Why Credit Card Rewards Are so Popular

Not all plastic cards are created equal, that's a fact. We can innumerate quite a few types offhand - debit cards, credit cards, secured and prepaid credit cards. All they have similar features and differences such as account types, fees, rates and other charges, additional services and benefits.

However, when it comes to rewards, credit and debit cards stand out for their great diversity of rewarding programs which make a person's paying experience most enjoyable and unique. It adds more flame into the competition between these two popular types of plastic cards and makes a consumer's choice more difficult. For this, we'll descend to particulars about debit and credit card rewards and guide a hesitating customer to his/her right decision.

You may stick to the opinion that debit cards are not as beneficial as their credit counterparts, and you should be right. What's so exiting about spending your own money which is taken from your account right away you make a purchase?

However, you may miss one thing. A debit card is becoming a stronger competitor of rewards credit cards, offering generous cash back and point rewards to its holder. To some customers, especially those who cannot have a standard credit card for some reason or who feel safer with debit cards, the ability to earn rewards on a debit card might be a great bonus.

But if we get a closer look at their rewards schemes and if we blink the risks of using a credit card, the latter is no doubt a winner. Let's see why.

Unlike credit cards with rewards, almost all points based and most cash back debit cards will charge you an annual fee. It might be vexing especially as even the highly profitable frequent flyer credit rewards programs are eliminating the annually charged fees.

Now, let's compare the rewards rates for cash back programs available with both, debit and credit card offers. It appears that debit cards tend to offer a considerably smaller rate than that with credit cards which might be as high as 5% of cash back.

On making a research we found that the most typical rate with most debit cash back cards is 0.25% on all purchases, provided you use your plastic as a credit card. That is you sign the purchase instead of entering a pin number.

It's no wonder that a most common cash back credit card is times more valuable and beneficial in this case. On the other hand, debit cash back offers typically do not set the annual rebate limit, and it might play to your advantage.

The strongest argument in favor of rewards credit cards is perhaps a huge diversity of rewards schemes that they have on offer. Just imagine: charity rewards, religion- and ecology-based rewards, auto and even wedding credit rewards!

You will hardly find a debit card so sophisticated in their promotional programs. So, rewards debit cards can really earn you free money but the amount is not really that enticing as you'll get with credit card.

If you plan to pay your balances off each month, get yourself a credit card and benefit from its enviable rewards programs.

Share Opinion: