Your cash back reward is based on the amount of money you charge to your card in purchases, before finance charges or other fees. The cash back amount is based on a percentage of those expenditures, usually 2% to 5%, depending on the type of card you have and the issuer.
Transferring a balance from another card can also increase the amount of your cash back reward, so note whether the card you are applying for offers a special incentive for balance transfers when you open your account.
How Air Miles are Determined
The number of airline miles you earn also depends on how much money you spend. Often, a rewards card will offer more air miles for certain types of purchases, such as grocery, gas and other common expenditures. The most air miles you can earn at one time is by using your reward card to book a flight on the card’s affiliate airline. Not only will you get the air miles earned by your actual flight, you’ll also get miles for the purchase price of the tickets, before taxes and airport fees.
Getting Your Cash Back
There are often numerous ways to get your cash back reward. Many times, the card issuer will allow you to trade your cash back reward for another type of reward certificate, such as a night in a hotel or a restaurant gift certificate. The most common way to redeem your cash back is for the company to send you a check for the amount of your reward. The reward check is sent once a certain amount of time has passed, such as once every three or six months. It can also be sent once your reward reaches a certain amount, such as $10, $25 or $50. Check your credit card agreement to see when you should expect to receive your reward amount.
Redeeming Your Air Miles
There are generally two ways to redeem air miles rewards. The first is to log in to your air miles account online and book directly through the partner company’s website. Most air miles rewards cards are linked to miles applicable for a certain airline or travel site. Most flights using air miles rewards must be redeemed well in advance of your travel date. Very few rewards cards will mandate that you have to book your travel using your air miles through their in-house travel agent. Many card companies still offer this customer service option but prefer for you to book travel using their online services.
Benefits of Both Rewards
The benefit of the cash back reward is obvious: You earn money for spending money using your rewards card. The downside is that you earn back only a small percentage of the money that you spend. If you use your card on a regular basis, this could result in a substantial amount of cash back, but if you use your card only sporadically, it may take a while for you to see the benefits of a cash back reward. Air miles are generally earned one-to-one for every dollar you spend on your card, with bonus miles for certain purchases, such as travel reservations. The potential for earning air miles is large, especially if you use your card to book travel. Rewards cards also offer a large amount of bonus air miles simply for opening your account.