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Are rewards credit cards worth the effort?

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.


  • 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. These bonuses are often what lead some to adopt aggressive and controversial strategies for earning these rewards.
  • 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. Compare the best cashback cards to get more bang for your buck.


  • Spending more than usual. With the incentive of a reward to look forward to, you might be tempted to chase points with unnecessary purchases. 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.

Who should use a rewards card?

Who are rewards cards best suited to?

  • Frequent spenders. If you plan on using your credit card frequently, you can benefit with strong rewards.
  • Loyal customers. If you do most of your shopping through a particular store, a retail card can reward you especially well versus another rewards card.
  • Cardholders who make regular payments. Making timely payments is crucial if you wish to make the most of your rewards credit card. If you keep a balance on your card, you’ll accrue interest that will eat into your rewards.

Who are rewards cards not suited to?

  • People in debt. If you’re in debt, consider a balance transfer card rather than a rewards card. It may be wise to avoid the temptation of earning rewards through additional spending.
  • Irregular spenders. If you don’t use your credit card regularly, it may not be worth paying the fees for a rewards card. This product type is only beneficial if the monetary value of your rewards exceeds the costs of the card.

Types of rewards credit cards

Here are a few types of rewards credit cards that you might encounter. Remember that while a card may offer stronger accelerated rewards for one category, it can also offer lesser accelerated rewards for other categories.

What are accelerated rewards?

    Accelerated rewards are cash back, points or miles that you earn at a higher rate than the base rate.

For example, a card might offer 1% cash back on all purchases as its base rewards rate. But it might offer 3% cash back for gas. This means the card offers accelerated rewards for gas.


Retail cards offer benefits and rewards tied to a particular retailer. You might only be able to use your card with the affiliated company.

Here’s an example: With the Forever 21 Credit Card, you’ll earn points for your spending, which you can redeem for rewards certificates at Forever 21. You’ll also receive perks like discounts and exclusive promotions. The card is valid only at Forever 21.


You’ll receive your rewards in the form of cash back, which you can usually redeem for statement credit or a deposit into your bank account. Some providers let you redeem for travel, gift cards and merchandise.

Here’s an example: The Chase Freedom Unlimited® credit card offers unlimited 1.5% cash back. You can redeem points for statement credit and bank deposits. Gift cards, travel and experiences are also available through Chase Ultimate Rewards.

Category-specific — Gas, grocery, dining, etc.

You’ll receive accelerated rewards when you use your card for specific spending categories like rewards cards for restaurants or streaming services. For example, you might receive 3% cash back for one category instead of 1%, which is the normal rewards rate for purchases. Some cards have spending caps for the highest rewards rates.

Here are examples of credit cards for certain categories:


You’ll typically earn bonus miles when you spend on flights with a cobranded airline. Later, you can redeem miles for rewards like flights and car rentals through the airline’s rewards portal.

This card type often includes airline-specific perks like priority boarding and free checked baggage.

Here’s an example: United℠ Explorer Card


A hotel credit card offers bonus points when you spend at specific hotel chains. You can often redeem points through the chain’s rewards portal for hotel stays, travel packages, point transfers and more. Here are a few of our favorite hotel loyalty programs on the market.

Usually, this card type also includes hotel-specific perks like loyalty-program upgrades and resort credits.

Here’s an example: Hilton Honors American Express Card. Earn 7x points at the Hilton Portfolio of hotels and resorts. Earn 5x points at US restaurants, US supermarkets and US gas stations and 3x points on all other eligible purchases.

Compare credit cards that reward you for spending

Name Product Welcome Offer Rewards Annual fee Filter values
BlockFi Bitcoin Rewards Credit Card
Up to $100 in Bitcoin rewards by earning 3.5% back in Bitcoin on all purchases in the first 90 days
3.5% back in Bitcoin in the first 90 days, up to a total of $100 in Bitcoin, then 1.5% on all purchases
Earn 3.5% back in Bitcoin in the first 90 days, up to a total of $100 in Bitcoin. After that you'll earn a solid 1.5% back on all purchases.
American Express® Gold Card
60,000 points after spending $4,000 in the first 6 months
4x at restaurants including delivery and Uber Eats; 4x at US supermarkets on up to $25,000 annually (then 1x points), 3x points on directly-booked flights and 1x points on other eligible purchases

Rose Gold is Back

Earn up to 4x points on select purchases, a bevy of travel perks, and a welcome offer worth up to $600 based on our valuation with this upper-mid tier travel card. Terms apply, see rates & fees
Blue Cash Everyday® Card from American Express
Earn a $200 statement credit after spending $2,000 in the first 6 months
3% at US supermarkets on up to $6,000 per year (then 1%), 2% at US gas stations and select US department stores and 1% on other purchases (redeem as statement credit)
Earn a $200 statement credit after spending $2,000 in the first 6 months. This is a higher-than-average welcome offer for a card with no annual fee. Terms apply, see rates & fees

Compare up to 4 providers

How to maximize your credit card rewards

Were you approved for a rewards card? That’s great news. Now here are a few steps to squeeze as many rewards from it as possible. Find more tips in our reward redemption guide.

  1. Grab the signup bonus.

    Your card probably has a signup bonus. This typically comes in the form of significant rewards if you reach a spending threshold within a certain time.

    Check your card’s signup-bonus requirements and calculate how much you need to spend per month to meet them. You don’t have to strain your budget just to get the bonus — there are many hacks to reach minimum spend requirements.

  2. Spend more in your bonus-reward categories.

    Your card might offer accelerated rewards for certain purchase categories. If that’s the case, use it for those purchases as much as you can.

    For example, if your card pays 6% cash back on groceries, it’s a no-brainer to use your card at the grocery store as much as you can. Meanwhile, the card might offer just 1% cash back on all other purchases. For those purchases, you might want to use a card that offers a solid rewards rate — for example, 1.5% cash back — on everything you buy.

  3. Redeem your rewards for high-value options.

    With a cashback card, your rewards rate easily translates to your redemption value. For example, if your card pays 1.5% cash back and you spend $1,000 a month, you know you’ll earn $1,000 x 1.5% = $15 in rewards monthly.

    Point- or mile-based cards can be a little trickier. Some cards make it easy with automatic rewards redemption — usually for statement credit. Other cards have many redemption options, and give you different values for your rewards.

    The credit card industry generally values a point or mile at 1 cent each. If you have 10,000 points, then, they’re usually worth around $100. Try to get value from your rewards at or above this rate. Best of all, most rewards redeemed this way are not subject to taxes.

How to calculate redemption value

See how much your points or miles are worth for certain redemption options by following these steps:

  1. Check the monetary value of the redemption option. For example, you might be looking at a $25 gift card.
  2. See how many points or miles you must trade. Let’s say you need to redeem 3,000 points to get the gift card.
  3. Divide the redemption’s monetary value by the number of points or miles you must redeem. With some quick math, you’d see that $25 / 3,000 = 0.008. That means your points would be worth 0.8 cents apiece if you redeemed them for this gift card. That’s less than the industry standard of 1 point = 1 cent, so it’s a mediocre deal.

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

  • What are the eligibility requirements?
    In addition to being at least 18 years old and a US citizen, you’ll need to provide your credit score and annual income.
  • What are some other features a rewards credit card could offer?
    Some rewards cards offer 0% intro APR period, cell phone protection, travel insurance, luggage insurance, car rental collision damage waiver, travel credit and more.

Images: Shutterstock

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