The 4 types of rewards credit cards that exist

If you’re interested in maximizing your rewards you need to know the basics. Essentially, there are four types of credit cards that earn some sort of rewards. They are: fixed value, transferable points, co-branded, and pure cash. Once you understand these differences, you’ll be well on your way to mixing and matching your loyalty programs and optimizing your rewards.

1. Fixed value credit cards

These allow you to earn points at a fixed rate where you know how much you are going to earn and also know exactly what you are getting in return when you redeem your points. For instance, a card such as the Capital One Aspire Travel World Elite MasterCard earns two points for every $1 spent on all purchases. And two points is worth two cents when you redeem for travel-related expenses. These types of cards are good for flexibility to book cheaper flights. (On the downside, they aren’t good to use to buy business class or first class flights.)

Other cards like this: BMO World Elite MasterCard* and Scotiabank American Express Platinum Card*

2. Transferable points credit cards

These types of cards allow you to accumulate points into a central pool and gives you the flexibility to transfer your points to different partners. For instance, the American Express Membership Rewards program gives you the option to transfer to different airlines and hotels programs. Watch for transfer bonuses, which the RBC Avion is pretty good at it.

Other cards like this: RBC Visa Infinite Avion and RBC Avion Visa Infinite Privilege

3. Co-branded credit cards

These credit cards let you earn points of a specific airline, hotel or other type of loyalty program directly—and some even allow you transfer points to another loyalty program. For instance, the American Express Starwood Preferred Guest Credit Card allows you to earn Starpoints, which is one of the best transferable hotel programs there is and allows you to transfer their points to 30 different airline programs. These cards are associated with perks such as free checked bags, free hotel night, lounge access and priority check-in.

Other cards like this: TD Aeroplan Visa Infinite Privilege Card* and CIBC Aeriogold Visa Infinite Privilege Card and Chase Marriott Rewards premier Visa Card

4. Pure cash back

These cards allow you to earn cold, hard cash back that is either credited directly onto your monthly statement, or a cheque is mailed out to you.