Rewards credit cards

How to compare rewards credit cards

When shopping for a rewards credit card, consider the following:

• Rewards. Consider where you spend most of your money and compare the cards with the highest rewards rate on those categories.
• Interest rates. Rewards cards come with high interest rates, but these are rarely meant for carrying balance. The exception here is a card with a 0% intro APR period on purchases or balance transfers, which come with an interest-free period for carrying your balance during a promotional period of between 12 and 18 months.
• Annual fee. Most everyday cards come with a $0 annual fee, which is great. But the cards with the highest rewards and the most valuable benefits charge an annual fee of between $99 and $550. Consider whether you can offset the annual fee with the card’s perks and rewards.
• Additional perks. The more expensive the card, the higher the benefits. This means a travel card with a $550 annual fee offers way more than a card with a $0 annual fee. For example, the premium travel card comes with airport lounge access, up to $300 statement credit, points transfer to partners, premium travel insurance and more.

Compare rewards cards by spending type

To maximize your rewards, get a rewards card that offers more points in the category you spend most.

Gas rewards

Grocery rewards

Travel rewards

Restaurant rewards

Entertainment rewards

Types of rewards credit cards

There’s a wide variety of rewards credit cards available on the market catering to a variety of financial needs. Here’s a breakdown of each of your major options and who should get them.

Cash back

Rewards earned with these cards are given as cash back. Redeem this cash back as a statement credit or deposit into your bank account.

Get this type of rewards card if: you prefer a simple, fire and forget rewards structure.

Points

These cards earn points on certain purchases, such as restaurants, gas or streaming services.
Redeem these points in a variety of ways, such as travel, gift cards or cash back.

Get this type of rewards card if: you like flexibility and enjoy getting even more value out of your rewards with a little research.

Travel

These cards earn points or miles on travel purchases, such as flights, cruises or hotel nights. These cards aren’t tied to a specific travel brand, letting you earn rewards regardless of how you travel.

Get this type of rewards card if: you travel frequently but don’t have a single airline or hotel you use more than others.

Airline

Earn bonus miles when you spend on flights and other eligible categories. You can redeem these miles on additional flights and other rewards. These cards often come with additional airline benefits associated with a specific airline such as Delta or American Airlines.

Get this type of rewards card if: you largely fly with a single airline, want to redeem your credit card rewards back into flights, and want additional perks for your flights and airport travel.

Hotel

Earn points when you spend on hotel stays and other eligible categories. Redeem these points on rewards nights and other hotel rewards. Like airline cards, hotel cards often come with additional hotel perks associated with a specific hotel chain.

Get this type of rewards card if: you have a preferred hotel chain you use, plan on spending your credit card rewards on additional nights and want additional perks associated with that hotel chain.

Retail

These cards offer benefits and rewards tied to a particular retailer. Often, you can only use these cards with the affiliated company.

Get this type of rewards card if: you often shop at a particular retailer, want to redeem rewards back into that retailer and don’t need to use your credit card for other purposes.

Gas

Gas credit cards are worth it if you’re often on the road and want to earn some cash back when filling up your tank. Most gas credit cards let you earn cash back, but some offer discounts, points or miles on your purchases. You’ll get rewards on gas purchases, as well as on other categories such as groceries and dining.

Get this type of rewards card if: you drive more than you fly for travel, enjoy cashback features and have strong credit.

Crypto

Crypto credit cards are the newest type of “rewards” card on the market. They allow you to earn or redeem cryptocurrency on eligible purchases. The type of crypto you can earn depends on the crypto card and affiliated crypto platform.

Get this type of rewards card if: you don’t mind taking risks with your money and are interested in investing your earned rewards more than spending your rewards.

Common credit card rewards programs

Most credit card providers offer a rewards program of some kind. To choose the best rewards program for your needs, consider whether you want a simple rewards structure like cash back or whether you want rewards redemption flexibility.

How to make the most of your rewards

With a good or excellent credit score getting a rewards credit card is easy. But to make the most of your rewards, and to stay out of debt, you’ll need to do some work.

How to earn points

Spending is the best way to earn points. But some cards offer more points for certain categories, like gas, groceries, department stores, dining and travel. Other cards offer a flat reward for all purchases. Review your spending habits to find the right rewards card for you.

How to maximize points

Maximizing your credit card rewards takes dedication. You need multiple credit cards that each earn accelerated rewards on a particular category. Then use each card where it earns the most. One of the best credit card combinations is the Amex trifecta.

Another way of maximizing points is by earning the signup bonus and redeeming your points with the highest redemption value. In some cases — as with the Chase credit cards — you can transfer your points from one card to another and get up to 50% higher redemption value.

How to redeem points for the best value

To get the highest points redemption value, you need to use your points for the right reward. For example, travel credit cards often have a 1 cent value per point, but only if you redeem it toward travel purchases. This means, avoid gift cards, cash and merchandise and focus only on travel redemption.

