Many credit cards offer a variety of reward rates. When you make a purchase with a rewards credit card, you’ll get a certain number of points. However, you may earn a different amount of points per dollar with many credit cards. Variable rewards rates can be a bit confusing, so if you want to get the most out of your credit card, you need to understand them. Here’s what you need to know about variable credit card rewards rates.
1. Different Purchase Categories
The most prominent type of variable rewards rates is different purchase categories. For example, a specific credit card might give you the option to get extra rewards when you buy at a grocery store or at a restaurant. Many credit cards offer these types of variable rewards rates, often giving you a baseline rewards rate, then more for certain categories of purchases.
2. Specific Companies
Some credit cards may also have agreements with different companies that give you extra rewards when you make a purchase through that company. If you choose to take advantage of the Chase Sapphire Reserve promotion, for example, you can get 10x the rewards on all purchases you book with Lyft through your credit card. The Chase Ultimate Rewards travel portal also gives you extra rewards on many other travel purchases.
3. Annual Credit
Annual credit can be a type of reward. The Chase Sapphire Reserve card has a steep $550 annual fee, but it also gives you a $300 annual credit for travel purchases, so as long as you use the credit, the fee is basically just $250 per year. This annual credit may vary depending on certain elements, like how much you spent on the card the last year, or it may be the same no matter what. An annual credit can be a type of reward that you can use to essentially reduce the annual fee of using an especially premium credit card.
4. Transfer Options
Some credit cards allow you to transfer rewards points to different partners. This may allow you to transfer points to a partner that can use your points more effectively. The Chase Sapphire Reserve card has 14 airline and hotel transfer partners, which allow you to transfer your points on a 1:1 basis. If you keep an eye on the value of different airline and hotel rewards points, you can often transfer your points over to make sure they’re worth as much as possible, creating your very own variable rewards rate.
Variable rewards rates can be a good way to use credit cards in the most effective way possible. If you pay attention to variable rewards rates, you’ll often be able to get more from all your purchases, using credit cards with high rewards rates to pay for certain purchases. With this information, it can be much easier for you to understand how variable rewards rates work and how you can make the most of them.