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An introduction to rewards credit cards — and how to choose the perfect one.
For many people, rewards credit cards are considered the best out there. You can get paid back a small amount for purchases you’d normally make and might also receive enticing benefits.
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Ultimately, the “best” credit card comes down to your specific needs. However, there are many options that are well above the rest.
When choosing these cards, we compared several features among available reward cards, including available reward categories, points earned per dollar spent, the average value of points upon redemption, welcome offer value, annual fees, introductory APRs and other perks or benefits a consumer might weigh when looking for a rewards card. The cards below stood out above the rest in terms of performance in these categories, earning a spot on our list.
Here are a few excellent cards to help you start your search.
If you consistently pay your balance in full, you’ll find solid rewards with the Citi® Double Cash Card. When you pay off your purchases, you’ll earn a better cashback rate than you’ll find with other no-annual-fee, flat-rate cashback cards.
Rewards: 1% cash back on all purchases and another 1% as you pay them off. Most other no-annual-fee cashback cards offer a flat rate of 1.5% cash back on all purchases. If you consistently pay off your balance, you’ll earn a better rate with this card.
Annual fee: None. You’ll get a strong cashback rate without having to pay an annual fee.
Intro APR: 0% on balance transfers for 18 months following your account opening and 15.74% to 25.74% variable after that. This is an excellent intro APR for balance transfers — one of the best on the market.
Time limit on balance transfers. You must complete your balance transfers within the first 4 months of opening your card.
Balance transfer fees. For each transfer, you’ll pay a fee of $5 or 3% of the transaction amount, whichever is greater.
Penalty APR. If you make a late or returned payment, Citi may apply a 29.99% variable APR to all of your balances.
Earn a $200 statement credit after you spend $1,000 in purchases on your new card within the first 3 months.
6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%) - that means spending $60 a week at U.S. supermarkets could earn over $180 back per year.
3% cash back at U.S. gas stations. 1% cash back on other purchases.
You spoke, we listened. Over 1.6 million more places in the U.S. started accepting American Express® Cards in 2018.
Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
If you spend a lot on everyday purchases, the Blue Cash Preferred® Card from American Express could be the right pick. You’ll pay an annual fee, but you’ll find stellar rewards on groceries and a strong rewards rate on gas.
Rewards: Up to 6% cash back. Earn 6% cash back at US supermarkets on up to 6,000 per year in purchases, then 1%. Earn 3% cash back at US gas stations and 1% cash back on other eligible purchases.
Welcome offer: $200 back after $1,000 in purchases within your first 3 months of card membership. This is a strong welcome offer that’s relatively easy to obtain. You’ll receive the welcome offer in the form of statement credit.
Intro APR: 0% on purchases and balance transfers for the first 12 months following your account opening. After that, your APR reverts to 15.24% to 26.24% variable. This is a solid intro APR and a nice addition to the card’s excellent rewards on everyday purchases.
Annual fee: $95. Calculate the rewards you earn and see if they’ll cover the card’s annual fee.
Few hotel cards charge as high an annual fee as the Marriott Bonvoy Brilliant™ American Express® Card. Then again, few offer as many high-value perks. Not only will you earn excellent points on Marriott Bonvoy purchases, but you’ll also enjoy benefits that can offset a large portion of the card’s annual fee.
Rewards: Up to 6x points. When you make eligible purchases at participating Marriott Bonvoy properties, you’ll earn 6x points. When you spend at US restaurants and on flights booked directly with airlines, you’ll earn 3x points. And you’ll earn 2x points on other eligible purchases.
Fee credits. Every year, you’ll receive $300 in statement credits for purchases at participating Marriott Bonvoy hotels. Also, enjoy statement credits every four years for your Global Entry or TSA PreCheck application fee.
Welcome offer: 100,000 bonus points after $5,000 in purchases within your first three months of card membership. If you earn this welcome offer, you’ll have enough points for one or more nights at any eligible property in the Marriott Bonvoy portfolio.
