Rewards based credit cards – are you making the most of them?

The choice of credit cards available to us today means that there is something for pretty much everyone, with different cards available to suit different needs. This includes interest free credit cards, balance transfer credit cards, cash back credit cards, prestige credit cards, and rewards based credit cards, amongst others.

To view our list of reward credit cards please click here

There are even specialist credit cards available for those with damaged credit, and these can help to repair their credit over time through sensible use and responsible repayments.

Rewards based credit cards have proven popular amongst many consumers over recent years, as these cards offer the consumer the chance to earn something back from the credit card company simply for using their card in the usual way – i.e. spending on it and making repayments on it.

There are many different types of rewards available on these cards, and this includes gift vouchers, air miles, rewards points that can be redeemed for various items, travel rewards that can be exchanged for travel related services and goods, and more.

The person most suited to a rewards based credit card is the cardholder that tends to repay the balance on their card in full each month, and therefore does not get charged any interest.

If you only make a partial payment on your balance each month you will be charged interest, and the amount that you pay in interest will by far outweigh the rewards that you accrue from using the card.

However, if you do not have to pay any interest because you settle your balance in full within the interest free period then you have nothing to lose and everything to gain from using these cards.

However, it seems that even those that are suited to rewards based credit cards are not making the most of them. The best way to use these cards is to spend on them regularly, as the more you spend the more rewards you will earn, and then repay the balance in full within the interest free period.

You should avoid making cash withdrawals and transactions, as not only are they costly in terms of fees but you will also no earn any rewards for these types of transactions.

Whilst many rewards based cardholders may know the best way to earn rewards and avoid fees on their credit cards, it seems that many are not so savvy when it comes to claiming their rewards. Recent research has shown that an alarming number of cardholders are sitting on unclaimed rewards such as air miles and gift vouchers, defeating the object of having the credit card in the first place.

One official said: “It’s fairly typical for a company to offer customers an incentive to join their club. Whether it’s reward points in a supermarket or air miles for choosing a specific airline, loyalty is meant to pay.”

He went on to state: “However our research shows that while these schemes are a clear incentive to buyers, we as customers do not fulfil our end of the bargain and spend our hard earned rewards. Which means providers have won twice by getting your business and then not having to reward your loyalty as agreed. If this shows anything it’s that there are very few reward schemes that genuinely work. Perhaps the best bet is to stick to a cashback credit card, where at least you are automatically rewarded in pounds and pence.”

Recent research shows that the average rewards based cardholder has around £42 of unclaimed rewards on their card, whilst around 20% of these cardholders have around £160 in unclaimed air miles.

It is estimated that a whopping £4.25 billion worth of rewards has gone unclaimed altogether. Over 50% of adults are thought to have unclaimed gift vouchers averaging around £51.

According to the report older people aged 55 and over are most likely to be hoarding rewards on their cards, and those in London and the South East are also most likely to have unclaimed rewards in terms of location.

All cardholders should check and see whether they have outstanding rewards on their cards, as there may be a deadline by which the rewards must be claimed, which means that the cardholder could otherwise lose out.

Rewards based credit cards can prove very useful for some consumers, and whilst the level of reward per pounds spent on the card is low, it can quickly add up if you use the card regularly.

You can use your card for everyday purchases such as petrol and shopping, and then repay the card with the money that you would normally have put aside for these purchases. This can help to boost your reward levels.

However, one very important thing that you need to remember is to claim your reward!!!