The credit card industry is in the eyes of many the most competitive of financial sectors, with millions of potential customers looking for that perfect card to suit their situation and tons of credit card companies looking to provide that service.  Over the last few years we have seen a whole array of marketing techniques and reward point systems to try and entice in the customer, but what is on offer out there?

While the majority of the schemes on reward offer revolve around a certain number of points being awarded depending upon how much you spend, there are many ways to cash in your reward points. Please find below selection of credit card reward point schemes available:-

Air Travel

As air travel has increased dramatically over the last few years we have seen more and more credit cards companies go down the route of so called “Air Miles”.  The more a customer sends the more air miles they are awarded, points which can normally be converted into travel tickets with affiliated airlines.

Specialized Spending

This is another very popular system whereby the credit card company may offer the chance to spend your reward cards at selected outlets (which are affiliated to the card provider).  These may include DIY stores, cinemas, sporting events, TV subscriptions, etc. More you use your card more points you earn and then use may redeem these points for merchandise.

Cash Back

Some credit card companies like Discover provides cash back on the money charge on your card. More money you spend more cash back you recieve. You may this cash back to pay your bills, buy discounted merchandise or just use these to pay any outstanding bill. 

As well as reward points, many credit card companies will offer an array of periodical offers, which could include :-

Insurance Offers

While this is something which is used fairly extensively around the world, the more popular forms of “free” insurance tend to be associated with travel and accident cover.  By offering these as “free” to customers there is every chance that the credit card holder will be tempted to remain long term. 

Discounter Retail Offers

You will very often see a credit card company working with someone in say the wine industry to offer discounted access to certain wine clubs thereby allowing credit card holders to save money on purchases.  As above, this can be a win win for all parties as the credit card holder may well turn out to be a long term member of such a club, at full prices.

Who really pays for these free / discounted services?

While credit card companies are very good at marketing their free offers and reward point schemes, when you get down to the basics somebody needs to pay.  As you might have guessed, more often than not it is the consumer who pays. 

If you look around at the vast array of credit cards which offer exceptional discounts or reward schemes you may well notice a trend.  Very often you will see that under the surface you may actually be paying higher annual charges, or additional fees, and the interest rate which they charge may not be as competitive as other credit cards in the market.

Conclusion

Even though there has been a massive increase in the number of credit cards offering rewards to their holders, we should not lose sight of the fact that these credit card companies are running a business.  They are not in the industry to give away offers for nothing in return, there is always a reason whether this is to keep you on board, attract you to their card or create an additional long term income stream for themselves.

When looking for a credit card offering a specific reward scheme you should always check that the rewards scheme is competitive, i.e. could you get the goods / service cheaper in the open market? You also really need to be sure that you need the reward in question as so many people seem to be blinded by the fact they may have free travel insurance, only to find that the cover is very basic or they may already be covered by their own existing insurance!

The credit card reward points industry can be very beneficial to those who take the time and care to check out the offers, whether they actually need them and whether they are competitive on a pricing basis. There are many examples of consumers rushing towards a particular card only to find that it was not quite what they expected or perhaps the underlying charges were greater than those they were previously paying.  The whole rewards system is a balancing act between what you want and what it will cost you.  If you can find the right balance then it can be very “rewarding”.