Starwood Preferred Guest/Marriott Rewards benefits. Get a boost to Gold Elite status in the Marriott Bonvoy program, which comes with perks like late checkout and room upgrades based on availability. You’ll also receive a Free Night Award every card year.
Airport lounge access. Access over 1,000 airport lounges globally with complimentary Priority Pass Select membership.
Annual fee: $450. This is a premium card with a price tag to match. If you can take advantage of its benefits, however, you might find it’s worth paying for.
You may receive a high ongoing APR. Depending on your credit, American Express may give you a purchase and balance transfer APR as high as 26.99% variable.
Penalty APR. If you make a late or returned payment, American Express may apply a 29.99% variable penalty APR to all of your balances.
Earn 60,000 Membership Rewards® points after you use your new card to make $5,000 in purchases in your first 3 months.
Enjoy Uber VIP status and free rides in the U.S. up to $15 each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings.
5x Membership Rewards® points on flights booked directly with airlines or with American Express Travel.
5x Membership Rewards points on prepaid hotels booked on amextravel.com.
Enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
Receive complimentary benefits with an average total value of $550 with Fine Hotels & Resorts. Learn more.
$200 airline fee credit, up to $200 per calendar year in baggage fees and more at one qualifying airline.
Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. Enrollment required.
See Rates & FeesThe Platinum Card® from American Express is more expensive than most premium travel cards. However, it offers many benefits for the cost — including excellent travel rewards, fee credits, hotel benefits and airport lounge access.
Rewards: Up to 5x Membership Rewards points. Earn 5x points on flights booked directly with airlines or with American Express Travel. And earn 5x points when you book prepaid hotels through American Express travel. These are top-notch rates for travel purchases. Earn 1x points on other eligible purchases.
Fee credits. Every calendar year, you can receive up to $200 in airline fee credits. You’ll also receive statement credit every four years for your Global Entry/TSA PreCheck application fee.
Welcome offer: 60,000 Membership Rewards points after $5,000 in purchases within the first three months of your account opening. An excellent welcome offer. At the industry average of 1 point = 1 cent, these points can be worth $750. But if you transfer them to select hotel and airline programs, they could be worth much more — potentially upwards of $1,500.
Hotel benefits. When you book stays at properties in the Fine Hotels & Resorts Program, you’ll receive complimentary benefits like daily breakfast, room upgrades when available and property amenities. You’ll also get a complimentary boost to Gold status in the Hilton Honors and SPG/Marriott Rewards loyalty programs.
Airport lounge access. Get complimentary access to over 1,200 airport lounges around the world, including the best-in-class Centurion Lounges.
Annual fee: $550.The Platinum Card® from American Express is one of the more expensive premium travel cards. However, you might find it packs enough benefits to make it worth paying for.
It’s a charge card. Because this is a charge card, you’ll need to pay your balance in full every billing cycle. American Express may invite you to use the Pay Over Time feature, which lets you extend payment over time for certain purchases.
0% APR promo balance transfer rate for 12 months with 3% balance transfer fee now through March 31, 2019. After that, the APR for the unpaid balance and any new balance transfers will be 12.99% to 17.99%. APR will vary with the market based on prime rate. Subject to credit approval.
Earn 25,000 bonus points by spending $2,500 in the first 90 days of account opening.
Earn 4x points on travel purchases through the PenFed Honors Advantage program. Earn 3x points on travel purchases for all other card holders.
Earn 1.5x points on all other purchases unrelated to travel.
$100 annual air travel credit
$100 Global Entry or $85 TSA PreCheck benefit every 5 years
No caps or limits on rewards. No annual or foreign transaction fees.
Chip enabled for added security.
Variable rate as low as 12.99% APR. Rate and offers current as of March 1, 2019 and are subject to change.
This card offers tremendous value for no annual fee: a strong signup bonus, top-notch rewards, an intro APR and travel credits.
