No matter what you spend your money on, a rewards credit card offers extra value on your purchases. But comparing credit cards isn't always easy. There are different types of rewards and many of the top credit cards are designed to be especially lucrative for specific purchases.
Before you submit a new card application and add a hard inquiry to your credit report, answer these four questions.
What do you spend money on?
Your first step should be looking at where you spend the most. You can dramatically boost your rewards balance by finding a card that is extra rewarding in the areas you tend to spend the most.
If you're usually on the road for work, consider a gas rewards credit card. If you love eating out, choose a card that rewards you for your restaurant spending, like the U.S. Bank Altitude® Go Visa Signature® Card or American Express® Gold Card.
Some cards let you earn bonus rewards in multiple categories. For example, the Blue Cash Preferred® Card from American Express covers a lot of bases with its bonus spending categories. It earns a generous 6% cash back* on select U.S. streaming subscriptions and at U.S. supermarkets on up to $6,000 per year in eligible purchases (then 1%), 3% cash back* at eligible U.S. gas stations, as well as on transit, and 1% back on other purchases. Terms apply.
The Blue Cash Preferred® Card from American Express is a low-fee card with generous cash-back rewards and useful ongoing benefits, such as a monthly Disney Bundle credit. (Enrollment required for select benefits mentioned)
- High cash-back earnings for U.S. supermarkets and streaming services
- Intro-APR offer for purchases and balance transfers
- No annual fee for the first year
- It's less rewarding after the first year because of the annual fee
- Bonus rewards for U.S. supermarkets are capped
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply and find out your welcome offer. As High As $300 cash back* after you spend $3,000 in purchases on your new Card within the first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply, and if approved: 1. Find out your offer amount 2. Accept the Card with your offer 3. Spend $3,000 in 6 months 4. Receive the cash back. *Cash back is received in the form of Reward Dollars that can be redeemed for a statement credit or at Amazon.com checkout.
- $0 intro annual fee for the first year, then $95.
- Enjoy 0% intro APR on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 19.49%-28.49%.
- Plan It®: Buy now, pay later with Plan It. Split purchases of $100 or more into equal monthly installments with a fixed fee so you don't have the pressure of paying all at once. Simply select the purchase in your online account or the American Express® App to see your plan options. Plus, you'll still earn rewards on purchases the way you usually do.
- Earn 6% cash back at U.S. supermarkets on up to $6,000 per year in eligible purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at eligible U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) purchases and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit and at Amazon.com checkout.
- Get up to a $10 monthly statement credit after using your enrolled Blue Cash Preferred® Card for a subscription purchase, including a bundle subscription purchase, at DisneyPlus.com, Hulu.com, or Stream.ESPN.com U.S. websites. Subject to auto-renewal.
- Terms Apply.
- See Rates & Fees
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7% of each transaction after conversion to US dollars
What type of rewards make sense for you?
Credit card rewards generally come in the form of cash back, miles you can use toward travel or brand-specific points.
Cash back is the most straightforward. With most cash-back cards, you earn a certain percentage of cash back on your spending. The Capital One QuicksilverOne Cash Rewards Credit Card (a good card for average credit) offers an unlimited 1.5% cash back on all your purchases. Other cards, like the Chase Freedom Unlimited® (see rates and fees), let you earn points that can be converted into cash back. Many of the top cash-back cards earn 2% cash back on every purchase, which is a return that's hard to beat.
The Capital One QuicksilverOne Cash Rewards Credit Card available to those with limited/fair credit, which makes it surprising that it features an elevated 1.5% cash back on all purchases.
- Simple rewards structure with no caps or categories to track
- Available if you have fair credit
- High APR
- Has an annual fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn unlimited 1.5% cash back on every purchase, every day
- No rotating categories or limits to how much you can earn, and cash back doesn't expire for the life of the account. It's that simple
- Be automatically considered for a higher credit line in as little as 6 months
- Enjoy peace of mind with $0 Fraud Liability so that you won't be responsible for unauthorized charges
- Help strengthen your credit for the future with responsible card use
- Earn unlimited 5% cash back on hotels, vacation rentals and rental cars booked through Capital One Travel
- Monitor your credit score with CreditWise from Capital One. It's free for everyone
- Check out quickly and securely with a contactless card, without touching a terminal or handing your card to a cashier. Just hover your card over a contactless reader, wait for the confirmation, and you're all set
- Top rated mobile app
Balance transfer fee
- $0 at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Travel rewards usually offer more flexibility, but the additional redemption options can be more complicated. For example, Chase Sapphire Preferred® Card (see rates and fees) earns Chase Ultimate Rewards® points, which you can transfer to 14 partner airline and hotel loyalty programs. This means you'll never be stuck having to redeem points with a single program.
The Chase Sapphire Preferred® Card packs a punch for a $95 annual fee card, offering annual travel credits, comprehensive travel protections and more.
- You can transfer rewards to all of Chase's travel partners including World of Hyatt, Southwest Rapid Rewards and many more
- Long list of travel and shopping protections
- $50 annual Chase Travel hotel credit
- Has an annual fee
- Requires a high credit score
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn 75,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.
- Enjoy benefits such as 5x on travel purchased through Chase TravelSM, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases
- Earn up to $50 in statement credits each account anniversary year for hotel stays through Chase TravelSM
- 10% anniversary points boost - each account anniversary you'll earn bonus points equal to 10% of your total purchases made the previous year.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Complimentary DashPass which unlocks $0 delivery fees & lower service fees for a min. of one year when you activate by 12/31/27. Plus, a $10 promo each month on non-restaurant orders.
