How to Find the best Rewards Credit Card?
There is no one credit card that is perfect for everyone. Even when we are talking about the best rewards credit card, you will realize that some cards can be very rewarding but depending on individual unique spending, that particular card may not be the best pick for them.
So, how exactly do you know which card is perfect for you and what are some of the cards that may fit your needs?
To get this answer, you must first understand that there are two types of rewards credit cards. These cards are categorized depending on the type of rewards that they offer i.e.;
Cash back credit cards
As you can already guess, cash back rewards credit cards are tailored to reward the cardholder by refunding them with a certain percentage of the cash spent through the card. This percentage varies from one card to another. This variance is precisely what makes a certain card more rewarding than others. For instance, most of the cards offer cash back rewards of between 1% to 2% but you might come across a card that offers as much as 5% in cash back but there’s a catch. In most cases, cards will have a flat cashback rate of say 2% but then they will increase the rate in a particular category like grocery or gas to up to 5%. It’s, therefore, crucial that you analyze your spending habits, identify the product category where you spend most of your money in and get a card that will get you as much cash back as possible.
Cash back rewards are very popular because they are simple to use. The reward can be found in different credit cards including some of the cards tailored for people with bad credit scores.
Travel credit cards
Travel credit cards can be very rewarding but they are only beneficial for individuals who travel a lot or spend most of their times in hotels. With these cards, you get to earn points or miles for every dollar you spend traveling. After accumulating the points, you can redeem the points in different ways i.e. you can redeem them to get miles for free, get free or discounted stays or even earn free holidays in selected destinations.
It should be noted that some travel cards come with impressive reward rates but then they are limited to particular airlines. It’s vital to know whether a certain card and its rewards programs are tied to a certain airline before making your application.
The challenge with travel credit cards is that they usually come with annual fees some which are really high. Their rewards are also redeemable for travels only and hence people who don’t travel a lot won’t get the most out of them.
Unlike cash back credit cards which are available for almost everyone, travel credit cards are mostly available to people with good to excellent credit scores.
Best Rewards Credit Cards
- Chase Sapphire Preferred Card
The Chase Sapphire Preferred Card is one of the best travel cards in the market today. It was even named as the “Best Credit Card for Flexible Travel Redemption” by the Kiplinger’s Personal Finance in 2018.
Sign up for this card today and you will get 60,000 bonus points upon spending $4,000 within the first 3 months. 60,000 bonus points are worth around $750 if you redeem them via the Chase Ultimate Rewards. That’s one of the best sign up bonuses you can find in any travel card.
Other than the signup bonus points, you can also earn 2 points per dollar spent on dining and traveling around the world and 1 point for every dollar spent on everything else.
What’s the value of the Chase Sapphire Preferred Card points? First, you can choose to transfer the points at 1:1 to some of the leading hotel loyalty and airline programs in the market. Transferring the points is not very lucrative but it brings flexibility.
You will get more value for your points (up to 25%) if you redeem them for hotels, airfare, cruises, and car rentals through the Chase Ultimate Rewards. The Chase Ultimate Rewards program is also more convenient as it does not come with any travel restrictions or blackout dates. This allows you to book a seat whenever there is one available.
The Chase Sapphire Preferred Card charges an annual fee of $95 and the APR is variable between 18.24% to 25.24%. There are no foreign transaction fees charged which makes shopping abroad more affordable. Unfortunately, this credit card is not available to many people since the requirements demand an excellent credit report.
- Discover it Cash Back
There are so many reasons to love the Discover it Cash Back Credit Card but the most outstanding of them all has to be their sign up bonuses. This card will match all the cash back you will have earned at the end of the first year of signing up for the card. This is done automatically! This basically means that both the seasonal and regular cashback rates you earn in the first 12 months will be doubled.
The card also issues a 5% cash back reward on different categories every quarter. This reward rotates from grocery stores to restaurants, gas stations, and even Amazon. For instance, the 2019 calendar shows that the 5% cash back on grocery stores ran from January to March while the Gas stations Uber & Lyft, Restaurants and Amazon.com categories will be available from the 2nd, 3rd and 4th quarter. You will have to activate them for the rewards rate to be effected. While earning 5% on the selected category, you will also be getting 1% cash back on all other purchases.
Unlike other cash back credit cards whose reward programs have a restriction, the Discover it Cash Back allows the cardholders to redeem their cash back at any time. There is also no limit or minimum threshold on the amount of cash back that you can redeem. The best part? These rewards have no expiry date!
Another brilliant thing about this card is that there are no annual fees charged!
Discover it also gives their clients additional perks which may seem minor but they are still very decent to have. For instance, Discover will provide free SSN alerts as they monitor different risky websites that you may have signed up in.
The APR here is 14.24% to 25.24% variable. You must also have a good or excellent credit report to be eligible for the card.
- Wells Fargo Cash Wise Visa Card
The Wells Fargo Cash Wise Visa Card is another great choice with diversified opportunities of earning some cash back. The card offers 1.5% cash rewards on all purchases. The 0.5% difference between this and most of the other cards in the market offering 1% cash rewards may seem minor but after spending a lot of money, the variance will be substantial. You will also get 1.8% cash rewards on selected mobile wallet purchases in the first 12 months. Some of these purchases include Google Pay and Apple Pay.
The credit card sign-up bonus is $200 after spending $1,000 in the initial 3 months. You will also get 0% APR in the first 12 months on balance transfers and purchases after which a variable APR of between 16.24% to 28.24% will kick in. The 0% APR applies for all balance transfers made within the first 4 months qualifies for this introductory APR.
We also liked the Wells Fargo Cash Wise Visa Card due to the $0 annual fees.
The cardholders here will also receive $600 mobile phone protection (which may be subjected to a $25 deductible) against theft and damages if you make your monthly cellular phone bills using the card.
Choosing the best rewards credit cards
Of course, we cannot go into finer details of all the best rewards credit cards here. There are still many other incredible options including the Wells Fargo Propel American Express Card, Capital One Venture Rewards Credit Card, Bank of America Cash Rewards Credit Card and the American Express Cash Magnet Card just to mention a few.
What we can do is give you a brief guide on how you can make the right decision in getting the perfect rewards credit card for you. With that in mind here are some of the factors that you need to consider:
Flexibility – The best rewards credit cards will have different avenues of earning points or cash back. They will also provide different opportunities through which you can redeem the points with minimal to zero devaluation.
Rewards rate – You should try as much as possible to get a credit card whose rewards rate is higher than 2%. This will earn you more rewards even if the rate is only seasonal as is the case with the Discover it Cash Back.
Fees – Remember to check the fees charged by the credit cards and do your math to see whether the rewards outweigh the fees. Don’t let decent rewards rate blind you into applying for a card with hefty interests, foreign transaction, annual, statement, and monthly membership fees which will overwrite all the rewards you are earning.
Long term benefits – You should also consider whether the card can have a long term place in your wallet. If not, then you’re better off looking for an alternative where you can build a profile and get the best value from it for as long as possible.
Additional benefits – Finally, look at some of the additional perks that you can get from the cards. These include sign up bonuses, cell phone protection, cash back on mobile wallet purchases among others.
David is a financial expert who graduated from the University of Fordham (Master in Finance) in 2001. He has 10+ years of experience in private equity and wealth management. With strong expertise in senior-level financial planning, personal financial analysis, and mortgages, David knows his way around personal finance. Before working at CCR he used to be a financial analyst at McKinsey.
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