Rewards: Up to 4x points. Earn 3x points on all eligible travel purchases — an already strong rate. If you’re a PenFed Honors Advantage member, you’ll bump that rate up to 4x points on all travel purchases. On all other purchases, you’ll earn 1.5x points.
Travel credits. Each calendar year, you’ll receive $100 in statement credit toward incidental air travel fees. And every five years you’ll receive a statement credit for your Global Entry or TSA PreCheck application.
Signup bonus: 25,000 bonus points after $2,500 in purchases within the first three months of card membership. At the industry standard of 1 point = 1 cent, these points are worth around $250.
Intro APR: 0% on balance transfers for 12 months following your account opening. After the intro period, your balance transfer rate reverts to a variable 12.99% to 17.99%. This is a solid intro APR, especially for a travel card.
Annual fee: None. Start earning excellent rewards for no annual fee.
Penalty APR. If you don’t make your minimum payment within 60 days after it’s due, PenFed may apply a 17.99% variable APR to all of your balances.
The Uber Visa Card ties the Savor® Rewards from Capital One® for best dining rewards. It pulls ahead with no annual fee, while its competitor charges a $95 annual fee starting the second year.
Both cards offer strong elevated rewards for different categories. It’s worth comparing them closely before picking one.
Rewards: Up to 4% back. Earn 4% back on dining. This ties the Savor® Rewards from Capital One®‘s rate for best dining rewards on the market. However, you’ll also earn 3% on hotel and airfare, 4% for online purchases and 1% on all other purchases.
$50 subscription credit. Receive a $50 credit for online subscription services after spending $5,000 or more on your card per card year.
Signup bonus: $100 after $500 in purchases in the first 90 days of card membership. You’ll find stronger signup bonuses elsewhere, but this one is relatively easy to obtain.
Potentially high APR. Depending on your credit, you may receive a purchase and balance transfer APR as high as 25.99% variable.
With a rewards credit card, you get a percentage back of what you spend. You’ll receive your rewards in the form of cash back, points or miles, which you can typically redeem through your card provider’s rewards portal.
For cashback cards, rewards are usually expressed as a percentage. If a card offers 2% cash back on all purchases, for example, you’ll receive $2 back for every $100 you spend.
For other cards, rewards are usually expressed as a point or mile multiple. A card might offer 2x points on all purchases, for example, which means you’ll receive 2 points for every dollar you spend.
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 elevated rewards for one category, it can also offer lesser elevated rewards for other categories.
What are elevated rewards?
Elevated rewards are cash back, points or miles that you earn at a higher rate than the base rate. Accelerated rewards is another name for elevated rewards.
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 elevated 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.
Cashback
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: TheChase Freedom Unlimited® credit card offers 1.5% cash back on every purchase. 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 elevated rewards when you use your card for a certain category. 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:
Gas: Costco Anywhere Visa® Card by Citi. You’ll earn 4% cash back on eligible gas purchases worldwide for the first $7,000 per year, then 1%.
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.
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.
Think about what kind of rewards you want. Do you want cash back, store points or travel rewards? Each has different redemption options as well as pros and cons.
Cash back is typically easy to understand and redeem. However, it may not be as valuable as travel rewards.
Store points can help you shop at a certain retailer. But you might find them restrictive, as they can only be redeemed with your card’s affiliated company.
Travel rewards can be very valuable, depending on what you redeem them for. But they can take time to understand, and you want to be careful not to redeem them for less than the industry average.
Decide if you want to pay an annual fee. This simple step can quickly help you narrow down your options. Many cards offer decent rewards for no annual fee. If you want the most powerful rewards rates, you’ll usually need to pay an annual fee. Annual-fee cards often come with additional perks such as fee credits and access to airport lounges.
