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.
How to choose a rewards credit card
What do you spend money on?
Blue Cash Preferred® Card from American Express
On the American Express secure site
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Rewards
6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit (including taxis/rideshare, parking, tolls, trains, buses and more) 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 or at Amazon.com checkout.
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Welcome bonus
Earn a $250 statement credit after you spend $3,000 in eligible purchases on your new Card within the first 6 months.
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Annual fee
$0 intro annual fee for the first year, then $95.
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Intro APR
Low Intro APR: 0% on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 18.74% – 29.74%.
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Regular APR
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Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
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Foreign transaction fee
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Credit needed
What type of rewards makes sense for you?
Credit card rewards generally come in the form of cashback, 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 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®, 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.
Capital One QuicksilverOne Cash Rewards Credit Card
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Rewards
Unlimited 1.5% cash back on every purchase
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Welcome bonus
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Annual fee
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Intro APR
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Regular APR
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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
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Foreign transaction fee
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Credit needed
Average, Fair, or Limited
Travel rewards usually offer more flexibility, but the additional redemption options can be more complicated. For example, Chase Sapphire Preferred® Card 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.
Chase Sapphire Preferred® Card
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Rewards
Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.
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Welcome bonus
Get up to $1,050 in Chase TravelSM value. Earn 60,000 bonus points after $4,000 in purchases in your first 3 months from account opening. That’s worth $750 when redeemed through Chase Travel. Plus, get up to $300 in statement credits on Chase Travel purchases within your first year.
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Annual fee
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Intro APR
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Regular APR
20.99% – 27.99% variable on purchases and balance transfers
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Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
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Foreign transaction fee
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Credit needed
Meanwhile, an airline credit card like the United℠ Explorer Card offers bonus United miles for your spending with United and at restaurants and hotels. United miles are useful, but provide fewer redemption options than transferrable 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.
United℠ Explorer Card
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Rewards
2 miles per $1 spent on United purchases; 2 miles per $1 spent on dining, eligible delivery services and hotel stays; 1 mile earned on every $1 spent on all other purchases
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Welcome bonus
Earn 50,000 bonus miles after you spend $3,000 on purchases in the first 3 months your account is open.
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Annual fee
$0 intro annual fee for the first year, then $95
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Intro APR
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Regular APR
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Balance transfer fee
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Foreign transaction fees
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Credit needed
Member FDIC. Terms apply.
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% cashback.
Cashback 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 one 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 two 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 transferrable rewards. Also, certain redemptions may have a value of less than one 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 purchases and qualifying balance transfers for 12 months from account opening (after that, 19.74%, 24.74% or 29.74% variable APR applies). Plus, it earns 2% cash back on all purchases. There is an intro balance transfer fee of 3% with a $5 minimum, then up to 5% with a $5 minimum after 120 days from account opening.
Wells Fargo Active Cash® Card
On Wells Fargo’s secure site
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Rewards
Unlimited 2% cash rewards on purchases
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Welcome bonus
Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months
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Annual fee
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Intro APR
0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% 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.
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Regular APR
19.74%, 24.74%, or 29.74% Variable APR
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Balance transfer fee
Intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
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Foreign transaction fee
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Credit needed
Bottom line
Rewards credit cards help you turn your purchases into valuable cash back, miles or points. Before you apply, make sure you shop around for the best card for your spending habits and check your credit score. Many of the best cards require good or excellent credit to qualify.
And while charging everything to your card may earn you more rewards, make sure you only spend what you can afford or you could end up paying more in interest than you earn in rewards.
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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.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
