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.

Here’s what you should know about rewards cards:

• Types of Rewards Currencies: Credit card rewards come in three basic currencies – cash back, miles and points. Cash back credit cards give you a certain percentage of your purchases back – the Blue Cash Preferred® Card from American Express, for instance is one of the best cash back credit cards as it offers an initial bonus of $300 as statement credit for spending $3,000 within the first 6 months; Miles credit cards offer miles that are either tied to a specific airline or are generic miles that can be used for any travel-related expense - Capital One Venture Rewards Credit Card is one of the best travel credit cards with its 50,000 bonus miles for spending $3,000 in the first 3 months. Points credit cards either offer hotel points or generic ones that can be redeemable towards various products and services – Chase Sapphire Preferred® Card is a good all-purpose points-based card as it offers a considerable 80,000 bonus points after spending $4,000 in the first 3 months.
• Rewards Program Structure: Regardless of the rewards currency that your rewards credit card offers, you will generally earn them as initial bonuses, spending-based rewards or anniversary bonuses. Initial bonuses generally offer new customers a lump-sum rewards bounty (such as the Chase Freedom Flex initial bonus which consists of $200 for spending $500 in the first 3 months) after you make a first purchase or as a result of spending a certain amount during a specified time period. Spending-based rewards offers earning rates for different spending categories (such as the Citi® Double Cash Card – 18 month BT offer which offers up to 2% Cash Back cash back on every purchase). And anniversary bonuses consist of free flights, hotel nights, or a certain amount of points, miles or cash back each year on your account anniversary (the Marriott Bonvoy Boundless™ Credit Card offers a free night redeemable at any Marriott Bonvoy property each account anniversary).
• Redemption and Value: Common ways of redeeming your rewards include statement credits (crediting your rewards balance to your account), checks, gift cards, merchandise, charities and special experiences. All these redemption methods will have different values, so your goal should be to redeem your rewards in a way that get you the highest dollar-value. For cash back rewards, you won’t have to do any conversions as these are already in the form of dollars.
• Earning limits: Some cards implement monthly, quarterly or annual earning limits in certain spending categories or across. Always make sure to check what they are and consider whether they may affect your situation.
• Rotating Categories: Some credit cards offer certain earning rates for spending categories that may change in a given time frame (e.g.: quarterly) and you have to sign up to earn that rate whenever that happens.
• Redemption Versatility: Rewards are only as good as what you can ultimately get for them. While cash back is straightforward, always consider what you can redeem miles and points for and what they’re ultimately worth.
• Devaluation and Expiration: Points and miles may have certain plateaus you have to reach in order to redeem them for goods and services. These plateaus aren’t guaranteed to be static and if your credit card issuer increases them, your accumulated points/miles may be worth less by the time you can redeem them. In terms of rewards expiration dates, most issuers have done away with them, but always check to make sure that is the case.

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.

A rewards card gives the cardholder something back for each purchase, usually a percentage of the purchase amount as cash back, miles, or points. You can sometimes earn bonus rewards by spending a certain amount in the first few months you have the card, too. You can then redeem the rewards, usually for merchandise, statement credits, gift cards or travel. Generally, your rewards will be available to use after you see them tallied up on your online account or monthly statement.

There are 3 kinds of rewards credit cards, and each is valuable to a certain type of lifestyle. But most rewards cards give at least one rewards unit per $1 spent. That can add up to 1% back or more, depending on the redemption method and credit card.

Cash back credit cards give a percentage of your purchases back to you as a statement credit, check, or bank deposit. Some cash back credit cards have set tiers for rewards - they’ll give 2% back at gas stations and 3% back at restaurants, for example. Others have rotating categories for different levels of cash back, which usually change once per quarter. The good thing about cash back is that it can’t be devalued by credit card companies, like miles or points can.

Points credit cards usually give at least 1 point per $1 spent. Typically, you can expect to redeem points for travel, merchandise, cash back, or gift cards. Many points credit cards also allow you to redeem for a charitable donation or for tickets to special events. Hotel credit cards are usually points credit cards, too. If you stay at that particular hotel brand a lot, there are often many bonus points and loyalty perks to be earned on those credit cards.

There are a lot more redemption options with points than cash back, but that doesn’t mean all points redemptions will be equal. Points are worth more with some methods than others. Credit card companies could make each point worth 1.25 cents when redeemed for gift cards and 1 cent when redeemed for cash back, for example. This can make it hard to pin down how much a point is actually worth.

Miles credit cards are made for travelers, obviously. In fact, many airline credit cards give rewards as miles. Most credit cards that give miles will also allow you to redeem for cash back, merchandise or other things, but redeeming miles for travel will usually give you the best redemption value. Like other rewards cards, you’ll generally get one for one - one mile per $1 spent. And like credit cards that give points, you’re also subject to devaluation with miles. The card issuer can decide that all your earned miles are worth half as much as they were when you earned them.

Overall, rewards credit cards work best when you get the one that’s right for your spending habits and lifestyle. So it’s worth reading a credit card’s reward redemption terms before you apply for one. One thing to watch out for is that some rewards credit cards have thresholds for redemption, meaning you need a certain amount of reward credits saved up to redeem them. And you definitely want to redeem your rewards often, especially if you’re earning miles or points, because those units can be devalued anytime.

The biggest pros and cons of rewards credit cards are savings with every purchase and extra secondary benefits, on the positive side; and the potential for devaluation and earning caps, on the negative side. Rewards credit cards can be lucrative when used with precision. But they can also end up costing more than they benefit you if you pick the wrong card or carry a balance from month to month.

