Rewards credit cards

About reward credit cards

With a reward credit card, each time you spend, you can earn something back in reward points as a reward for your loyalty. This can be cash, points or special deals.

Reward card credit cards are great for people who pay off their balance each month, because you get the reward card perks without paying any interest.

Some of the best credit card rewards allow you to exchange points for store discounts, gift vouchers, hotel stays and even almost free flights.

If you have existing credit card debt, are paying interest on one or more credit cards, or struggle to pay off your credit card debt then reward cars are probably not for you. You could look instead at Balance Transfer Credit Cards or Credit Builder Credit Cards.

What is a reward credit card?

A reward credit card gives you points for spending that you can then redeem against goods and services.

The points you earn from the best reward credit cards mean you can benefit from spending on your credit card. These points can be converted into useful vouchers or discounts on purchases like flights or hotels. These can often be traded for special offers or days out.

Some reward credit cards offer specific rewards such as air miles, discount vouchers and cashback. You may have to spend a minimum amount on your reward credit card each month in order to qualify for rewards or perks. It is best not to use these types of reward credit cards for borrowing or withdrawing cash, as the interest rates on them can be quite high.

Air Miles

An Air Miles or airline credit card is a reward credit card for travel. Depending on which program the card is affiliated with, it allows you to collect British Airways Avios points or Virgin Atlantic Flying Club miles through your everyday spending.

You can exchange Avios points for spending towards travel costs including flights, hotels and car rental.

Find out more about air mile credit cards

Cashback

Instead of earning points, a cashback credit card allows you to earn back a percentage of the money you spend. The money you earn will be put back into your account either monthly or annually. This is a very easy way to save some money on your purchases.

Find out more about cashback credit cards

Should I take out a reward credit card?

Using a reward credit card instead of cash or your debit card for everyday spending could be a great way to earn something back, but you should always pay off your balance in full. However, you should avoid a rewards card if you are unable to pay off your balance.

A rewards credit card might not be your best option if you're unable to pay your balance off in full each month. The interest you will be charged on an unpaid balance each month is likely to be far more than the value of any rewards you earn for using the card.

Credit cards with rewards often have higher interest rates, known as the APR or Annual Percentage Rate, compared to other credit cards. Any rewards you earn might be worth less than the interest you owe.

For example:

You earn 1000 points

You exchange them for a £100 voucher

You've been unable to pay off your balance in full

You now owe £150 in interest charges

You owe more interest than your voucher is worth

How do I choose the right credit card reward card?

The card you choose will depend on your needs and spending habits. Some cards offer you the chance to earn points that you can spend in a specific shop. Others provide vouchers that you can spend across a variety of retailers.

For example, some reward cards give you the chance to collect Nectar points, which can be put towards anything from restaurant bills to cinema tickets.

Multi-purpose reward credit cards

Reward cards are often competitive in other areas, allowing you to use them for different purposes. Even if you’re not a regular shopper some reward cards could be worth considering for the added benefits on offer.

For example, as well as points, many cards offer long 0% interest periods on balance transfers, or long 0% interest periods on purchases, or even both.

However, as interest rates on reward credit cards are normally average at best, they’re only really suited to people able to clear their balance in full every month.

What is the best rewards credit card?

What makes the best reward credit card for you will vary depending on what rewards you'll use most. Think about how much you will use a reward credit card, where you will use it, and what benefits or rewards would be most valuable for you.

Where you do most of your shopping with a particular retailer it might be a good idea to get a reward card from that retailer. You can earn points that you'll be able to spend in their shop. If you do your shopping in a number of supermarkets or retailers then you might not be getting the best deal. Even with a really attractive rate of points, you'll be tied to shopping in one place when it comes to spending your rewards.

What about premium rewards cards?

Premium cards are elite reward cards that give exclusive rewards like access to VIP lounges, in exchange for a fee. There is usually a minimum income level that you have to have in order to be approved for a premium reward card. There is also often a minimum monthly or annual spend in order to qualify for the rewards. Some top end reward card credit cards also charge an annual fee, so you need to weigh up the benefits and costs.

Find out more about premium cards

How many reward card credit cards can I have?

There is no limit to the number of reward credit cards you can have, although in terms of managing your personal finances you do not want to have too many cards to have to pay off each month.

While different credit cards give different rewards, it is better to pick the right reward credit card for you, rather than having lots of credit cards. This is because you will have the temptation to overspend, and because lenders may be wary of you if you have applied for a lot of potential credit.

Having lots of credit cards, whether you use them or not, can affect your credit rating, and whether you are approved for credit such as a loan, mortgage or mobile phone or broadband contract. Find out more about How to check your credit rating.