Which Rewards Credit Card Is Best For Me?
When used wisely, rewards credit cards have serious earning potential. Unlike when you pay for…
When used wisely, rewards credit cards have serious earning potential. Unlike when you pay for purchases using a debit card or cash, when you use a rewards credit card, you can earn rewards in the form of points, miles or cash back. Rewards cards are a smart way to earn money on everyday spending, as long as you use them responsibly and don’t borrow more than you can afford.
Rewards credit cards: What you need to know
Wondering how to choose the right credit card? With so many cards to select from, it can be difficult to narrow down your options. Some cards offer incredibly lucrative rewards and perks, while others lag behind the competition. Different rewards cards may also be better suited to different borrowers, especially those who have a lot of spending in a particular category. The best rewards credit card for you, though, is one that has high earning potential, competitive rates and attractive perks.
Types of rewards credit cards
If you’re interested in a rewards credit card, there are several different types of cards you may want to consider, including cash back, points and miles. The best option for you depends on which cards you qualify for, the categories you spend the most in and your personal preference.
Cash back credit cards are among the most popular rewards cards thanks to their straightforward earning structure and the overall appeal of earning “cash”. Most cash back cards earn a flat rate of 1 percent to 2 percent cash back on all purchases, and some cards have additional rewards categories that can earn 3 to 6 percent cash back. If you want a rewards credit card that earns a little extra when you spend but don’t want to think too much about spending categories and limits, a straightforward cash back credit card is an attractive option.
Rewards credit cards that earn points aren’t quite as simple as the typical cash back credit card, but they can have high earning potential for savvy cardholders. When you make a purchase with this type of rewards card, you earn points on your purchase. Most cards offer 1 point per dollar spent on all purchases that fall outside of more specific categories like gas, groceries and travel. Points can be redeemed for gift cards, travel expenses, statement credits and more.
Credit cards that earn miles are another option worth considering for borrowers who travel frequently. These cards earn miles for every dollar spent, which can then be redeemed for airfare and other related expenses.
What to look for in a rewards credit card
There are a few features that you should keep an eye out for when choosing a rewards credit card, including:
- Few fees. In general, you should look for a rewards credit card that charges few fees, such as an annual fee, late payment fee, foreign transaction fees or an over-limit fee. If a card does charge a hefty annual fee, for example, you should be sure that the fee is justified when it comes to the earning potential of the card.
- Competitive rates. While it’s always recommended that you pay off your credit card balance monthly, if possible, some rewards cards offer low interest rates if you do end up carrying a balance.
- High earning potential. Since the point of a rewards credit card is to earn you rewards, you should look for a card with significant or high earning potential. The best card card for you, in terms of earning potential, depends on your spending patterns and rewards redemption preferences.
- Welcome bonus. Many rewards credit cards offer lucrative sign-up bonuses for new cardholders. Be sure to read the fine print to see how much you need to spend and what the term limit is in order to qualify.
- Intro APR. Rewards cards often feature low introductory APRs for a certain period of time after account opening. Depending on the card, this can apply to both purchases and balance transfers, making it a great way to potentially pay down debt or finance a big purchase without accumulating interest.
- Other perks and benefits. While rewards like cash back, points and miles often steal the show, many rewards cards also come with valuable perks like fraud protection, purchase protection, dining and rideshare credits and, if it’s a travel credit card, lounge access and TSA PreCheck or Global Entry credits.
- Ease of use. Ultimately, you want your rewards credit card to be easy to use. While some cardholders prefer tiered rewards systems and redemption options that allow them to maximize their rewards, other borrowers prefer a simple, straightforward rewards card with decent earning potential.
How to choose a rewards credit card
The first step when choosing a rewards credit card is to examine your spending patterns and determine which category of rewards credit card is the best fit for your specific situation. For example, if you spend a lot in categories like dining or travel, you should look for a card that comes with additional rewards for those categories. Alternatively, if there’s not any specific category that the majority of your expenses fall into, a cash back credit card with a competitive flat-rate rewards structure might be a good fit.
After you determine which type of credit card you’re interested in, the next step is to compare your options, taking into account each credit card’s rewards program, welcome bonus, perks, rates and fees. Finally, you should apply to the card that’s the best fit, keeping in mind that applying for multiple credit cards at once has the potential to damage your credit score. Some card issuers allow you to see if you pre-qualify online before you submit an application, or you can do so with Bankrate’s CardMatch tool.
Borrowers can also pair different credit cards in order to maximize their earnings. For example, some people use one credit card to earn rewards on everyday spending and a different card with generous travel rewards for airfare, hotel stays and other travel expenses.
Bankrate’s picks for the top rewards credit cards
Blue Cash Preferred® Card from American Express: Best for groceries and gas
- Rewards: 6 percent cash back at U.S. supermarkets (up to $6,000 per year, then 1 percent) and on select U.S. streaming subscriptions; 3 percent back on transit and U.S. gas station purchases; 1 percent back on everything else
- Welcome offer: $300 statement credit after you spend $3,000 in purchases on your new card within the first six months
- Annual fee: $0 introductory annual fee for one year, then $95
- APR: 13.99 percent to 23.99 percent variable
If groceries and gas are among your top expenses each month, the Amex Blue Cash Preferred is a great choice. This card earns an impressive 6 percent cash back at U.S. supermarkets for the first $6,000 per year, after which you continue to earn the base rate of 1 percent on all purchases. The card also earns 6 percent back on select U.S. streaming services and 3 percent on U.S. gas station purchases and transit expenses, including taxis and rideshare apps, parking, tolls, trains, buses and more.
