Card rewards, gift cards and vouchers, explained

A card can pay you back in three ways, and shops hand out other money-like things on top. They look alike on a screen, but they follow different rules. This guide sorts them out, so you know what you are holding and what could make it disappear.

The three kinds of card rewards

Card rewards usually come in one of three forms.

• Cash back returns a share of what you spend, as a statement credit, a deposit or another cash equivalent with a fixed money value.
• Miles earned on a card linked to an airline go straight to your account with that airline, and the airline decides what they can buy. The frequent flyer guide explains how those programs work.
• Points are the most flexible. Depending on the card, they can become cash back, move to airline or hotel partners, or pay for travel, shopping and gift cards through the issuer's own site. What a point is worth depends on how you spend it. In the United States, issuers commonly value one point at about one cent.

What to check before you count on a reward

Complaints gathered by the US consumer finance regulator, the CFPB, keep returning to the same four problems: conditions nobody noticed (a minimum spend, special categories, a sign-up step), a lower value than expected at the moment of redemption, redemptions that failed, and rewards taken back, for example when an account was closed. Before you rely on a reward, find these four things in the card's terms:

• How it is earned. Which purchases count, whether there is a spending minimum, and whether there is a cap.
• How long it lasts. Most issuers have an expiry rule, usually tied to inactivity or to closing the account.
• What it buys. The ways you can redeem it and any minimum amount.
• What can change. Issuers and loyalty programs generally reserve the right to change the value of rewards, including at the moment you redeem them.

If you carry a balance from month to month, compare the interest you pay with the rewards you earn before you chase either one.

Gift cards, vouchers and coupons

These three are often lumped together, but they are different things.

• A gift card holds money that someone paid. A retail gift card works only at the shop or restaurant that sold it. A bank gift card carries a payment network's logo, such as Visa, and works wherever that network is accepted.
• A voucher or coupon is an offer. The merchant gives you a discount or a credit, usually with conditions: a minimum spend, one use per customer, a last day to use it.
• A promo code is a coupon you type in at checkout.

In the United States, federal rules protect the money on gift cards you buy. It cannot expire for at least five years from the purchase or from the last time money was added. An inactivity fee can be charged only after a card has gone unused for a year, and then only once a month. The card or its packaging has to state the expiry date and any fees clearly. Other countries and regions have their own rules.

Those rules cover gift cards and prepaid cards. A free coupon or voucher is whatever the merchant says it is, so read its terms and its last day.

A short checklist

• Write down the expiry date of every voucher and gift card on the day you get it.
• Use gift cards early, and keep the receipt or the card's terms.
• Check where a voucher works: which shops, which country, online or in store, and whether it can be combined with other offers.
• Never post or send card numbers, security codes, PINs or redemption codes where other people can see them.
• If a reward or a card balance looks wrong, ask the issuer in writing and keep the answer.