Compare Rewards Credit Cards

Yes, rewards credit cards are worth if you won't have to spend extra to earn the rewards. The best rewards credit cards are worth more than $2,000 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.

Here’s how to choose a rewards credit card:

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 rewards 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.

Plenty of credit cards are worth getting, since they can save you much more than they cost you if used responsibly. For example, the Chase Freedom Unlimited® card is worth getting if you have good credit because it has a $0 annual fee and offers 1.5 - 5% cash back on purchases, with an introductory APR of 0% for 15 months.

The credit card that is most worth getting for you as an individual will depend on your own needs and wants, as well as what you can qualify for. After checking your credit score, you can narrow down your search to cards you have a good chance of getting. Then, you can pick a card that fits your needs, such as a card that helps you build credit, earn rewards, finance purchases or get the best value at your favorite retailer. For your convenience, below is just a small sample of credit cards that are worth getting for different types of customers.

Credit Cards That Are Worth Getting

To learn more, check out WalletHub’s guide on how to choose a credit card. You can also browse our editors’ picks for the best credit cards and get personalized credit card recommendations by joining WalletHub for free.

Yes, closing credit accounts can hurt your credit score in the short term, depending on how old the accounts are and how much other credit you have. But canceling a credit card account might also benefit your credit score in the long run if you manage the rest of your finances better as a result of having one fewer account to worry about.

You can estimate the effect of canceling a credit card on your credit score by using our credit score simulator. You can also check your latest credit score for free on WalletHub. You’ll get daily updates as well as personalized advice.

Here’s what happens to your credit score when you cancel a credit card:

• Credit score drops: Your credit score often goes down because the average age of your open accounts decreases and your overall utilization increases (since you have less available credit).
• Scores bounce back: Your credit score should rebound within 3-6 months of canceling your credit card account. Make sure to have at least one open credit card remaining and pay all your bills on time.
• What happens if you don’t cancel: A credit card that is in good standing will continue to help your credit score. Even if you don’t make purchases with it, it will still report positive information to the credit bureaus each month. This is definitely worth considering if your card does not charge an annual fee.
• Age matters: Closing newer accounts won’t have as much of an impact as closing older ones.
• Limit matters: Closing low-limit accounts won’t do as much damage as closing high-limit ones.
• When score drops matter: If you don’t need the best score possible for the 3-6 months it usually takes credit scores to bounce back after credit card cancelation, the temporary drop shouldn’t cost you anything.

Bottom Line: Avoid canceling your oldest card and your card with the highest credit limit. That will mitigate the amount of credit score damage. And if you have to close your oldest or highest-limit card, make sure you do it at a time when you don’t need your credit score to be at its best.

There are three different types of credit card rewards: points, miles and cash back. Rewards credit cards are also targeted to three main groups: students, small business owners and people with above-average credit.

Although there are differences between credit card rewards currencies and the ways in which credit card companies dole them out to different groups, the major types of credit card rewards all work pretty much the same way. You’ll earn rewards for every purchase you charge to the card – sometimes at a flat rate on all purchases, and other times with earning rates that vary by spending category. It’s also possible to earn rewards for doing things like spending a certain amount in the first few months, referring a friend or adding an authorized user.

Co-branded cards are different from store cards, which are issued by banks but are not linked to any of the major card networks. This means store cards only let you make purchases and earn rewards with whichever retailer is associated with the card.

Types of Credit Card Rewards

Points

Credit cards with rewards points generally give at least 1 point per $1 spent. You can redeem points for hotel stays and other travel expenses, statement credits, gift cards or merchandise, depending on the card. Points cards are sometimes affiliated with hotel chains.

Miles

Credit cards with miles are travel oriented, often affiliated with a specific airline. Rewards typically start at 1 mile for every $1 you spend. Miles can be redeemed for airfare, other travel expenses, gift cards, cash or merchandise. Cards co-branded with a particular airline may reward you with seat or room upgrades, early boarding on flights, free checked bags and more.

Cash Back

Credit cards with cash back rewards return a portion of each purchase cardholders make, usually at least 1%. You can redeem cash rewards as a check, direct deposit to your bank account or statement credit, depending on the card. Some cash back rewards can also be redeemed for gift cards and merchandise through the issuer’s online rewards mall.

You’ll need good or excellent credit to qualify for the best rewards credit cards. Many also come with annual fees to offset the costs of their rewards programs. And some cards offer sign-up bonuses that require meeting a minimum initial spending requirement.

For more information, check out WalletHub’s Credit Card Rewards Guide.

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.

To maximize your credit card rewards, start by comparing credit card offers to make sure you have the most rewarding cards for your spending habits. Then, use whichever card has the highest rewards rate for the purchase category whenever you buy something, and pay the cards’ bills in full monthly to avoid interest. Finally, redeem your rewards regularly in order to maximize your enjoyment.

That’s how to go about it at a high level. Of course, there’s a bit more involved in maximizing your credit card rewards, and you can see the details in the step-by-step list below.

