It is a credit card that lets you earn rewards for spending on it.
For example, you could earn points for each pound you spend on your reward credit card, that can later be exchanged for shopping vouchers.
The points you get depends on the card, with some offering a pound for each pound you spend, but other offering a point for every £5 spend.
Cashback schemes let you earn money for spending, e.g. 0.5% of any card transaction. Here is how cashback cards work and how to use them.
Supermarket rewards schemes like Tesco's Clubcard or Sainsbury's Nectar points can be exchanged for vouchers to spend in-store, or with some other retailers.
Air miles schemes like Avios and Virgin Atlantic's Flying Club give you points you can exchange for flights.
Department store schemes let you exchange your points for vouchers you can spend in shops like John Lewis and Marks and Spencer.
Football club schemes offer free team merchandise, like a shirt, if you spend a certain amount within the first few months of using the card.
Hotel reward schemes like IHG Rewards Club give you points you can use to book hotel rooms or flights.
There are also provider specific schemes, like Lloyds' Choice rewards, HSBC's Premier Rewards and Barclaycard Freedom Rewards. These let you choose between a range of rewards like shopping vouchers, flights or restaurant vouchers.
This is just as important as how many you can earn per pound you spend.
If Card A offered 10 points for every pound you spend but you need to save 100,000 points to get a £1 voucher, you would only be earning 0.01 pence of rewards per pound you spend.
If Card B offered just one point per pound you spend but gave you a £10 voucher for every 1,000 points you save, you would earn a penny for every pound you spend on the card.
Although Card A sounds like it earns you more points, Card B would earn you 100 times more than Card A.
Each scheme is different, but most only give their rewards once you have reached a certain number of points.
Get your reward immediately: Some schemes such as Sainsbury's Nectar points take up to 48 hours to be added to your account. Once you have 500 or more (worth £2.50), you can spend them in store or online whenever you like.
Get your reward every few months: Rewards like Tesco Clubcard vouchers are issued every three months as long as you have earned enough points.
Get your reward once a year: Some schemes will exchange your points for rewards once a year. For example, if you had 1,030 points after a year and got a shopping voucher worth £0.50 for every 50 points, you would get a voucher for £10. The extra 30 points would be carried over into the next year's balance.
Some schemes will automatically send you a voucher by post, while others let you select from a range of different rewards online. You can then use your voucher in the shop or online store it applies to. If you have a card that lets you use your points immediately, you can just present the card or sign into your account online and choose to pay with your points without the need for a voucher.
Most reward points expire after a certain period, such as Clubcard vouchers, which expire two years after you receive them. Nectar points do not expire unless you close your account. However, they may close your account if you do not use it for 12 months. Check the terms and conditions of each scheme to find out how long their points last for.
Many cards offer the chance to earn bonus points, especially in the first few months you have the card. For example, a card might offer you an extra 10,000 points if you spend more than £3,000 in the first three months. Others might usually give you a point for every pound you spend on the card but offer two points per pound spent during the first three months. You may also get more points when you spend with certain retailers. For example, the Nectar card offers you two points for every £1 you spend in Sainsbury's.
You should try to maximise the number of points you get by using your rewards credit card any time you spend (as long as the retailer lets you use it without charging a fee). American Express cards often give the highest rewards, but some retailers do not accept them. However, some providers will give you two cards: an American Express card that offers more points, and a backup Visa or MasterCard that offers less points but will be more widely accepted. Here is the difference between American Express, Visa and MasterCard.
Some transactions will not earn you any points, including fees, cash withdrawals, balance and money transfers, paying interest or purchasing foreign currency.
If you are unable to pay off everything you spend, the interest and other fees you are charged could come to more than the value of the rewards you earn.
These cards often come with high interest rates and some have an annual fee. You could also have to pay other credit card charges if you:
Miss a monthly repayment
Break the terms and conditions
If you can pay off your statement balance in full every month, you should be able to benefit from having a rewards card.
Set up a direct debit for the full amount to make sure you do not miss any repayments.
You can compare rewards credit cards here. When you choose your card, look beyond how many points you earn for each pound you spend. Instead, think about:
How much you are likely to spend on the card? You can then work out what rewards you would earn.
Decide what type of rewards you would actually use. For example, if you prefer shopping to travelling, a scheme that offers high street vouchers will suit you better than one that gives you air miles.
You can use our credit car eligibility checker to find the rewards credit card that you're most likely to be accepted for.
No, you cannot swap points between schemes, but some points can be swapped for vouchers from different retailers.
Check with each provider, as some schemes limit the points you can earn each year.
Most schemes let you check your points balance online.
Find the best credit card for you, whether you're looking for 0% card for balance transfers or purchases or day to day spending and rewards