A reward credit card, as the name suggests, is a type of credit card that offer you incentives for using it. Most commonly, these rewards are cashback, points or air miles, which you earn as you spend on your credit card.
Otherwise, this type of credit card works pretty much the same as any other ones, in that you can spend up to a set limit and, when you receive a monthly bill, you can either:
- Pay off the balance in full, in which case you shouldn’t pay any interest (subject to the terms and conditions of your card)
- Make a smaller payment, right down to a minimum set by the provider, but you’ll have to pay interest on the balance left on the card.
There’ll be a limit to how much you can spend on your card. If you go beyond the specified amount, you could face charges and it might even affect your credit rating.