tell you.
How do the rewards programs of the credit cards work?
The dynamics of these rewards are not difficult to understand. In essence, you get points every time you make a purchase with your credit card or as part of a sign-up bonus (welcome bonus) when you sign up for a new plastic and spend a certain amount during the established period.
The amount of points that a rewards program can offer you will depend on the bank, the type of credit card, the amount you pay and the spending category. For example, it is common to receive a 3x or 2x reward for every dollar you spend on certain expenses, like entertainment or travel.
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Generally, most credit cards simply give you 1 point for every USD on any kind of purchase.
Another important part of credit card rewards programs is related to redemption possibilities. As you accumulate points automatically, financial institutions give you different options to take advantage of them as you see fit and within a time limit ranging from 1 to 3 years.
What do credit card rewards points offer?
Once you have enough points, you can exchange them for various benefits offered by issuers or banks. Depending on whether you have a basic or platinum credit card and your average spending, you may be offered more or less rewards. Among the most frequent options are:
- Cash. This is one of the most popular alternatives to make the accumulated points count. Depending on the amount you have, the financial institution converts the reward into cash on your card account or in your checking account, which you can use to make payments. It's a way to save to pay off any outstanding balance you may have.
- Catalog of products and services. There are different banks that offer a variety of products for you to exchange the points you have collected. It usually includes categories such as clothing, shoes, accessories, food, beauty services, movie tickets and more.
- Miles. Another widely used option that is focused on those who like to travel. Since banking institutions have alliances with different online booking sites and airlines, they give you this type of rewards. You can use these miles in different ways, such as getting tickets, renting cars, getting ground transportation, paying for rooms, among others.
- Vouchers or discount coupons. This is another way to redeem the points you have in stores associated with the entity that sponsors the credit card. In some cases, they allow you to use these vouchers to make online purchases at selected stores.
- Cash back. You also have the possibility of converting the points into cash back so that they are deposited in an account or you have money in your credit card account to pay balances. This is done by converting points into their dollar equivalent.
- Donations. For those looking to help charitable causes, you can do so through points programs. Many financial institutions give you the opportunity to donate what you've accumulated to your favorite charity in the form of cash.
- Other rewards. As part of their loyalty programs, banks may offer other types of rewards. Points for gas purchases, classes, training, entertainment and more are also common. These entities often partner with different merchants so that you can exchange your points for specific brands.
How much are loyalty program points worth?
This is a basic consideration when applying for a particular credit card. The average price per point is usually 1 cent, but this varies.
Entities and issuers charge different rates depending on the redemption system you choose. For example, about 5,000 points may be worth $50 or more when you travel or $25 in entertainment.
Therefore, the value may be subject to the different conditions imposed. There are institutions that may give you as little as 0.18 cents for purchasing merchandise or as much as 1.25 cents for a gift card.
Although miles are similar to points, you can get more of them using co-branded cards, giving you from 0.96 to a maximum of 5 cents.
Credit card rewards programs can be very rewarding if you choose the right one for your lifestyle. If you want to compare the best cards in this category, just visit our Busconomico comparator.
Español: Qué ofrecen los programas de puntos de las tarjetas de crédito