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 - 100,000 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.

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.

The best secured credit card with rewards is Discover it Secured because it has a $0 annual fee and offers 2% cash back on up to $1,000 spent at gas stations and restaurants every quarter. It also gives 1% back on all other purchases, and Discover matches all your cash back earned during the first year.

Another card in the running for best secured credit card with rewards is the AeroMexico Secured Visa. It’s extremely rare to see an airline card for bad credit. But this one gives a nice bonus of 3,500 miles and a companion ticket just for using the card once. Plus, you get 2 miles per $1 on gas and groceries and 1 on all other purchases.

The Best Western Secured card is yet another good secured credit card with rewards. It gives 3 points per $1 on Best Western purchases and 2 on everything else. And you get a 5,000-point bonus for making a single purchase.

Discover it Secured is the best secured credit card with rewards, all things considered. But it definitely isn’t the only card in the conversation. It’s good to weigh all your options before settling on the best card for you. By the way, all of these cards report to the credit bureaus on a monthly basis, giving you the chance to build credit with on-time payments.

Here are the best secured credit cards with rewards:

• Overall: Discover it Secured. $0 annual fee. $200 security deposit. 2% back on the first $1,000 spent on gas and dining per quarter. 1% back on everything else. First-year rewards doubled.
• Airline Miles: AeroMexico Secured Visa. $25 annual fee. $300 security deposit. 3,500 bonus miles and 1 companion ticket ($99 value) after first use. 2 miles per $1 spent on gas and groceries and 1 on other purchases. Companion ticket each account anniversary. Free checked bags on AeroMexico flights.
• Motorcycle Rewards: Harley-Davidson Secured Visa. $0 annual fee. $300 security deposit. 1 point per $1 on all purchases. 2,000 points gets you a $25 H-D gift card.
• Hotel Points: Best Western Secured Credit Card $29 annual fee. $300 deposit. 5,000 bonus points after first use. 3 points per $1 spent at Best Western. 2 points per $1 on other purchases. 10% discount at bwrcarddiscount.com.
• Military Community: Navy Federal Credit Union nRewards Secured Mastercard. $0 annual fee. $500 deposit. 1 point per $1 on all purchases.
• Small Business: Wells Fargo Business Secured Mastercard. $25 annual fee. $500 deposit. 1.5% cash back on all purchases.

There are a few factors you should consider when choosing a secured credit card. They include the annual fee, the minimum deposit requirement and whether the card offers rewards.

Paying an annual fee just to get rewards only makes sense if the amount you’ll earn exceeds both the fee and your expected earnings with a cheaper card combined. Fortunately, you don’t have to worry about that because the best secured credit card with rewards also happens not to charge an annual fee.

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.

But you’re choosing between rewards credit cards, not credit card rewards programs. So your credit card rewards comparison should focus on finding the single best rewards card for your lifestyle. In other words, 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’s not possible 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 best rewards credit card for fair credit is the Capital One® QuicksilverOne® Cash Rewards Credit Card, thanks to its generous earning rate and the simple fact that people with fair credit can get it. The truth is that rewards credit cards for fair credit are few and far between. And while some credit cards for people with fair credit do offer rewards, rewards should not be your focus at this point in your credit career. Your main objective should be to find a credit card with no annual fee that you can get approved for.

Once you’ve narrowed down your options, you can use rewards or low interest rates as the tiebreaker for the remaining offers. Rewards are best for people who pay their monthly credit card bills in full, while a low rate will likely offer more savings to those who foresee carrying a balance from month to month.

There are rewards credit cards available to people of all credit levels, even folks with bad credit. But if you want really good rewards, you’ll generally need a good or excellent credit score. That’s what the market’s best overall rewards cards require.
Plus, credit cards for people with less-than-good credit usually don’t have high enough spending limits for users to rack up significant rewards value. That’s why finding a credit card with no annual fee becomes increasingly important the lower your credit score is.
If you’re not sure where your credit stands, you can check your latest credit score for free on WalletHub. You’ll also receive a personalized credit analysis, complete with customized credit card recommendations.

