Rewards Credit Cards
Everything you need to know about rewards credit cards
Are rewards credit cards profitable for banks?
Reward programs are profitable for banks as they increase both sources of revenue for card issuers - merchant swipe fees and interest charged on balances that revolve. Studies have shown that consumers spend more when earning cash back, points and miles which translates into more interchange income and larger balances that potentially earn interest income.
How does Chase Ultimate Rewards work?
Chase Ultimate Rewards provides points per dollar of spend on participating Chase credit cards. Chase administers the points program and converts customer points to cash back, merchandise and travel at various redemption levels.
Are certain card issuers’ rewards points better than others?
Credit card reward points values can vary in value across similar products with major card issuers, particularly when it comes to point values for their branded reward programs like Chase’s Ultimate Rewards and American Express’ Membership Rewards. Points values are determined by card issuers and can change over time.
What are credit card rewards points and miles worth?
Credit card points values vary depending on the rewards program involved and can have significant differences when co-brand partners are involved like airlines and hotels.
Merchant Category Codes
Merchant category codes are the alphanumeric designations given to all merchants by card networks like Visa, Mastercard, Discover and American Express. These codes differentiate between types of merchants such as travel, entertainment, retail, grocery, etc. and often involve different interchange fees depending on merchant type.
Elite status is a loyalty program designation typically involving airline and hotel frequency reward programs that provide frequent flyers and hotel guests with special privileges such as seat and room upgrades, early boarding, late checkout and bonus miles and points earning levels.
An affinity credit card is a card issued in partnership with an organization or university that has a built in constituency, such as a group with a cause or an alumni group. Affinity credit cards often provide reward points that are earned with purchase activity with the revenue being split between the affinity partner and the issuing bank.
Co-branded credit cards are rewards cards that are branded with both the name of the co-brand partner, such as an airline or retailer, and the issuing bank. Co-branded credit cards drive loyalty and additional profitability for the co-brand partner and the issuing bank by incentivizing patronage and purchase behavior by the credit card customer through points and miles per spending dollar.
Transferable Points Programs
Transferable points programs allow reward program members to transfer points to other participating partner loyalty programs that allow points to be used for their products and services. So, if a reward program has several airline or hotel partners a program member could transfer points earned with their credit card purchases from one partner program to another.