Rewards credit cards are known for offering 1% to 5% back on most purchases, often supplemented by an initial rewards bonus potentially worth hundreds of dollars. Many rewards credit cards also have $0 annual fees, and some even provide the opportunity to save on finance charges with 0% APR periods.

But rewards cards have their pitfalls, too. Although cash back is straightforward to redeem, there can be a minimum redemption amount, depending on the card. Points and miles, on the other hand, have different redemption values from card to card. To add to the general confusion surrounding rewards programs, credit card companies can change the value of a point or a mile anytime they wish - and usually they don’t increase the value.

Credit card rewards can also expire based on any criteria the card issuer decides, including account inactivity, a missed payment, or simply after a certain period of time. That’s why it’s important to read the card’s terms and conditions before applying.

Biggest pros and cons of rewards credit cards:

Overall, rewards credit cards are mostly a good deal, as long as you use them responsibly by not spending more than you can afford to pay each month. It’s important to pay your bill in full every month, because any money saved in rewards can be negated easily by paying interest.

Devaluation is a problem with points and miles, too, so redeem your rewards often to decrease the chance of having them become less valuable. And if you get a rewards card with an annual fee, make sure the perks outweigh the fee.

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.

The best way to choose a rewards credit card is to narrow down your choices to what your credit score qualifies you for, then compare the rewards rates and costs of the remaining options. Next, pick the credit card with the highest expected rewards earnings, based on your spending habits, minus any annual fees.

In addition to net rewards value, there are many secondary features that might influence you to pick one card over another when choosing a rewards credit card. For example, you may want a card that gives a certain type of rewards, whether cash back, points or miles. You may also want qualities like no annual fee, no foreign transaction fee, introductory financing on purchases, or perks with certain airlines or hotels. How long you want to keep the card and where you want to use it will factor into your decision as well.

How to Choose a Rewards Credit Card

1. Eliminate cards you can’t qualify for. Check your credit score, then narrow down your options to the cards you can qualify for with that score.
2. Decide what kind of rewards you want. It’s clear how much cash back rewards are worth. Cash back can’t be devalued, either, unlike points or miles. But many points and miles cards offer increased redemption value toward travel.
3. Think about where you want to use the card. Some credit cards give extra rewards at certain merchants or types of merchants, so you might look for a card that caters to your biggest purchase categories. Or you might want a card with a good flat earning rate on everything.
4. Consider how long you want to keep the card. If you’re only planning to keep the card for a year, initial bonuses and promotional financing will probably factor heavily into your decision. If you’re looking for a card for the long haul, terms like fees and ongoing rewards rates are more important.
5. Compare offers based on expected net value. Calculate the amount of rewards you expect to earn in a year or two with each card you’re considering, based on your spending habits. Then, subtract the cards’ annual fees to see which one provides the most value.
6. Compare perks. There are all kinds of features that might sway you to pick one rewards card over another. Some examples are $0 foreign transaction fees, big initial bonuses, 0% introductory APRs, credits for certain types of purchases, and airport lounge access.

At the end of the day, the best way to choose a rewards credit card is to figure out what you want out of a card and then pick the credit card offer that most closely matches that description. And you can use WalletHub’s editors’ picks for the best rewards credit cards as a starting point to do just that.

In addition, you can use WalletHub’s CardAdvisor tool to get credit card suggestions based on your answers to a few simple, anonymous questions. Or, you can create a free WalletHub account to get access to personalized credit card recommendations based on your WalletHub profile and credit report info.

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.

Plenty of credit cards give bonus cash back rewards in certain purchase categories. Cardholders may receive extra value on gas, groceries, dining, entertainment, wholesale clubs and more. Other cards have bonus categories that change every quarter and may require activation, giving you the chance to earn big on different types of purchases every few months.

Best Credit Cards with Cash Back Bonus Rewards

• Blue Cash Preferred® Card from American Express – Best Overall
• Alliant Cashback Visa® Signature Credit Card – Best for Flat-Rate Rewards
• Capital One® Savor® Cash Rewards Credit Card – Best for Dining and Entertainment
• Blue Cash Everyday® Card from American Express – Best for U.S. Supermarkets
• Capital One SavorOne Cash Rewards Credit Card – Best for No Annual Fee
• Discover it® chrome – Best for Gas Stations and Restaurants
• Discover it® Cash Back – Best for Cashback Match
• Chase Freedom Flex℠ – Best for Travel
• Bank of America® Customized Cash Rewards credit card – Best for Category of your Choice

Lots of credit cards with cash back bonus rewards on purchases also offer an initial cash rewards bonus for spending a certain amount in the first few months. Plus, it’s good to remember that many credit cards without cash back bonus rates still give a solid cash back rate on all purchases.

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.

Many stores have reward cards. Some are so-called store credit cards, which can only be used at the retailers they’re affiliated with and typically require just fair credit for approval. Others have the Visa, Mastercard, Discover or American Express logo and work wherever those card networks are accepted. That type often requires good credit.

Both types of store credit cards typically don’t charge annual fees and can help you save a bundle on specific types of purchases.

Here are some examples of some popular store reward cards:

• Department Stores: TJX Store Card, Victoria's Secret Credit Card, Saks Fifth Avenue Store Card
• Online Retailers: Amazon.com Store Card, Fingerhut Credit Account
• Discount Stores: Target Credit Card, Walmart® Store Card
• Grocery Store: Costco Anywhere Visa® Card by Citi
• Gas Station: Shell Credit Card

To find the right retail rewards for your needs, compare the best store credit cards.