Credit Card Glossary
Reward Plans
Reward Plans are programs that allow your credit card purchases to provide you with points that can be redeemed for merchandise, services or that can be transferred to frequent traveler programs of hotels or the frequent flier programs of the various airlines.
Reward plans can vary drastically from card to card. Out there on the market there is probably a rewards card for everything. You can get reward cards for making donations to charities, humane societies, emergency relief organizations, wild life funds, political causes, non partisan causes and tickets to the theater or sporting events. You can even a get a card through American Express (through Space Adventures Ltd.) that puts points toward sub-orbital space flight and zero gravity travel in the far future.
The theory behind the rewards program is a simple one. The credit card issuer wants to encourage you to use the card as much as possible so that they will receive more fees from participating merchants. The benefits to the cardholder are obvious – you get something for nothing.
Some credit card companies are even permitting you to use your reward points towards reducing your mortgage. An example is the Citibank Home Rebate Platinum Select MasterCard, which allows you to put your rewards points towards the cost of your mortgage loan.