Some credit cards let you transfer points to partner airlines and hotels. But this doesn’t necessarily mean that you’ll get better points value. To be sure you get the most for your points, compare the redemption value in points on your credit card and travel partners by dividing the cash price by the points price.

Are rewards credit cards worth the effort?

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.

Ask the experts

• Mark D. Groza
• Associate Professor of Marketing
• Northern Illinois University

What is the best way to use credit card rewards?
There are two schools of thought here. First, from a purely economic perspective, the ‘best way’ to use a credit card with rewards is to use them for something you need in a way that maximizes the value of the points. Let’s say your credit card company offers a 20% bonus if you redeem them for a gift card to a retailer that you frequent – ‘the best’ way to use the rewards then, is to use them on products/ services that you need, which have the highest bonus (i.e., points that have the highest dollar value).

A second perspective is, rewards are a bonus and should be used for something that you really want but may not necessarily need. For example, perhaps you always wanted to take an all-inclusive trip to the Caribbean but could never justify the expense. Amassing enough points to cover the trip is a great way to justify it. This may not maximize the points’ economic value, but it does provide tremendous value to the credit card holder and for some people is likely the ‘best way’ to use credit card rewards.

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• Lee Huffman
• Budget Travel Blog
• BaldThoughts.com

What’s one question everyone should ask before getting a rewards card?
Paying an annual fee on a travel card is worth it only if you can reasonably make back the fee through its benefits and rewards or if it provides desirable optionality for redemption. Statement credits, discounts at retailers, and other card benefits can get you back to par. But the most important consideration is whether the card affords you the option to redeem for rewards that you can use.

Before applying, count how many ways you can redeem your miles or points with the airline or the credit card issuer itself. And pay attention to the quantity and quality of travel partners that are a part of the redemption network.

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• Eliot Buchanan
• Co-Founder and CEO
• Plastiq.com

What are the most important features of a rewards card?
The feature itself is not as important as understanding how to earn and redeem those rewards to their fullest potential. Not only should the rewards match what you want to redeem for, but you should also be intimately familiar with the value and options provided within the rewards program. And if you understand how to arbitrage your rewards for maximum value, even better!

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• Audrey Guskey
• Associate Professor of Marketing
• Duquesne University

What is the best way to use credit card rewards?
My advice is to match the rewards to your interests. If you like to travel, take advantage of that. If you like going out to eat, then use your rewards for restaurants. The biggest tip is to align rewards with your interest! If you like to shop, pick one that’s accepted where you want to shop. Trading points for gift cards is always a smart move.

The more you use your credit card, the more points you will get, but be careful you don’t spend too much and over budget. Always pay your balance in full each month. Otherwise, even the rewards you earn may be eaten up by the interest payments. And don’t sit on those rewards. You may forget about them or the program may change and you could lose those points.

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• Yuliya Strizhakova
• Associate Professor of Marketing
• Rutgers University School of Business-Camden

For the average consumer, is it better to get cash back or points on a rewards card?
It depends on what this average consumer wants. Earning cash is frequently an immediate next statement
reward. It is an instant deduction in payments that gives a feeling of actually getting something back from the credit card. Earning points may be beneficial if someone is aiming at a higher-priced award (e.g., airline tickets) or is looking for a discount for an expensive item. However, the reward is frequently delayed and may require a longer commitment to spending to earn this reward.

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• Paolina C. Medina
• Assistant Professor of Finance
• Texas A&M University

Why might credit rewards make you spend more?
Rewards are a great benefit of credit cards when used properly. However, there are several ways in which our brain can trick us into overspending.

For example, whenever a reward is framed as part of a challenge (like many introductory credit card offers), our brain triggers a gaming mentality, by which we don´t want to miss out on a prize: we pay a disproportionate amount of attention to the prize, compared to the cost incurred to earn it…

But the main risk is that this overspending may trigger the habit of revolving instead of paying the bill in full every month, in which case interest cost can break the bank.

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• Vassilis Dalakas
• Ph.D., Professor of Marketing & Chair, Department of Marketing
• Cal State University San Marcos

How can consumers get the most value from their rewards credit cards?
It is tempting to sign up for multiple rewards credit cards given the rewards and the fact that many of them have very appealing signup offers. However, it is important to always keep in mind one’s own interests and behaviors in determining if signing up for and using a rewards credit card is worth it. For example, getting a Disney rewards credit card makes sense and will provide good value for someone who is a big fan of Disney and visits Disney parks frequently but would be of little value to someone who buys Disney products or visits Disney parks sporadically.

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• Matthew Fisher
• MBA, Lecturer
• San Francisco State University

What is the ideal number of rewards cards to own?
The ideal number of reward cards to hold will vary by individual… It is very likely that most consumers can handle 2 to 3 reward cards and recall when they are best to use, but beyond that number would be very taxing for most. If two or three cards offer quarterly rotating benefits, then it would be difficult for a consumer to evaluate which card to select in the moment of checking out at the grocer, gas station, department store, or restaurant. If the cards also carry annual benefit maximums, then the decision becomes even more challenging.

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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.