Credit Card Reward Credits: What you need to know

Reward credits offer valuable perks that can significantly enhance your credit card experience. However, understanding how they work and how to maximize them is critical to getting the most out of your spending.

What are Reward Credits?

Reward credits function as financial benefits that directly reduce your credit card's purchase balance. Importantly, they differ from points or miles that can be used toward future purchases.

Why Reward Credits are Important

• Valuable Savings: Reward credits provide direct monetary value, helping you save money on your credit card spending.
• Offset Annual Fees: In some cases, the value of earned reward credits can almost exceed the card's annual fee, significantly reducing the 'effective' annual fee for the card.

Important Considerations for Maximizing Reward Credits

• Minimum Spending Requirements: Some cards may require you to meet a minimum spending amount within a period to qualify for the reward credit.
• Qualifying Purchases: Often, reward credits are only earned on purchases made through specific portals or within designated categories (e.g., travel, dining, etc.).
• Restrictions: Be aware of potential restrictions on eligible purchases, such as specific airlines or hotel chains.
• Timing: Since reward credits typically apply in subsequent billing cycles, the final year of card usage often doesn't benefit from the same level of credit as previous years. This is a significant factor when considering annual fees.

How Crunchly Calculates Reward Credits

We review and apply each credit card's reward credits to your expected spending across categories.

• We monitor reward credits for each purchase category your card offers – hotels, airfare, rental cars, dining, groceries, gas, food delivery, gyms, streaming services, online shopping, and more.
• Using your estimated expenditure within each category, we calculate the expected total reward credit you can earn in that category.
• We add up the calculated reward credits across all applicable categories and years of card usage, integrating this value into our assessment of the card's total value for you.

See additional resources to learn more about how we calculate credit card total value and how we determine overall card scores and rankings.