With the popularity of credit cards today, it's no wonder that there are a variety of incentive programs offered by different card companies in an effort to get consumers to choose one company's cards over another. Some incentive programs offer you cash back on your purchases, while others offer free airline miles or discounts on certain items or from certain retailers... but incentive programs don't do much good if consumers aren't sure how to use them or whether one program is better for their needs than another.

Below you'll find an overview of what incentive programs are and how they operate, as well as examples of some of the more common benefits offered by these programs and some of the advantages of each.

What Incentive Programs Are

Put simply, incentive programs that are offered by credit card companies are just marketing tools used to try and get people to choose particular cards. They are often combined with lower introductory rates in an effort to draw in more customers, and are usually dependant upon the cardholder's ability to keep their card account up to date and their payments current.

Cash Back Programs

One of the earlier incentive programs that were used by credit card companies was the cash back incentive... it is also one of the more popular programs. Cash back incentive programs work by giving cardholders a portion of the amount that they pay on each purchase back, usually once per year. The percentage of each purchase is generally quite low (around 1%, though sometimes as high as 1.5% or 2%), but over the course of a year that small percentage can begin to add up. Some cards completely forego the annual payment, though... they instead pay their percentage back as soon as each purchase clears the processor.

Airline Miles Programs

Another of the early incentive programs, cards that award airline miles or frequent flyer miles with major airlines have always been popular... especially with businessmen or others who travel by plane on a semi-regular basis. Some cards only allow trips to be booked at certain times or on certain dates, though a growing trend is to allow customers to use their built-up airline miles whenever they wish. This can be especially useful for individuals who take regular vacations... the purchases that they make throughout the year can be utilized the following year to pay for vacation travel.

Discount Programs

As more retailers and major manufacturers have become aligned with different credit card companies, a number of cards that offer discounts with certain retailers or with certain types of products have flooded the market. Automotive manufacturers may offer one type of card that entitles cardholders to a discount on that make of vehicle, whereas chains of department stores might have another card that gives customers a discount on all of the items that they purchase. Discount cards remain one of the more popular incentive cards on the market, and are often used for purchases with the retailers who are partnered with their issuers.

Other Programs

In addition to these common incentive programs, there are a variety of other incentive programs that various credit card issuers might offer. Some of these have a mass appeal, such as automotive roadside assistance, whereas others might have a more limited appeal such as making donations to specific charities.

The benefits of the various incentives should be carefully weighed before deciding on one particular program, as well as the usefulness and the likelihood that it will fit in with the way that you usually shop with your credit cards.