A rewards credit card allows you to earn points for every £1 you spend, which can be redeemed for a variety of rewards like free flights, airport lounge access, supermarket points, shopping vouchers, or even cashback.

This is possible because credit card providers, such as Mastercard, Visa, or American Express, charge retailers a small fee for processing payments. With rewards cards, these providers share part of that fee with you, using their buying power to secure deals with major brands like Sainsbury’s and British Airways.

The best rewards credit cards may require you to spend a minimum amount each year to unlock the full benefits, and they may also come with an annual fee. It’s important to consider whether your spending will meet the required thresholds and if the rewards you earn justify the fee.

If you consistently pay off your balance in full each month, rewards credit cards can be a great way to enjoy perks without paying interest. However, if you have existing credit card debt or aren’t confident in your ability to pay off your balance each month, a rewards card might not be the best option for you.

What rewards are on offer?

An air miles credit card is designed to reward your spending by giving you airline points. The more you spend on your air miles credit card, the more points you’ll get.

You can then exchange the points for discounts on the price of your flights or upgrades. Depending on which air miles credit card you have, you’ll be able to earn points for flights on different airlines.

Supermarkets are well established in the credit card market, including Tesco.

These cards offer the most points for spending in 'home' shops - so the supermarket itself, and, in some cases, elsewhere.

As well as using these cards for your groceries, you can also use them to collect rewards, in the form Clubcard points for example, on other purchases you make on the card at other retailers.

It’s not the only supermarket with credit cards, however, as M&S and John Lewis also offer rewards for spending.

The secret to getting the best out of a rewards card is to make sure you know what's on offer.

For example, lots of cards come with introductory bonuses, where the points ramp up if you spend a certain amount, in a certain store, within a certain time.

Miss out on that target and you could see how much you get back seriously affected.

Bonuses aside, many cards pay far more for spending in certain shops - with supermarket cards often increasing rewards for spending in-store and online at the ‘home’ shop. If you have the option to pay in more than one way, getting this right can also boost your rewards.

But, more importantly, never spend more than you can afford to repay that month in the hunt for reward points.

Doing that is a losing game, with a few more points here and there almost never making up for missed payments, interest charges and the damage to a credit score that can result from spending more than you can afford to repay.

Reward card FAQs