Amex Blue Cash Everyday might be your best option. Can't really beat 3% cash back at supermarkets, 2% at gas stations and select department stores and 1% on the rest of your purchases. Plus, you get a 0% APR on purchases for 15 months. This is a great card especially considering that rewards credit cards tend not to offer long 0% periods and 0% cards lack in the rewards department.

Most of the time, though, it's best to keep separate cards for separate purchases. You can get both a rewards credit card and a 0% card to focus on earning for one and financing for the other. I found some good ones on WalletHub's rewards cards page and 0% cards page​​​​​​​. Good luck!

The best 2% rewards credit cards are Citi Double Cash, Capital One Venture, and Barclaycard Arrival Plus Preferred. They each give 2 rewards per $1 spent, but cover all the different types of credit card rewards. Citi Double Cash gives you 2% cash back. Capital One Venture gives you 2 miles per $1 on all purchases. And Barclaycard Arrival Plus also gives you 2 miles $1 on all purchases.

In other words, Citi Double Cash is the best 2% cash back credit card. Capital One Venture and Barclaycard Arrival Plus are the best double miles credit cards. And the best double points credit card would have to be Chase Sapphire Preferred.

2% rewards credit cards that give the 2% rate on everything, like Double Cash and Venture, are hard to find. Most of the time, the higher rate will be in a bonus category, like with Sapphire Preferred. But if you make frequent purchases in that category, these cards can be well worth your time.

Here are the best 2% rewards credit cards:

• 2% cash back on all purchases: Citi Double Cash. No annual fee. Good credit needed.
  

• 2 miles per $1 on all purchases: Capital One Venture.10 miles per $1 on hotels.com.50,000-mile bonus for spending $3,000 in the first 3 months. $95 annual fee. Good credit needed.
• 2 miles per $1 on all purchases: Barclaycard Arrival Plus. 60,000-mile bonus for spending $5,000 in the first 90 days. $89 annual fee. Good credit needed.
• 2 points per $1 on travel and dining: Chase Sapphire Preferred. 1 point per $1 on all other purchases. 50,000-point bonus for spending $4,000 in the first 3 months. $95 annual fee. Excellent credit needed.
• 2 points per $1 on dining out and entertainment: Citi ThankYou Preferred. 1 point per $1 on other purchases. No annual fee. Excellent credit needed.
• 2% cash back on all purchases: Capital One Spark Cash for Business. $500 bonus for spending $4,500 in the first 3 months. $95 annual fee. Good credit needed.
• 2% cash back at restaurants and gas stations: Discover it Secured. 2% rate applies to the first $1,000 spent per quarter in those categories. 1% on other purchases.Rewards earned the first year get doubled.No annual fee. For bad credit.
• 2 points per $1 at supermarkets: Amex EveryDay. 2 points per $1 on first $6,000 spent per year at supermarkets. 1 per $1 on other purchases. 10,000-point bonus for spending $1,000 in the first 3 months. No annual fee. Good credit needed.
• 2 miles per $1 on Delta purchases: Gold Delta SkyMiles. 1 mile per $1 on other purchases. $95 annual fee. Good credit needed.
• 2% cash back at restaurants and gas stations: Discover it Student Chrome. 2% rate applies to the first $1,000 spent per quarter in those categories. 1% back on other purchases. Rewards earned the first year get doubled.No annual fee. For students with limited credit history.

As you can see, there are even 2% rewards credit cards for people with bad or limited credit. But most cards will only give you the higher rate on certain categories.

There are also many credit cards that will give you higher than 2% rewards rates on some purchases, such as Chase Sapphire Reserve, Discover it Cash Back and Amex Blue Cash Everyday. But you’ll need good or excellent credit to get them. And most come with fairly high annual fees.