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Guide To Cashback & Gift Cards Rewards Programs

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Giving Back To Cardholders - With Cash

Two of the most popular rewards program features are cashback and vouchers which a cardholder can redeem their points for. These are very simple, yet effective, measures which allow a cardholder to redeem their rewards points for cashback credited to their credit card account or for gift cards and vouchers, allowing them to buy their own rewards from their favorite retailers. These are, thus far, proving extremely popular among many cardholders who don't have the time to browse rewards catalogs or simply don't feel like it.

Types Of Cash Rewards Programs

There are 3 major types of cash rewards programs:

  • In a direct cashback program like that offered with Citi Double Cash Card, a certain percent of their spending is credited directly back to the account each statement. This will help to lower your monthly bill and save you money in interest and purchases.
  • Points based programs allow the cardholder to save up all the points they want, which they will then redeem for cash which can be credited to the account to pay annual fees, charges or pay down their balances.
  • There are points programs which allow your to redeem your points for shopping vouchers and gift cards. You can save all the points you want, and redeem them for gift cards to your favorite retailers, allowing you to literally choose your own reward for spending money using your credit card.

Why Does It Work?

These cash style rewards programs work because you the company is essentially paying their customers to use their cards. The vouchers and gift card programs work the best because the company is giving their loyal customers the ability to choose from literally thousands of items they want, such as high end electronics or sports equipment, to much more mundane things like groceries. If you NEED food or other essential items, a new iPod offered by your rewards program will not help you. A gift card you can spend at your local grocery, however, will help immensely in times of need and uncertainty. The freedom to choose is going a long way for these rewards programs.

It's one thing to have a limited catalog from which you can choose. Maybe you can get a media player and some camping equipment from your catalog. Often, there's a slim range of products in a wide range of departments in a rewards catalog. However, if your credit card company sends you a gift card that you can walk into your nearest department store and buy literally anything you want, your options are literally multiplying exponentially. While your catalog may have hundreds, perhaps even thousands, of items, your local favorite place to shop can have hundreds of thousands. People like choice, and cash vouchers, gift cards and their like offer people a huge variety of options.

The same can be true for cashback. When that money is credited to your account, it's like getting that much stuff - for free. If you earned $100 in cashback on your credit account for the month, that's $100 worth of things you didn't pay for. Often, this reward will fall under and interest free period - so you really did get that $100 worth of whatever you bought for free - complete with no interest.