Best Rewards Credit Cards

A rewards card is a credit card that gives points, miles or cash back, either for making purchases with the card or as a bonus for meeting a spending threshold in a certain time period. People with any level of credit can qualify for a rewards card, but you’ll need at least “good” credit to be approved for the best credit cards with rewards. Rewards cards also have a wide range of annual fees. Some of the best rewards cards have no annual fee, while others charge hundreds of dollars per year.

Reward card bonuses are usually a set amount of money or rewards units, and are given as a signup gift to new cardholders who meet an initial spending threshold within a few months to a year after opening the account. Some rewards cards also give bonuses for adding authorized users or as an anniversary perk.

The value of the ongoing rewards given for using the card - also called spending-based rewards - will depend on the credit card issuer and, to some degree, the type of rewards given. But the average rewards credit card will give 1% back on purchases. And most points and miles are worth 1 cent each. In general, credit card rewards can be redeemed for travel, merchandise, statement credits, and other things, depending on the card issuer.

That said, your mileage may vary on both miles and points. Unlike cash back, miles and points are subject to devaluation at any time. That means, for example, your card issuer could decide that your points are worth less than they were when you got your card, or that you need 2,500 more miles to start redeeming them. Most, if not all, credit card terms state that the card issuer has this right, and they can do it whenever they want.

Other Types of Rewards Cards

In addition to paying for purchases with rewards credit cards, consumers can save money using a loyalty rewards card when shopping. Many resorts, hotels, and retailers have loyalty programs, and they’ll often have a corresponding loyalty card or number that you can present when you make a purchase.

CVS and Office Depot are two retailers with good loyalty card programs. The loyalty card keeps track of your eligible purchases and any rewards you’ve earned. Loyalty cards aren’t credit cards, but they are a good way to rack up rewards for hotels or retailers you visit often.

Store credit cards and co-branded credit cards – which are affiliated with specific retailers and organizations – can also be used in conjunction with loyalty rewards cards to help you save as much as possible with your favorite brands.

Finally, you might hear gift cards referred to as reward cards, especially those awarded as a prize or incentive, or as credit in lieu of a refund.

Credit card points are worth an average of 1 cent apiece, though credit card point values usually range from 0.5 cents to 1.5 cents per point, depending on the card and the redemption method. For example, you might spend 2,500 points on a $25 gift card, but the same number of points might only get you $15 when redeemed for merchandise.

More credit cards reward users with points than you might think, too. For instance, some so-called “cash back” cards actually give points, which cardholders can redeem at a rate of 1 cent per 1 point.

Average Credit Card Point Values by Issuer:

High Credit Card Point Values:

• U.S. Bank FlexPerks Gold: 1.5 cents per point when redeemed for plane tickets, hotels, and rental cars.
• Chase Sapphire Reserve: 1.5 cents per point when redeemed for travel through Chase Ultimate Rewards; 1 cent per point for other redemption methods.
• J.P. Morgan Reserve: 1.5 cents per point when redeemed for travel through Chase Ultimate Rewards; 1 cent per point for other redemption methods.
• Chase Sapphire Preferred: 1.25 cents per point when redeemed for travel through Chase Ultimate Rewards; 1 cent per point for other redemption methods.
• Citi Premier: 1.25 cents per point when redeemed for travel through Citi ThankYou; 1 cent per point for gift card redemptions; 0.5 cent per point for cash back redemptions.

It’s important to note that credit card points can get devalued at any time by the card issuer. That means the point values listed above can change. Usually, card issuers will reserve the right to change rewards programs - including point values - in the card’s terms and conditions.

For example, a card issuer can decide that a $300 plane ticket should cost 1,000 more points than it does currently, which in turn lowers the redemption value of the reward point. That’s why cash back is usually a better value than points - $1 in cash back will always be worth $1.

This information is accurate as of the day this answer was posted.

You should redeem credit card rewards as often as possible, whether they’re points, miles, or cash back. It is important to redeem often because credit card rewards can be devalued or expire, depending on the type of rewards they are.

The longer credit card rewards earnings stay in your account unredeemed, the more time they’re subject to devaluation, the more likely they are to expire, and the less you actually get to benefit. Rewards don’t get you anything until you put them to use, after all.

Reward Expiration and Devaluation

Just because you earned your credit card rewards fair and square doesn’t necessarily mean they’ll retain their value, or that they’re yours forever. Some credit card rewards expire after a certain amount of time if you don’t redeem them. In fact, some credit card terms state that other events, such as a late payment or even prolonged account inactivity, can put your rewards in jeopardy. So it’s a good idea to read the terms closely.

