Reference
Rewards glossary
The words you will meet when reading any cashback or rewards program, defined in plain English.
- Annual fee
- A yearly charge some cards or memberships apply. It should be weighed against the rewards you realistically earn, not the best-case amount.
- APR
- Annual Percentage Rate — the yearly cost of borrowing on a card. If you carry a balance, interest at the APR can easily exceed any cashback earned.
- Cashback
- A share of eligible spending returned to the shopper, usually as a percentage, funded by transaction fees and marketing budgets.
- Cap
- A maximum amount of spending that qualifies for a bonus rate within a period. Spending beyond the cap earns the base rate or nothing.
- Category bonus
- A higher reward rate on selected types of purchase, such as groceries or travel, compared with the base rate.
- Earn rate
- How quickly you accumulate cashback or points per unit of spend, for example 1% back or one point per unit.
- Exclusions
- Purchases that earn no reward, such as fees, certain gift cards, or cash-like transactions. Always listed in a program's terms.
- Loyalty program
- A scheme that rewards repeat custom with points, discounts or perks to encourage you to keep shopping with the same business.
- Points
- A reward currency earned on spending and redeemed later. A point has no fixed value until you redeem it.
- Redemption
- The act of converting points or rewards into cash value, gift cards, goods or travel at the program's set rate.
- Redemption value
- The real worth of a point or reward for a specific redemption, found by dividing the cash value by the points it costs.
- Rotating categories
- Bonus reward categories that change on a schedule, often quarterly, and are usually capped.
- Sign-up offer
- A one-time reward for a first purchase or for meeting a spending milestone within a set window.
- Statement credit
- A reward paid by reducing your card balance rather than paying you separately.
- Store credit
- A reward usable only with a particular retailer, such as a voucher or gift balance.
- Threshold
- A minimum amount of rewards you must accumulate before you can redeem or be paid out.
- Tier
- A membership level whose earn rate or perks improve as your qualifying spend or status rises.