See where you spend the most money. To get the biggest bang for your buck, look for a card that offers elevated rewards for the categories you spend the most in. For example, if most of your budget goes toward groceries, it might not make sense to get an airline card — consider a grocery card instead. And if you’re always eating out, you might like a dining card.
What else should I consider when picking a rewards card?
Signup bonus
Cards that offer bonus points to new customers can help you kickstart your rewards points. You’ll likely need to meet some eligibility requirements before you can claim the points. For example, you may need to spend a certain amount on your card in the first few months.
Restrictions
Many rewards cards limit how you can earn and redeem points. If a card has a cap on elevated rewards for certain categories, you may want to look elsewhere if you’re a big spender. Keep an eye out for expiration dates on your rewards, too.
Interest
Interest rates vary from card to card. Comparing these, along with your spending habits, will help you calculate how much you’ll have to repay over time.
Introductory APRs
Some rewards cards offer introductory interest rates — often 0% APR — on purchases, balance transfers or both. If you want to make a balance transfer, consider paying off your debt entirely before making new purchases with your card.
Were you approved for a rewards card? That’s great news. Now follow these steps to squeeze as many rewards from it as possible.
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. However, there are many hacks that can help you reach the spending threshold.
Spend more in your elevated-rewards categories.
Your card might offer elevated 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.
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.
How to calculate redemption value
See how much your points or miles are worth for certain redemption options by following these steps:
Check the monetary value of the redemption option. For example, you might be looking at a $25 gift card.
See how many points or miles you must trade. Let’s say you need to redeem 3,000 points to get the gift card.
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.
Rewards. You can choose a card that fits your lifestyle and earn rewards on purchases you would have made anyway.
Redeeming rewards. Redemption options vary from card to card. You may be able to earn cash back, travel benefits, merchandise, gift cards and more.
Global acceptance. Most rewards cards are affiliated with Visa or Mastercard, and you can use these cards in over 200 countries and territories worldwide. While American Express and Discover credit cards aren’t as widely accepted internationally, they can be used in many locations around the world.
Extra perks. Many rewards cards offer extra perks, such as complimentary travel and rental car insurance. Compare your options to see which features work best with your lifestyle and spending habits.
Cons
Cost. You may have to pay an ongoing annual fee, or your card may have a higher APR than your basic, no-frills product.
Limitations. Your card provider might not let you earn more than a certain number of points in a calendar year, and your points may expire after a set time.
Temptation to spend. Rewards are always enticing. But if you aren’t careful, you could find yourself in snowballing debt. If you consistently carry a balance on your card, the interest could offset any rewards you earn.
Are rewards credit cards really worth it?
If you use your rewards card wisely, it could pay off handsomely. Here are the rewards you might earn based on the following sample budget. We’ll use the Bank of America® Cash Rewards credit card for our example.
Category
Yearly spending
Rewards rate
Total cash back
Gas
$3,600
3%
$108
Groceries
$6,000
2%
$120
Other purchases
$8,000
1%
$80
With no annual fee, the card offers valuable rewards. Over a year, you’d earn cash back worth $308.
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.
Bottom line
There’s no shortage of rewards credit cards to choose from. Think about what rewards you want and how you typically spend, then compare a few cards before settling on the winner.
This is an initial bonus you’ll receive upon meeting certain requirements. Most commonly, you’ll receive a big rewards haul for spending a certain amount with your card within a specified time period.
It depends on your spending. As a rule of thumb, get a tiered-rewards card only if you spend a lot in its elevated-rewards categories. If your spending is dispersed throughout many categories, consider a flat-rate-rewards card instead.
The value of rewards can be deceptive, especially if you earn points or miles.
Here’s an example: Card A has a welcome offer of 150,000 points, and Card B has a welcome offer of 75,000 points.
It may seem like Card A has a more valuable welcome offer, but its points are worth only 0.5 cents apiece. Meanwhile, Card B’s points are worth 1 cent apiece. When you do the math, both card’s welcome offers are worth the same.
Disclaimer
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
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