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Are rewards credit cards worth the effort?

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Consider factors such as your spending habits and rewards goals.

You might have thought about getting a rewards credit card to earn cash back, flights or even complimentary hotel stays. While getting a card with such perks might seem like a no-brainer, a rewards credit card is not right for everyone.

To determine if a rewards credit card is worth it for you, consider factors such as your spending habits, rewards goals and the card’s annual fee. Be sure to weigh the pros and cons before applying.

What are the pros and cons of a rewards credit card?

It’s important to understand what you hope to gain from a rewards credit card. However, the benefits are only worthwhile if the card’s drawbacks, such as its fees or interest rate, don’t cancel out the card’s potential reward value.

Consider these pros and cons of a rewards card:

Pros

  • The rewards. A cashback rewards card might be worth it if you spend heavily on everyday purchases such as groceries, gas or dining. If you value traveling, consider a travel rewards card to get accelerated points on hotel stays, airfare or cruise lines. Shoppers might want a retail card to get accelerated points on store purchases.
  • Signup bonus. Some credit cards let you earn a bonus when you sign up. No-annual-fee cards often have a bonus of up to $250 in value, while credit cards with an annual fee can have a bonus valued up to $1,000.
  • Travel insurance. Some rewards cards, such as airline credit cards, offer benefits, including free checked bags or travel insurance. If you’re a frequent flyer, such extras could help reduce your travel costs.
  • Intro APR period. Cashback credit cards often come with a 0% intro APR period on balance transfers and purchases. If you plan to make a large purchase and carry your balance interest-free or if you want to move your balance from another card, this could be an option to save some money.

Cons

  • Spending more than usual. With the incentive of a reward to look forward to, some cardholders are tempted to make purchases for the sake of earning rewards. Remember that you’ll need to repay the balance. Otherwise, the accumulated interest could outweigh the value you’ve received from your rewards.
  • High interest rates. The APR on these cards tends to be higher than others. Also, most rewards cards come with a penalty APR of up to 32% that can apply if you make one or more late payments. Unless you are paying off your balance in full each month, this could mean that the rewards benefit is being lost in interest payments.
  • Fees. Along with the high APR, rewards credit cards often come with additional fees, including annual fees, fees for balance transfers, cash advances, late and returned payments or for going over your limit. Make sure these feeds don’t offset the value of your reward.
  • Point capping. Some credit cards only allow cardholders to earn a certain amount of points or cash back per quarter. If you use your credit card regularly and have the potential to earn points beyond this cap, such restrictions could limit the value of your card.
  • Point expiration. If you plan to save your points over time to redeem for a larger reward, make sure you know when your points expire. Otherwise, you could lose them before you get a chance to redeem them.

Compare credit cards that reward you for spending

Updated June 19th, 2019
Name Product Welcome Offer Rewards Annual Fee Filter values
$150 after spending $1,000 in the first 3 months
2% at US gas stations and select US department stores, 3% at US supermarkets on up to $6,000 per year, then 1% after that and on all other purchases
$0
Earn a $150 bonus statement credit after you spend $1,000 on purchases in the first 3 months. Rates & fees
75,000 points after spending $1,000 in the first 3 months
7x points on Hilton Honors purchases, 5x at US restaurants, US supermarkets and US gas stations, 3x on all other purchases
$0
Earn 75,000 Hilton Honors™ Bonus Points after you spend $1,000 in purchases on the card within your first 3 months of card membership. Rates & fees
3% cash back bonus on up to $10,000 in the first 12 months, then 1.5%
3% cash back on up to $10,000 in the first 12 months, then 1.5% on all purchases
$0
Earn 3% cash back on up to $10,000 in the first 12 months, then 1.5% on all purchases. See Rates and Fees.
$150 after spending $1,000 in the first 3 months
1.5% cash back on all purchases
$0
Earn a $150 statement credit after you spend $1,000 or more in purchases with your new card within the first 3 months of card membership. Rates & fees
60,000 points after spending $5,000 in your first 3 months
5x points on directly-booked flights or on flights and hotels on Amex Travel. 1x points on all other purchases
$550
Get 5x Membership Rewards® points on flights booked directly with airlines or with American Express Travel and 5x points on eligible hotels booked on amextravel.com. Rates & fees

Compare up to 4 providers

Bottom line

Depending on the card you choose, you can get perks such as an intro APR period, free checked bags, airport lounge access and more. But watch out for your card’s interest rate, fees and point capping. If the drawbacks offset the value of your potential reward, a rewards credit card might not be worth it for you.

If you still haven’t found a credit card that fits your needs, compare all credit card options to find something that works for you.

Frequently asked questions

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