The Blue Cash Preferred does come with a $95 annual fee (waived your first year of card ownership), but this is quickly offset by the earning potential of the card. For example, if you spend $6,000 in groceries over the course of a year, you’ll earn $360 in cash back in that category alone. The card also features a solid welcome bonus of $300 when you spend $3,000 in purchases on your new card in the first six months.
Capital One Quicksilver Cash Rewards Credit Card: Best for cash back
- Rewards: Unlimited 1.5 percent cash back on all purchases
- Welcome offer: $200 cash bonus when you spend $500 on purchases in the first three months
- Annual fee: $0
- APR: 15.49 percent to 25.49 percent, variable
If you’re looking for a simple, straightforward cash back credit card that you can use on autopilot, the Capital One Quicksilver Cash Rewards Credit Card certainly fits the bill. The card earns a flat 1.5 percent cash back on all purchases with no upper limit. This means that you can spend less time worrying about rotating spending categories and earning caps and more time deciding what you’re going to spend that cash back on.
The Quicksilver comes with a welcome offer equal to $200 in cash back when you spend $500 in the first three months. To boot, there’s no annual fee associated with this card, making it a great choice for all—even borrowers on a budget.
Chase Freedom Unlimited®: Best for travel
- Rewards: 5 percent cash back on travel purchased through Chase Ultimate Rewards; 5 percent back on Lyft purchases (through March 2022); 3 percent on dining and drug store purchases; 1.5 percent back on everything else
- Welcome offer: $200 cash bonus when you spend $500 within three months of account opening
- Annual fee: $0
- APR: 14.99 percent to 23.74 percent, variable
The Chase Freedom Unlimited® may not be quite as deluxe as the Chase Sapphire Reserve®, but it’s still a great travel rewards credit card for borrowers who may be deterred by the latter’s hefty annual fee. The Chase Freedom Unlimited earns cardmembers 5 percent cash back on travel purchased through Chase Ultimate Rewards, 3 percent back on dining and drugstore purchases and a flat 1.5 percent cash back on everything else (making it a versatile rewards credit card for frequent travelers).
Unlike some other Chase credit cards, this option has no annual fee, which is a definite perk for borrowers new to the world of credit card rewards or who may not want the commitment of a pricier, more premium card. Additionally, the Freedom Unlimited offers a nice welcome bonus of $200 in bonus cash when you spend $500 in the first three months.
American Express® Gold Card: Best for dining
- Rewards: 4X Membership Rewards points on restaurants worldwide; 4X points on Uber Eats purchases; 4X points at U.S. supermarkets (up to $25,000 in purchases per year, then 1X points); 3X points on flights booked directly with airlines or through amextravel.com; 2X points on rental cars booked through amextravel.com; 1X points on everything else
- Welcome offer: 60,000 points when you spend $4,000 in the first six months
- Annual fee: $250
- APR (For Pay Over Time): 15.99 percent to 22.99 percent, variable
The American Express Gold Card is a great choice if you dine out frequently (or, in the age of COVID-19, purchase a lot of takeout). The card earns an impressive 4X points on restaurants worldwide, including takeout and delivery, plus 4X points on Uber Eats purchases and 4X points on up to 25,000 in supermarket purchases per year (then 1X points). The card also earns a solid amount of rewards on air travel and rental car purchases and offers a standard rate of 1X points on everything else.
This American Express credit card comes with a generous welcome offer of 60,000 points when you spend $4,000 in the first six months. Amex Membership Rewards points are some of the most valuable rewards points, with a redemption value of approximately 2 cents per point if you redeem them with airline and hotel partners, according to The Points Guy. The $250 annual fee is higher than some other rewards cards, but savvy spenders will more than make up for it in rewards earned over the course of a year.
Rewards credit cards FAQ
What credit score do you need to qualify for a rewards credit card?
Top-notch cards require good or excellent credit in order to qualify, however, there are plenty of good rewards credit cards that accept applications from borrowers with fair credit.
How much are points worth?
The exact value of the points you earn with a rewards credit card depends on both the card issuer and how you plan to redeem the points. A general rule of thumb is that 1 point is equivalent to about 1 cent.
How do you redeem credit card rewards?
You can typically redeem your rewards via your online account, your card’s mobile app or over the phone, though redemption options vary depending on the card at hand. Common redemption options include cash, statement credits, travel credits and gift cards.
The bottom line
Rewards credit cards are a great way to earn extra on everyday expenses and purchases. The best rewards credit cards have serious earning potential, along with a host of other benefits like travel perks, fraud protection and more. When possible, we recommend paying off your card’s balance in full each month in order to maximize your earnings and avoid accumulating interest.