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If you're going to get a credit card, you want the one which is going to work the hardest for you. Therefore it makes sense to choose one with a reward scheme, where you'll get something back for your spending. And the more you spend, the more you get back! So let's take a look at the top 5 types of reward card.
1. Airmiles Reward Cards
Every time you spend money, you accumulate more airmiles. Airmiles don't translate exactly into actual miles and how much they're worth can vary from card to card. You don't have to use airmiles on flights, you can also save money on hotels, car hire, theme park tickets and activity dates.
As with all these cards, the more you spend, the more rewards you get, so use your card to pay for big purchases as well as day to day costs and your points will build up faster. As with most reward cards, if you don't pay off in full each month you may be charged more in interest than you're earning from rewards, so make sure you read the terms and conditions before signing up.
2. Loyalty Reward Card
Loyalty schemes are great for people who spend a lot of money with one company, so it's a good idea to consider where most of your monthly pay check goes before purchasing to one brand. If you spend hundreds of pounds a month in your local supermarket or petrol station, it may be worth choosing a card from them. While some card providers will only give you points for the money you spend with them, others will reward you for spending elsewhere too, albeit with less points, which is definitely something to consider when choosing your card.
The main benefit of a reward card is that you can use the points you earn as full or part payment when buying goods or services from that company. However, they also come in the form of special offers and discounts from that company.
3. Cashback Credit Card
The very first thing you should know about cashback credit cards is that they're only good for people who pay off the balance each month. The interest rates are high if you don't pay your balance on time and they require excellent money management skills to get any benefit. If you already have debts, get a 0% interest balance transfer card or a lifetime balance transfer card instead.
That said, if you manage them properly, they can have a great return and some offer up to 5% cash return on everything you spend during the promotional period. To get the most out of them, use them as you would your debit card, pay them off fully each month and don't buy things you wouldn't have done anyway. Some cards even offer discounts at selected retailers, so look around for a card that will benefit you the most before signing up.
4. Charity Credit Cards
While charity credit cards sound like a great idea, and are pretty popular as a result, unfortunately in most cases hardly any of the money you spend will be donated to charity – normally around 0.25%.
If you want to give money to charity, it can be better to get a cashback reward card and use the money you earn to donate to charity. If your cashback credit card offers 5% cashback in the promotional period you could be earning 20 times more for your chosen charity. By doing it this way you can also Giftaid your donation, which most charity credit cards don't allow you to do. This means your charity of choice can reclaim the tax on your donation and get more money, with no extra cost to you.
5. Football cards
Football credit cards are another deal that sounds great, supporting your team by wearing your colors on your card, and you're supporting the future of your club by donating money to the academy team. Unfortunately football credit cards are of a similar breed to charity credit cards and hardly give any money back. As suggested with charity credit cards, another option is to get a cashback reward card and donate the money you earn to your club.