Credit Cards — What are Cash back and Reward Credit Cards
Cash Back Cards
In this arrangement, cardholders who use their cash back credit card to pay for purchases, qualify for a cash back payment from by the card issuer. The payment may be in the form of actual cash, or vouchers, or points. If it is cash-based, the cash is likely to be paid directly into the cardholder’s account; where the rewards are points or vouchers, both can usually be redeemed at leading high street retailers.
Generally speaking, the amount of cash back is based on the amount the cardholder spends. Some card issuers may, however, offer higher amounts of cash back initially, but the amount of cash the cardholder will receive over the introductory period, may be subject to a limit.
A reward credit card earns the cardholder ‘points’ whenever he or she uses the card to purchase for goods or services. The card issuer may, for example, award the cardholder one point for every £1 he or she spends. When the cardholder has sufficient points, he or she may be able to exchange those points for shopping vouchers for use at a particular store or stores, to obtain discounts on air fares or to pay for admission tickets at entertainment outlets.
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