- Member FDIC
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Meanwhile, an airline credit card like the United℠ Explorer Card offers bonus United miles for your spending with United and at restaurants and hotels (see rates and fees). United miles are useful, but provide fewer redemption options than transferable points. If you want to use United miles for award flights, you're limited to booking at the prices United offers, whereas with flexible points, you can access the prices offered by many different loyalty programs.
The United℠ Explorer Card is worth it even if you only fly with United Airlines once or twice a year because you can take advantage of two United Club℠ passes per year when the primary cardmember or authorized user is traveling and you can receive free checked bags.
- No annual fee for the first year
- Unlocks upgrades for elite members on award flights
- Two free United Club airport lounge passes every year
- Valuable United Airlines perks, such as in-flight purchase discounts and the ability to earn elite status credit through credit card spending
- First checked bag free benefit requires you to pay for the flight with the card
- United Airlines has a dynamic award chart which can limit the value and flexibility of your miles
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn up to 60,000 bonus miles
- $0 introductory annual fee for the first year, then $150
- NEW! 9x total miles on eligible United flights and 3x miles on all other eligible United® purchases
- 2x miles on dining and hotel stays when booked with the hotel. 1x mile on all other purchases.
- Free first checked bag - a savings of up to $200 per roundtrip. Terms Apply. Plus, priority boarding on United® flights.
- 2 United Club one-time passes per year - over a $100 value
- Over $500 in partner credits each year
- NEW! Save 10% or more when booking flights with miles. Premier members save even more.
- Member FDIC
What are the rewards worth?
Points and miles aren't created equal. When you earn 1X miles or points, you're not necessarily getting the same value as when you earn 1% cash back.
Cash back is easy to redeem and typically has a fixed value. If you have $100 in cash-back rewards, it's generally worth $100 no matter how you redeem it.
When you have points or miles with flexible redemption options, you can dramatically boost the value you receive. You may be able to redeem travel rewards for cash back or gift cards and receive 1 cent per point. This is essentially the same value as cash-back rewards, but you can get much more than that.
For example, Chase Ultimate Rewards® points are typically valued at over 2 cents per point because you can transfer them to airlines and hotels to book luxury stays or expensive business-class flights. That means earning 1X Chase points can be as valuable as earning 2% back when you take advantage of the best transfer partners.
On the other hand, it's more complicated to get the best value from transferable rewards. Also, certain redemptions may have a value of less than 1 cent per point, so you'll want to pay attention to how you use your flexible travel rewards.
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What's the cost of the card?
Many of the top rewards cards have annual fees and high interest rates. You may also pay taxes and fees when you redeem airline miles for award flights. So make sure you read the fine print when determining a card's cost.
There are tons of great options with sub-$100 annual fees, and these make sense as mid-tier or beginner travel cards. You'll have to pay a higher annual fee (typically $300+) if you want luxury perks. However, premium credit cards usually have a longer list of valuable benefits that can help offset the cost.
You can avoid interest by paying your balance on time and in full every month. A 0% APR credit card with rewards can help you avoid interest charges if you're unable to pay off your entire balance by the due date.
The Wells Fargo Active Cash® Card could be a good option in this situation. It has a 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. After the intro APR ends, a variable 18.49%, 24.49% or 28.49% APR applies. Only balance transfers made within 120 days of account opening qualify for the intro rate and intro balance transfer fee of 3% (then a balance transfer fee of up to 5% applies with a $5 minimum).
The Wells Fargo Active Cash® Card is great if you want simplicity thanks to its flat-rate 2% unlimited cash rewards on purchases and $0 annual fee.
- High flat-rate return on purchases
- Intro-APR for purchases and qualifying balance transfers for a year
- No annual fee
- Cell phone protection
- Has a foreign transaction fee
- Limited redemption options unless you pair it with a Wells Fargo card that allows point transfers
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 18.49%, 24.49%, or 28.49% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don't expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Balance Transfer Fee
3% intro for 120 days from account opening, then up to 5%, min: $5
Foreign Transaction Fee
3%
Pros and cons of a rewards credit card
- Large welcome bonuses available for new accounts
- Earn rewards on purchases you would otherwise earn nothing on
- Build your credit history and credit score by paying the full balance on time every month
- High APRs compared to other types of credit
- Can have high annual fees
- Rewards and benefits can be more complicated
FAQs
Can rewards credit cards hurt my credit score?
When you open a credit card, there's usually a hard pull on one or more of your credit reports. Hard inquiries like this will temporarily reduce your credit score by a small amount and can also impact the age of your accounts (15% of your FICO Score). However, these effects are small, and credit cards do the most damage to your credit score if you fail to make on-time payments and accumulate large amounts of credit card debt.
Which credit cards have the best rewards system?
The most valuable type of rewards is generally flexible travel rewards. These reward systems often give you the most redemption options, and by allowing transfers to airlines, you can unlock outsized value with luxury flight redemptions.
What's the biggest killer of credit scores?
Your payment history is the biggest factor (35%) in calculating your FICO Score, which is one of the most popular credit scoring models. If you miss payments or are frequently late on paying your bills, that can have a huge negative impact on your credit score. The second thing to watch out for is debt, especially if you use a high percentage of your available credit. Having a high credit utilization ratio and large amounts of debt can also drag your credit score down.
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For rates and fees of the American Express Gold Card®, click here.
For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
*Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.
Information about the U.S. Bank Altitude® Go Visa Signature® Card has been collected independently by CNBC Select and has not been reviewed or provided by the issuer of the card prior to publication.
