Rewards Credit Cards

Cash back 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 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 card 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:

• Best cards: Citi Double Cash for cash back. Chase Sapphire Preferred for points.
• Best initial bonus: Bank of America Cash Rewards for cash back - $200 for spending $500 in the first 90 days. Marriott Premier Plus Credit Card for points - 75,000 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 tops the cash back offerings with 2% cash back on all purchases and an introductory APR of 0% for 18 months on balance transfers. It also chases a $0 annual fee and requires good credit to get.

But if you have excellent credit and you’re a frequent traveler, Chase Sapphire Preferred is a more attractive option. It gives 2 points per $1 spent on travel purchases and 1 on everything else. It has an initial bonus of 50,000 points for spending $4,000 in the first 3 months. Preferred’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, which is waived the first year. The card requires excellent 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’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.

The best $500 credit card bonus offer is the Capital One Venture Rewards card, which gives 50,000 miles, worth $500 in travel, for spending $3,000 in the first 3 months. After that, the card keeps the rewards flying with 2 miles per $1 on all purchases. There’s no annual fee for the first year, but the card charges $95 after that.

Chase Sapphire Preferred is another card worth considering for a $500+ credit card bonus. It offers 60,000 points for spending $4,000 in the first 3 months. That’s worth $625 when used toward travel or $500 in cash. Preferred charges an annual fee of $0 the first year and $95 after.

There’s also Chase Sapphire Reserve, which charges a $450 annual fee. Its initial bonus is 60,000 points for spending $4,000 in the first 3 months. But it’s worth $750 toward travel or $500 toward cash. And the card also gives a $300 annual travel credit and a Priority Pass Select lounge membership.

Credit card reward redemption works a little differently for every issuer. But generally, you can redeem your rewards online or by calling your issuer’s customer service. Depending on your card, you may be able to redeem for travel, statement credits, paper checks, gift cards, merchandise and more. And you may get more value when redeeming for some things than others. The Chase Sapphire Reserve card, for example, gives you 25% more value for your points when you redeem for travel.

Some credit card companies also have special rules and restrictions for reward redemption. For example, you might be required to earn a certain amount of rewards before you can redeem. Or you might have to redeem rewards in certain increments. In rare cases, like with the Costco Anywhere Visa, you might even receive your earnings just once per year.

Given how much reward redemption procedures can vary from credit card to credit card, it’s good to read a card’s terms and conditions carefully before applying.

Here are the basics of credit card reward redemption:

• Credit card users can usually redeem rewards for travel, cash back (check or statement credit), gift cards, merchandise and more.
• Most credit card companies let customers redeem rewards online or over the phone.
• Each credit card company has its own reward redemption rules. Rules may dictate when you can redeem rewards, for example.
• Your credit card’s terms and conditions will include information about reward redemption. Be sure to read them in detail.
• Some scammers attempt to pose as a credit card “reward redemption center” to get your credit card details. Don’t give personal information to unsolicited callers.

There is a common phone scam where someone claims to be from the “Reward Redemption Center.” If you get this call, hang up right away and block the number. Don’t give them any personal information. The caller is trying to commit fraud, not to give you any real reward. Here’s how the scam works: they say you have won a free gift card, but you need to pay for shipping to get it. They do this to get your credit card number, then use it for fraudulent purposes.

So the bottom line is don’t trust anyone who calls saying they’re from the “Reward Redemption Center.” Your credit card issuer will never call you like this. And if you’ve earned rewards on your card, you can take care of reward redemption on your own. The only true way to redeem rewards you’ve earned is directly through your credit card company.

Unlimited Rewards is a loyalty program for travel professionals that lets you earn cash back for booking with Avis car rentals, Budget Car Rental, Hilton hotels, Carey Executive Transportation and the Embarque chauffeur service. All U.S. and Canadian travel agents can join. Once you have earned at least $10 in rewards, you get a prepaid Visa debit card tied to your rewards balance. You can use it to make purchases or withdraw the cash at an ATM.  

All a registered travel agent must do to enroll in Unlimited Rewards is provide their name, email, seller ID and address. After that, you can set up a password and security question. But there are a few other things you should know about the program before you join.

Here’s what you need to know about Unlimited Rewards:

• You must be a U.S. or Canadian travel agent to join.
• You get rewards for booking with Avis, Budget Car Rental, Hilton, Carey and Embarque.
• Hilton, Carey and Embarque give you credit for booking anywhere in the world.
• Avis and Budget Car Rental give credit for booking in the U.S., Canada, Mexico, Brazil, Latin America, the Caribbean, Australia and New Zealand.
• Avis and Budget give you up to $7 cash back per booking. Hilton gives up to $2. Embarque gives $1, and Carey gives up to $1.
• To earn rewards, you must include your Unlimited Rewards account number when you booking.

There are a few other things “unlimited rewards” could refer to. The first is rewards on the Chase Freedom Unlimited card. With that card, you get unlimited 1.5% cash back on all purchases. And there’s a $150 bonus when you spend $500 in the first 3 months.

Many other credit cards also say their rewards are “unlimited,” in that there’s no cap to the amount of rewards you can earn.

Many credit cards let users shop with rewards, either on sites like Amazon or through the credit card company’s online rewards shopping mall. For example, you can shop on Amazon with Discover it rewards points. And you can shop both on Amazon and the Chase Ultimate Rewards center with Ultimate Rewards points. Plus, all credit cards with points, miles or cash back give you rewards when you shop.

There are other types of shopping rewards, too.

The Shop Your Way rewards program allows you to earn points when buying goods from popular brands. Some notable ones include Sephora, Brookstone, Cuisinart, Champion, Zipcar, Avis, Petco, Barnes & Noble and Expedia. And that’s just a few of the more than 11,000 companies on the site.

Shop Your Way rewards is free to join. All you have to do is make an account on the Shop Your Way site. Then, you can make purchases from the selection of products there. Or, present your account number when checking out at a participating retailer’s store or website, and your points will show up in your Shop Your Way account. You can use your points on future Shop Your Way purchases. Different retailers will offer different amounts of points. And through a partnership with Sears, you’ll get even more points any time you pay with a Sears Mastercard.

Airlines, hotel chains, supermarkets and gas stations often have their own shopping rewards programs. Anyone can join for free. You don’t need a certain credit card. But getting the merchant’s co-branded card will help you earn more rewards every time you shop.

Here are several ways to earn shop rewards:

• Credit card rewards: You can often use credit card rewards to pay for purchases. Chase, Discover, and Citi credit card users can Shop With Points on Amazon.com, for example. Many credit cards also let you shop with points on the issuer’s online shopping mall. Plus, you can always go shopping anywhere with cash back.

• Shop Your Way: You can earn points by shopping at more than 11,000 different brands, both online and in-store. Just create a free account at shopyourway.com to get started.
• Company loyalty programs: Airlines like Southwest have loyalty programs so you earn miles for flying with them. And stores like Stop & Shop or Game Stop may give you rewards back for shopping with them.

It’s generally free to join a shop rewards program, except when it comes to credit cards with annual fees. So when you’re shopping at your favorite retailer, it doesn’t hurt to ask if they have one you can join. And joining Shop Your Way for free gives you access to rewards at many retailers you may already visit.