However, making sure you’re aware of everything in the card’s terms may not be enough. Many credit card companies have language in their terms allowing them to change the rewards structure at any time. They can change rules that govern which purchases earn rewards, how much your miles or points are worth, and anything else about the rewards program. For example, a credit card company can decide your 30,000 points are worth $250 rather than $300.

Redeem Rewards Often

The possibility for change in credit card rewards programs is reason enough to redeem your rewards often. Rewards from cash back credit cards are considered the most stable rewards, because they can’t be devalued by credit card companies. That doesn’t mean they can’t expire, though. And due to possible devaluation or expiration, miles and points should also be redeemed as often as possible.

Frequent Travelers May Want to Save Up

Miles and points can definitely serve people better when they’re saved up to redeem for travel. But expired or devalued miles and points won’t take you anywhere. That’s why it’s a good idea to pay for travel with a combination of points/miles and cash, if the rewards program allows it.

If you can’t pay for your travel accommodations partly with rewards and partly with a normal credit card purchase, stockpile points or miles with caution, and only after determining exactly when they could expire. Plus, if you’re not in a position to redeem points or miles regularly, you might get more value and enjoyment from a cash back credit card instead.

Final Thoughts

At the end of the day, knowing when and how to redeem credit card rewards to get the best value can be tricky, considering the obstacles of devaluation, expiration, and varying redemption rules. For instance, many credit card rewards programs have minimum redemption thresholds, meaning you can’t redeem your rewards until you collect a certain amount of them.

But there are solutions to such problems, and applying them to your situation can be very valuable. For example, some credit cards have the option to auto-redeem once your unused rewards hit a certain threshold. Doing that is a good idea if you don’t want to redeem for travel. That way, you’ll know your rewards won’t be sitting in your account, waiting for the rules to change.

You can get the most reward points from credit cards by picking the right rewards points credit card offers, qualifying for initial bonuses, taking advantage of bonus categories, and using the cards as much as possible – as long as you can pay off the balances in full each month. Some rewards credit cards also have ways to earn extra points by shopping through the card issuer’s online mall. Chase cardholders can use Shop through Chase to earn bonus points, for example.

How to get the most reward points:

1. Get the best points credit cards
2. Read the rewards program rules
3. Qualify for initial bonuses
4. Take advantage of bonus categories
5. Use the card(s) as much as possible

Get the best points credit cards

Of all the things you can do to earn more credit card points, getting the right credit card is the most important. Remember that not all credit card points are created equal. Some credit card points are worth more than others, so it’s a good idea to assess each rewards program on a deeper level than the number of points they give.

It’s also important to consider your own spending habits and lifestyle. For example, if you don’t travel much, lots of points with great travel redemption value won’t be of much use to you. And a credit card that gives 5% back on groceries won’t do much for someone who goes out to eat most of the time. On the other hand, if more than one card would suit your spending habits, consider getting multiple rewards cards and using the Island Approach to optimize rewards in your highest spending categories.

Read the rewards program rules

When comparing rewards credit cards, it’s a good idea to read each card’s terms - especially the part about the rewards program. The terms will state any rules about points earned, such as when they expire, and any conditions that would result in losing the points (such as late payment, for example). A person who’s out to earn credit card points should be aware of all the rules regarding those points.

Qualify for initial bonuses

Many rewards credit cards available today have initial bonuses - usually a lump sum of points, miles, or cash back - that new cardholders can earn by charging a certain amount on the card in the first few months the account is open. The average initial bonus is worth around $200, but many cards give more than that.

Take advantage of bonus categories

If you’re serious about earning credit card points, bonus categories are a great way to rack up more points than you would otherwise. Bonus categories on credit cards are designated types of purchases - groceries or gas, for example - that give a higher point value per $1 spent. With many credit cards, bonus categories change every quarter, and those usually require quarterly registration to earn the bonus rate. That takes a little extra organization, but it can be well worth the effort in the end.

Use the card(s) as much as possible

The reason credit card companies give rewards is to encourage cardholders to use their credit cards more. So, take as much as they’ll give you. Use your credit card to pay your monthly bills, your gas expenses, groceries, online purchases, streaming services, and anything else you already pay for. Every time you have to pay for something, consider how using your credit card could get you something extra.

