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The Best Rewards Program Credit Cards

Monday, September 26th

What Are the Best Credit Card Rewards Programs?

Using a credit card with a rewards program is an excellent way to make your money work even harder for you - getting free gift cards, airline miles, or even cash for the purchases you would make anyway. Some credit card rewards programs up the ante with generous sign-on bonuses or with spending categories like travel or gasoline that offer even higher rewards.

While credit cards with rewards programs may not be an ideal fit for people with low credit scores or those who carry a balance from month to month, most consumers can find a credit card rewards program that fits their lifestyle. The perks definitely make it worth considering.

After all, who doesn't want to get free money? If you aren't currently using a credit card with a rewards program, you could be missing out on gift cards, airline tickets, and even good old-fashioned cash.

So, how do credit card reward programs work? Typically, the card issuer - a credit card company, bank, or other provider - establishes a certain percentage of each purchase that you'll get back in either money, airline miles, or points that can be redeemed for gift cards and more. Some cards offer a flat reward amount regardless of what you buy (1% back on all purchases), while others have categories with higher rewards values (4% back on gasoline or 3% on restaurants). These categories can be fixed, but some credit card rewards programs have rotating categories that change during the year or that offer limited-time bonuses of higher rewards if you opt in. For example, you might get 5% back on groceries from January to March or 3% back at department stores during the holiday shopping season.

Another savvy way to use credit card reward programs to get even more is by shopping around for a great sign-on bonus. Credit card companies make money when you use their cards, so they often offer extra incentives to get you to sign up. Sometimes these sign-on bonuses have minimum spend requirements - spend a total of $500 in the first 3 months and get a bonus equal to $150, for instance - so it's important to have an idea of your spending habits and whether or not you'll be able to meet those minimum amounts.

Credit card reward programs have different requirements for redeeming your points, miles, or cash. Some make it extremely convenient, allowing you to cash them out whenever you wish and even allowing you to "shop with points" by linking your card at well-known retailers like Amazon. However, other rewards programs have minimum redemption amounts or only give you cash back once a year.

Are you asking yourself, "What's the catch?" Here are some factors that might impact whether or not a credit card rewards program is a good fit for you:

  • Annual Fees. Many credit cards with rewards programs don't have an annual fee. But, especially with the cards that target high-income clientele, you may see annual fees ranging from $49 to a whopping $5000. It would take a lot of rewards to just break even with some annual fees, so make sure the rewards you're getting are worth any annual fees charged by the credit card company.
  • Eligibility. If you don't have good credit already, you might not be able to get a credit card with a rewards program. As your credit score increases, though, so does the likelihood that you'll be approved. You may also want to consider a secured credit card, where you put in a deposit equal to your desired credit limit; this lets you build your score over time, and some of these secured cards are available with rewards programs too.
  • Interest Rates/Penalties. If you're getting 2-5% back in rewards but paying 27.99% APR in interest, you're losing money. Credit cards with rewards programs aren't a great deal if you carry a balance; they tend to be a better deal for people who pay their credit card bill in full every month. The same goes for late payment fees and other penalties.

TopConsumerReviews.com has partnered with LendingTree to help you find the best credit card rewards programs available today. We hope this information helps you choose the right rewards card for your purchase habits - and to be rewarded for spending money!

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FAQ

Not all of them offer a rewards program, but the vast majority do. Why? Because most consumers with decent-to-excellent credit won't consider applying for a card that doesn't! The credit card companies make enough money from merchants who accept payments, interest fees and late payments that they can afford to give their users a little in return.
There are three main types of rewards programs: miles, points, and cash back. They all work roughly the same way, giving you a percentage of each purchase back; you can then redeem what you've earned towards airfare, gift cards, statement credits, or good old-fashioned cash. You may even be able to connect your earnings to your favorite online shopping accounts and pay for your purchases directly with your rewards.
How about both? Category-based credit card rewards programs give you higher percentages on certain types of spending, like 5% back on gasoline or 3% on restaurants and travel. Those categories can be fixed, or they may rotate: you could get the highest rewards on gasoline from January through March, and then it shifts to groceries and home improvement stores for the next quarter. Flat-rate rewards don't change, giving you a set reward amount no matter what you purchase, usually anywhere from 1-3%. That's the best option for anyone who doesn't want to keep track of which cards to use when, but the savviest credit card users often have multiple credit cards that allow them to reap the biggest benefits.
That depends on the terms and conditions of the card. Most credit cards with rewards allow you to cash out your miles/points/money whenever you like, but a few give you access once a year.
Maybe. If your credit score is at least 660, you'll probably be eligible for most of the credit cards with rewards available today. With a lower score, you may need to choose a prepaid or secured option, but even those credit cards often have rewards programs.
Not any higher than other types of credit cards. You may get introductory interest rates of 0% APR and then they'll jump back up to the market rate after that promotional period, but overall there's no interest surcharge when using a credit card with a rewards program.
Some do, some don't. If you're looking at an exclusive/luxury tier of credit card, you can almost guarantee you'll have an annual fee (but if you're at that level of income/wealth, you can afford it!). Other rewards cards with annual fees usually give you perks that make up for it, like rebates on TSA PreCheck fees or access to airport lounges. But, there are lots of credit cards with rewards programs with no annual fees.
Most online credit card applications today are approved or declined instantly. Your physical cards may take up to two weeks to arrive, but if you need to use your credit sooner you may be given a temporary number until then.

Choosing the Best Credit Card Rewards Program

For consumers that use a credit card for a lot of purchases, choosing the right credit card rewards program is very important.

Typically, credit card reward programs fall into one of three categories:

  1. Credit cards that reward users for everyday purchases (cash back rewards, airline miles, store gift cards and or other items)
  2. Credit cards with sign-up bonuses
  3. Credit cards that include benefits when you use them (for example, a 5% discount every time you shop at a specific store, free checked bags, and so on)

The first thing you should consider is what is your reward goal? Would cash back be the best? Are you planning on using a rewards program to travel? Knowing what you want out of a card is a good place to start.

It is important to continually evaluate your current credit card and your current spending habits. As your life circumstances fluctuate and credit card offers change, you may find there is different credit card rewards program that fits your lifestyle better than your current card. Though it is not advisable to switch credit cards frequently, taking a good look every few years at your spending habits and comparing your credit card rewards program to others is recommended. For example, a frequent flyer rewards program would benefit a traveler, but if their life circumstances change and they are not traveling frequently, they may find a card better suited for them. Another example would be if your income changes and you need a card with a lower interest rate or a card with a different type of rewards program. A general rewards card (cash back, gift cards etc.) is best for someone that does not travel often. If you like to travel, taking advantage with a card that offers airline miles can be a great option.

It's also advisable to limit yourself on the amount of credit rewards cards you use. Once you find a card that suits you best, fully take advantage of the rewards it offers. Most research shows that credit cards with reward programs increase spending. If you have too many cards you may be tempted to spend more than you can afford, making your rewards less than the interest you are spending. Interest rates are usually higher with credit cards that feature rewards program. Do not be scared off by higher interest rates or annual fees, as these can often come with better rewards. However, take the time to read the fine print and compare the reward programs of these cards. For those that are disciplined and pay the credit card off in full each month, they do not need to worry about the interest rates and there is little to no extra cost to receive their rewards.

Research how your rewards are redeemed before signing up for a credit card rewards program. No one should have to go to great lengths to redeem their rewards nor find out that rewards earned have expired. A best credit card rewards program should cost you the least amount of money, while offering the largest amount of benefits.

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