This program is sometimes called loyalty credit card program, because credit card companies give these gift cards to their loyal customers. This program should not be confused with simple gift cards issued by several stores and companies. This latter type of gift card is not necessary a real credit card, but it is a present: the person who gets the card can buy goods up to a certain amount of money and then the card becomes valueless. Of course, these cards also have a modern version, where the card does not become useless after the certain amount of money was withdrawn, but the buyer can fund it with more money and use the card as a credit or debit card.

A loyalty credit card is issued by a credit card company, and it offers reward points or some other gifts to the cardholder. It is easy to understand the system behind these credit cards. The credit card company offers these cards in hope that the customer will use the certain card more often, making it his favorite credit card because of the bonus points or the gifts offered by the credit card company. By using the credit card the customer will create profit to the company, so using a gift card is a win-win situation to both parties. In the beginning of such programs the gifts were usually smaller and more or less valueless, but nowadays this has changed. Credit card companies offer a certain number of points for every transaction, or for every set amount of money spent from the credit card. Some of them even offer bigger, more valuable gifts, like designer items, cash back, discounts for certain items, but sometimes even cruises are offered to loyal customers. It is true, in order to get a free cruise, the person will have to spend quite a lot of money in a given period of time, but if the person does it anyway, than why not use a card which gives something back in return? And this is the psychology credit card companies’ use.

These loyalty or gift credit cards come in different types, giving bonuses for everyone: there are cards for people who buy mostly electronic equipment, who travel a lot, or there is the simplest one which gives points (or any other bonus) just for using the card, without a special purpose. Many people use these types of loyalty credit cards and profit from the given bonuses, but many others are skeptical when it comes to using these credit cards. We have to state an important thing: these cards do not differ in any way from the standard credit cards; they have an added value instead. The interest rates or the APR rates are not higher than in case of a common credit card, credit card companies try to generate profit by offering something in return for people who chose them. They might not be perfect for people who do not use credit cards, but for those, who buy goods using their credit cards could be rewarding. People who frequently buy things with credit cards get some of their money back, either by getting a present or literally getting a part of their money back. What could be wrong with this? It is simply psychology and marketing: people will most likely choose a gift card instead of choosing one which does not give anything in return, and they will use it more often, hoping that they will get the promised gift, generating profit both to the credit card company and to the bank which issued the card.

Since the gifts differ from one credit card company to the other, a person who would like to have a loyalty credit card should look at the offers and choose the one which fits its needs. People should also check the gifts or special offers given by the companies, choosing a card which will really worth it. Also, they should not forget to check the interest rates and do not choose a credit card based only on the loyalty program. After all, these are credit cards too, so all the general rules of choosing the right credit card and credit card company apply in this case too.