If you’re willing to jump through an extra hoop or two, you could be rewarded with bonus point opportunities. Some credit cards have online shopping portals that give massive bonuses simply for shopping at popular retailers through the portal. If you were already planning on shopping at that retailer, it’s a win-win situation.

Overall, you’ll earn more credit card points by simply being aware of your credit card’s terms and points-earning potential at all times. Just remember to not spend more than you can afford to pay off at the end of the month. Gains from credit card rewards are quickly eaten up when interest accrues. And if you’re not gaining anything from earning points, there isn’t much of a point in earning them.

Each credit card company has its own rewards program. And each credit card rewards program has a unique reputation. Some are known for good customer service. Others are notable for offering rewards cards to people with less-than-good credit. You can find the latest rankings in WalletHub’s annual Credit Card Rewards Study, which reviews major credit card rewards programs based on earning potential, eligibility, transparency and more. The study also includes scores and rankings for individual cards.

Given that your ultimate goal should be to find the single best rewards card for your needs, your focus should be more at the card level than the issuer or rewards program level. The quality of a rewards program matters in the sense that it impacts what you can redeem your earnings for and how much they’re worth when you do. But a credit card’s core terms – annual fee, rewards earning rates, etc. – are what matter most.

With that being said, the first step in choosing the right rewards program is asking yourself this question: Do I rack up 30,000+ airline miles or 20+ hotel nights per year?

If your answer is “yes,” get one of WalletHub’s best travel rewards credit cards. Most people will be better off with a card that’s equally rewarding no matter where you book travel accommodations. But if you always fly with the same airline or stay at the same hotel chain, it’s worth at least considering that company’s credit card.

If you answered “no,” we recommend getting the best cash back credit card for your spending habits. Credit card companies can easily devalue points/miles by increasing the number that you need to redeem for certain items. That makes saving them up for infrequent redemption a bit risky. But issuers can’t play the same games with cash. Cash back rewards also give you versatility in that you can redeem earnings for any type of expense by getting a statement credit.

The difference between cash back and points is that the former is the most versatile type of credit card rewards, as it can be redeemed for anything, and there’s never any doubt about how much it’s worth. Points, on the other hand, have a value set by the credit card company and tend to be worth the most when redeemed for travel. Credit card companies won’t always clearly disclose points values, and those values can change over time. It’s possible that points could be worth 1 cent apiece one day and 0.8 cents each the next.

You can spend points for many different things. Usually, you can trade them for travel, gift cards, unique experiences, charitable donations or even cash. There are no restrictions on what you can use cash for. You can typically redeem cash back for a statement credit, paper check, or direct deposit to a bank account. One thing credit card shoppers should watch out for are cards advertised as offering cash back that really provide points. For example, the Chase Freedom Flex℠ offers “5% cash back” in certain bonus categories. But what it actually gives is 5 Chase Ultimate Rewards points per $1, which cardholders can then trade for cash back at a rate of 1 cent each.

Cash Back vs Points:

• Good cards overall: Citi® Double Cash Card – 18 month BT offer for cash back. Chase Sapphire Preferred® Card for points.
• Initial bonus: Bank of America® Cash Rewards credit card - $200 for spending $1,000 in the first 90 days. IHG® Rewards Club Premier Credit Card for points - 140,000 points for spending $3,000 in the first 3 months.
• Earning rate: Usually at least 1% cash back or 1 point per $1 spent.
• Devaluation: Points can be devalued by the issuer, while cash back can’t.
• Redemption options: Statement credit, check or deposit for cash. Travel, merchandise, gift cards, cash and more for points.
• When it’s the best choice: Points for frequent travelers. Cash back for everyone else.

Let’s take a look at two high-profile cards in a battle of cash back vs. points.

Citi® Double Cash Card tops the cash back offerings with 2% cash back on all purchases and an introductory APR of 0% for 18 months on balance transfers, with a 3% (min $5) balance transfer fee. It also chases a $0 annual fee and requires good credit to get.

But if you’re a frequent traveler, Chase Sapphire Preferred is a more attractive option. It gives 2 points / $1 spent on travel and dining purchases and 1 point / $1 on everything else. It has an initial bonus of 60,000 points for spending $4,000 in the first 3 months. This card’s points are worth 1 cent each toward cash back or gift cards or 1.25 cents each toward travel. There’s a $95 annual fee and the card requires good credit.

