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Credit cards that offer rewards programs can be a valuable tool when used thoughtfully. Here we breakdown the factors to consider when deciding which rewards card is right for you.
NOTE: If earning rewards is not important to you, a traditional credit card is your best bet.
Be sure to weigh your typical spending habits against annual fees to ensure the rewards will cover the cost of the fee without spending in excess. For help valuing points on different cards, check out The Point Calculator or The Points Guy.
Some cards allow different methods of redemption (statement credit, travel purchases, gift cards), but will offer varying levels of value per point depending on how you redeem them. For instance, you may receive only 1 cent per point on statement credits, but 2 or 3 cents per point when used for airline tickets.
INTEREST RATES & TERMS
Rewards cards often have higher than average interest rates.
A card that requires a minimum amount of purchases in a certain timeframe should be opened only if you had planned purchases that would meet the requirements.
TIERS & CATEGORIES
Some cards offer a fixed amount of rewards on all purchases, while others offer varying levels by spending category.
Continually registering to earn points in rotating categories throughout the year can become a hassle and lead to missed rewards.
While most cash back rewards don’t expire as long as your account is in good standing, different cards have different policies, so be sure to check. Airline miles and hotel points are more likely to have expiration terms.
Be careful not to obsess so much about earning points that you overspend. Select a card that aligns with your typical spending patterns.
Rewards programs can change at any time. Read all communications from your card issuer to stay informed.