Credit Card Rewards Glossary
The key terms you will run into when comparing rewards cards, defined in plain English.
- Annual fee
- A yearly charge for holding a card. Worth paying only when rewards and credits you will use exceed the fee.
- Annual percentage rate (APR)
- The yearly interest rate charged on a balance you do not pay in full. Rewards never outweigh APR, so pay the statement balance every month.
- Someone you add to your account who gets a card on your credit line. Can help them build credit and can earn you extra rewards.
- Award travel
- Flights or hotel stays booked with points or miles instead of cash, usually the highest-value way to redeem transferable points.
- Base rate
- The rewards rate a card earns on purchases outside its bonus categories, often 1x or 1.5x.
- Bonus category
- A type of spending, such as dining or groceries, where a card earns an elevated rate.
- Cash back
- Rewards paid as a statement credit or deposit, always worth their face value.
- Cobranded card
- A card tied to a specific airline or hotel brand. Rewards are usually locked to that brand.
- Credit utilization
- The share of your available credit you are using. Keeping it low, generally under 30 percent, helps your score.
- Earner card
- A card, often with no annual fee, that earns points cheaply but cannot transfer to partners on its own. Pair it with a hub card.
- Foreign transaction fee
- A surcharge, often around 3 percent, on purchases made outside your home country. The best travel cards waive it.
- Hub card
- A premium card that unlocks transfers to airline and hotel partners for an entire family of cards.
- Miles
- A points currency, either flexible bank miles like Capital One, or airline miles tied to one carrier.
- Points valuation
- The cash value assigned to a point. Cardocrat uses a flat 1 cent per point so cards compare honestly.
- Redemption
- How you cash in rewards: statement credit, travel booking, gift card, or a transfer to a partner.
- Statement credit
- A reward or perk applied as a reduction on your bill, such as an annual travel credit.
- Transferable points
- Bank points you can move 1 to 1 into airline and hotel programs, where they can be worth more than 1 cent each.
- Transfer partner
- An airline or hotel program that accepts points from a bank rewards program.
- Welcome bonus
- A one-time reward for meeting a minimum spend as a new cardholder. Also called a sign-up bonus.
- 5/24 rule
- A Chase guideline that often declines applicants who have opened five or more cards from any issuer in the past 24 months.