How to Maximize Your Credit Card Rewards

1. Get a card with rewards that match your spending habits.

   It’s important to find a card that fits your lifestyle. For example, there’s no point in investing in an airline credit card with a hefty annual fee if you fly only once a year. Rather, if you’re a frequent traveler, dine out regularly, or spend a lot on groceries, for instance, find a rewards card that will pay you extra for those purchases. Or, if you want something less complicated, get a card that pays a flat cash back rate on all of your purchases.

   Below, you can see some of the top rewards card options available right now.

   • Overall: Chase Freedom Unlimited®
   • No Annual Fee: Wells Fargo Active Cash® Card
   • Travel: Capital One Venture X Rewards Credit Card
   • Bonus Cash Back: Blue Cash Preferred® Card from American Express
   • Fair Credit: Upgrade Cash Rewards Visa®
   • Bad Credit: Capital One Quicksilver Secured Cash Rewards Credit Card

2. Use multiple cards to get the best rewards.

   This is known as the Island Approach. For example, if you have a card that earns 5 points per $1 spent on gas, you could use that card primarily for gas purchases and put your groceries on a card that offers a high rewards rate at supermarkets.

   On the other hand, if you have a card with a big spending requirement for an initial bonus, you might want to focus your purchases on that card until you qualify for the bonus.

3. Pay your balance in full.

   When you keep a balance on a rewards card, interest charges may cancel out any rewards you earn. If you’re after financing options, check out WalletHub’s editors’ picks for the best low interest credit cards.

   Avoid any late or missed payments, too. Not only will a late fee further eat into your savings from rewards, but you could end up forfeiting any rewards you’ve earned altogether.

4. Know each card’s rewards terms.

   In addition to understanding when exactly you will earn rewards and how quickly those rewards will be credited to your account, it’s important to make sure any spending requirements for sign-up bonuses are attainable. Also, familiarize yourself with the card’s ongoing rewards and redemption rates. Rewards come in three main currencies: cash back, points, and miles. Cash back is straightforward, but points and miles can be redeemed for many things, including cash, gift cards, merchandise, charity donations and more. Rewards points and miles often have different values when redeemed for different things, too.

5. Redeem often.

   Try redeeming miles or points periodically rather than stockpiling them. Rewards generally don’t expire as long as your account is in good standing, but in some cases, you could lose earnings if there’s no activity on your account. And if you close your account, you will lose all of your unredeemed rewards. Plus, if you have points or miles, the issuer can devalue them at any time.

6. Redeem for the most valuable option.

   Rewards cards, particularly points and miles cards, often have multiple redemption options. For example, you might be able to redeem your rewards for cash back, travel, gift cards or merchandise. Some cards may offer different redemption values for different options – for instance, a point may be worth 1 cent toward travel and 0.5 cents toward cash back. Therefore, to maximize credit card rewards, you should redeem for the most valuable option.

7. Take advantage of initial bonuses.

   Some credit cards offer bonus rewards for spending a certain amount within the first few months. If you get a card with this type of bonus, you should make sure to spend enough to qualify, provided that it doesn’t make you overspend by more than the value of the bonus. The best time to get a card with a big initial bonus is right before you’re about to make a big purchase, so you can earn the bonus quickly and offset some of the cost of the big purchase with your rewards.

You can learn even more about credit card rewards and how they work on WalletHub. You can also compare the best rewards credit cards to find one that’s a good option for you.

Exactly how you redeem credit card reward points varies by credit card company, but most credit card users can redeem reward points online through their account summary page. Some credit card issuers also let you redeem rewards over the phone. Credit card reward points may be redeemable for cash back, travel purchases, gift cards, and more, depending on the card.

Once you redeem your credit card reward points, they’ll be subtracted from your rewards balance immediately and your account will be credited within 1-3 weeks, if applicable. In some cases, reward points will expire if you do not use them by a certain time.

Here's how to redeem credit card reward points:

1. Log in to your online account and head to “Account Summary.” Specifics will vary by issuer, but your rewards will usually be featured on a main account page.
2. Click on “Rewards Balance.” The exact wording may differ depending on the issuer. Once you click on your rewards balance, you’ll be taken to a page with your total amount of unredeemed rewards, and information about your redemption options.
3. Select how you’d like to redeem your rewards. You may be able to redeem reward points for travel purchases, cash back in the form of a check or statement credit, merchandise, or gift cards, depending on the rewards card.
4. Redeem your rewards. Once you redeem your credit card reward points, the points will be deducted from your rewards balance immediately. If you’re redeeming for statement credits or covering past purchases, your account will usually be credited within a week. If you redeem your points for gift cards or merchandise, you can expect them to arrive in the mail within 2-3 weeks.

While many rewards cards will let you choose from multiple redemption options, you’ll usually get the most value with one in particular. For example, travel rewards credit cards will often give you the most when you redeem your points for travel purchases, and your rewards may be worth less if you redeem them for cash back or gift cards.

On average, credit card reward points are worth 1 cent each. Most major credit card issuers, like Chase, Capital One and American Express, advertise that your points will not expire as long as your account remains open. But you should check the exact terms and conditions of your specific credit card to make sure you don’t lose any rewards you’ve earned.