What is a Credit Card?

A rewards card is a credit card that gives points, miles or cash back for making purchases. Some rewards cards also give a bonus to cardholders who spend a certain amount during the first few months their account is open or over the course of a year. People with any level of credit can qualify for a rewards card, but you'll need at least “good” credit to be approved for the best credit cards with rewards. Rewards cards also have a wide range of annual fees. Some of the best rewards cards have no annual fee, while others charge hundreds of dollars per year.

Key Things to Know About Rewards Cards

1. Rewards Currencies

   Credit card rewards come in three basic currencies – cash back, miles and points. Cash back credit cards give you a certain percentage of your purchases back. Miles credit cards offer miles that are either tied to a specific airline or are generic miles that can be used for any travel-related expense. Points credit cards either offer hotel points or generic ones that can be redeemable towards various products and services. Generic points and miles credit cards make for the best travel credit cards on the market.

2. Rewards Program Structure

   Regardless of the rewards currency that your rewards credit card offers, you will generally earn them as initial/sign-up bonuses (often offered as a lump-sum rewards bounty after spending a certain amount in a specified time period), spending-based rewards (flat or different earning rates for various sending categories) or anniversary bonuses (such a free hotel nights, free flights, or a certain amount of points, miles or cash back each year).

3. Redemption and Value

   Common ways of redeeming your rewards include statement credits (crediting your rewards balance to your account), checks, gift cards, merchandise, charities and special experiences. All these redemption methods will have different values, so your goal should be to redeem your rewards in a way that get you the highest dollar-value. While cash back is straightforward, always consider what you can redeem miles and points for and what they're ultimately worth.

4. Earning limits

   Some cards implement monthly, quarterly or annual earning limits in certain spending categories or across. Always make sure to check what they are and consider whether they may affect your situation.

5. Rotating Categories

   Some credit cards offer certain earning rates for spending categories that may change in a given time frame (e.g.: quarterly) and you have to sign up to earn that rate whenever that happens.

6. Devaluation and Expiration

   Points and miles may have certain plateaus you have to reach in order to redeem them for goods and services. These plateaus aren't guaranteed to be static and if your credit card issuer increases them, your accumulated points/miles may be worth less by the time you can redeem them. In terms of rewards expiration dates, most issuers have done away with them, but always check to make sure that is the case.

   In addition to paying for purchases with rewards credit cards, consumers can save money using a loyalty rewards card when shopping. Many resorts, hotels, and retailers have loyalty programs, and they'll often have a corresponding loyalty card or number that you can present when you make a purchase. CVS and Office Depot are two retailers with good loyalty card programs. The loyalty card keeps track of your eligible purchases and any rewards you've earned. Loyalty cards aren't credit cards, but they are a good way to rack up rewards for hotels or retailers you visit often.

   Store credit cards and co-branded credit cards – which are affiliated with specific retailers and organizations – can also be used in conjunction with loyalty rewards cards to help you save as much as possible with your favorite brands.

Finally, you might hear gift cards referred to as reward cards, especially those awarded as a prize or incentive, or as credit in lieu of a refund.

A metal credit card is a credit card made from metals such as brushed stainless steel, brass, copper, titanium, palladium, or gold. You can use a metal credit card to make purchases, balance transfers, and cash advances, just like you would with a plastic credit card.

Metal credit cards are often seen as status symbols because they are geared toward big spenders who love to travel, and they require good or excellent credit for...

A signature card usually refers to a credit card on the Visa network that offers the Signature level of benefits. This level of benefits offers additional perks compared to the traditional Visa credit cards. Some of these perks include Visa Signature Concierge, travel insurance, and other special offers and experiences.

Even though Visa Signature credit cards share the same level of benefits, they are actually quite diverse. These cards are issued by dozens of different banks and...

A credit card isn't very big; the standard dimensions are 3.375 inches by 2.125 inches. Credit cards are pretty thin too. They're only 0.03 inches thick. Debit cards, ATM cards, and other types of payment cards also have those same dimensions. You won't really find any cards that deviate from this because the standards are internationally agreed upon.

However, you will see cards with varying weights, since credit cards can be made of different materials....

An unsecured credit card is a credit card with no security deposit. When a credit card is unsecured, it means the card's credit line is not "backed" by collateral and the card is what most people would refer to as a normal credit card.

What kinds of unsecured credit cards are there?

The vast majority of credit card offers are unsecured, with no deposit needed. So, it's no surprise there are lots of slightly different...

A student credit card is a card designed specifically for college students with limited credit history or better in general. Student credit cards are easier to get than the average credit card, and they usually have $0 annual fees, rewards, and minimum credit limits of $300 or so. Some student credit cards offer low introductory APRs, but the regular APR on student credit cards tends to be above average.

Students generally have less credit history and...

Credit card debt is the balance owed on one or more credit cards. With a credit card debt, the cardholder is required to pay only a portion of the balance each month, while the rest rolls into the next month. That means it is a revolving debt. Every day that goes by with a balance left over on the card will cost the cardholder a certain amount in interest. That's one reason why credit card debt...

A credit card statement is a document sent by a credit card issuer once per month detailing the cardholder's account activity, including payments made toward the account balance, purchases, balance transfers, cash advances, and fees and interest charges incurred. Credit card statements also show the cardholder's new balance, previous balance, available credit, and any past-due amounts. A credit card's account number, payment due date, grace period, and interest rate are all listed on its monthly...

Most of the credit card basics you should know before getting a card are pretty simple. A credit card is a tool that allows you to make purchases using a lender's funds, with the promise that you will repay that lender. At the end of every billing period, you get a statement that lists those purchases, the sum of which is known as your balance. If you pay off those purchases before the due date, that's...

The main difference between a store card and a credit card is that a store card usually has limited use compared to a regular credit card. Most store cards can only be used for purchases from a specific store or group of stores. Regular credit cards can be used at any merchant that accepts cards from their network – American Express, Discover, Mastercard, or Visa. 

Note that many stores also offer cards that belong...