For both cash back and points cards, you can expect to lose your rewards if your account closes for any reason. Most cards don’t let your rewards expire over time. But Citi® Double Cash Card’s cash back expires if you don’t use your card for 12 months. And on points cards alone, your points can be devalued if the issuer decides to charge more points for its rewards. So, frequent redemption is essential.

So, the bottom line is that frequent travelers should check out points cards. Otherwise, cash is king.

You can calculate reward point values by dividing the dollar value of what you redeem points for by the number of points required to get that product or service. This will leave you with the value of a single reward point. For example, if a $500 plane ticket costs 40,000 points, that means each point is worth 1.25 cents when redeemed for airfare.

Cost of Item in Dollars / Cost in Points = Value of 1 Reward Point

In many credit card rewards structures, point redemption values change depending on what you redeem them for. Some credit cards give more value point-for-point on travel redemptions than cash back, for example. The average credit card reward point value is 1 cent, for reference.

To maximize credit card rewards, keep it simple. Stick with rewards you know you will use. Understand the terms your rewards program. Spread expenses across best rewards cards. And above all else, pay your balance in full every month.

The purpose of a rewards credit card is to get the most out of the benefits the card offers. Otherwise, it’s just a regular credit card; and not a cost-effective credit card, to boot. The best rewards cards on the market often come with an annual fee to help defray the cost of the rewards – rewards you may not be taking full advantage of. So rather than throwing away money on your rewards card, follow a few simple steps, and let your rewards card pay you for responsible usage.

Here’s how to maximize credit card rewards:

• Stick with rewards you’ll use. There’s no point in investing in an airlines credit card with a hefty annual fee if you fly only once a year. If you’re a frequent commuter, dine out regularly, or spend a lot on groceries, find a rewards card that will pay you for those purchases. If you want something less complicated, get a card that pays a flat cash back rate on all of your purchases. You should have a card with a rate of least 1.5% per $1 spent.
• Know the card’s rewards terms. Make sure any spending requirements for sign up bonuses are attainable. Familiarize yourself with the card’s redemption rates. Rewards points and miles are often worth less when redeemed for one category over another.
• Use multiple cards to get the best rewards. This is known as the Island Approach. If you have a card that earns 5 points on gas purchases, make that your gas-only card. If your airline card has a minimum spending requirement for 50,000 bonus points, put all of your expenses on that card.
• Pay your balance in full. When you keep a balance on a rewards card, interest charges may cancel out any rewards earned. And avoid any late or missed payments. Not only will a late fee further eat into your rewards, but you could end up forfeiting any rewards earned altogether.

Try redeeming reward miles or points periodically rather than stockpiling them. Rewards generally don’t expire, but in some cases, you could lose points if there’s no activity on your rewards account. And if you close your account, you will lose all of your earned rewards.

One of the only unsecured rewards credit cards for bad credit is the Credit One Platinum Visa. You get 1% cash back on select puchases but will have to cope with an annual fee, high APR and low credit limit.

A better option would be a secured rewards credit card like the Discover it Secured card. It has a $0 annual fee, rewards you with 1% - 2% cash back on purchases, and doubles the rewards you earn the first year your account is open.

Rewards credit cards are worth it if they will save you more than they cost you, all things considered. The best rewards credit cards are worth more than $1,000 in savings for the average person over the first two years of use, after annual fees. But you need good or excellent credit to get the most worthwhile rewards cards. Things aren’t as clear-cut for people with lower scores. In addition, rewards credit cards are only worth it for purchases that you can afford to pay off fully by the due date each month. Credit card interest rates are much higher than credit card rewards rates, so it’s best to use a low interest card for balances that you’ll carry from month to month.

When determining if a rewards credit card is worth it or not, you have to weigh the worth of the rewards against the cost of the card. If the card has no annual fee and you plan to pay the bill in full every month, it’s pretty easy to decide the card is worth it. However, you’ll often get the best rewards and biggest signup bonuses from cards that do have annual fees. In that case, you just have to crunch the numbers to make sure you’ll get your money’s worth.

Regardless of which rewards card you choose, be sure to understand how you can earn rewards most efficiently. Some cards have higher rewards rates for specific categories, and some give a flat rewards rate that you earn on all purchases. The fastest way to earn credit card rewards is through signup bonuses. Many of the top rewards cards come with signup bonuses that you can get for meeting a minimum spending requirement in the first three months. The signup bonuses are usually worth several hundred dollars, enough to cover the cards’ annual fees for years. And you can get them for spending money you were already planning on spending.