5 steps for finding the right rewards card

Tony Mecia
Personal finance writer
Rewards expert who writes the "Cashing In" reader Q&A column for CreditCards.com

5 steps to finding a good rewards card

If you’re like me, hardly a day goes by that you don’t receive some credit card offer in the mail. Or maybe an ad for one pops up as you browse the internet. Or you see someone at a booth at the airport hawking an airline card. Or a helpful cashier asks if you’d “like to save 10 percent off your purchase today?” 

Ads for credit cards are all around us. But ads for good rewards cards – cards you actually might want and apply for, and then earn points and redeem them? Those are fewer and farther between. If you’re looking for rewards, here are five ways you can quickly judge whether that credit card offer is worth your consideration – and what questions you need to be asking yourself. 

5 steps for finding the right rewards card

  1. Weed out nonrewards cards.
  2. Pay attention to sign-up bonuses.
  3. Understand the rewards programs.
  4. Assess other card perks.
  5. Evaluate the costs.

1. Weed out nonreward cards.
This might sound obvious, but you might be surprised how many ads are out there for cards that offer no rewards. This seems especially true of offers that come in the mail.

If the main selling point of the card is its low interest rate or its free balance transfer, then it is probably not a worthwhile rewards card. Rewards cards tend to have higher-than-average interest rates: In the Jan. 31, 2017, CreditCards.com rate survey, the average reward card’s annual percentage rate was 16.50 percent, nearly a point higher than balance transfer cards and more than 3 points higher than the typical low-interest card. 

Remember that if you tend to carry a balance on any credit card or have trouble paying off your bill on time in full, you should not be applying for reward credit cards. Get your finances in order first, then start dabbling in rewards, because you will pay far more in interest charges and late fees than you would earn in points or miles.

2. Pay attention to sign-up bonuses.
Sign-up bonuses are a great way to accumulate a lot of points or miles quickly, usually by spending a few thousand dollars on the card in the first few months.

If you see an ad touting 30,000 or 40,000 points or miles, that’s a standard amount. But if you see one advertising 75,000 or 100,000 points or more, then pay closer attention, because those don’t come around every day. If you’re curious what bonuses are currently on offer that you qualify for, our CardMatch tool can find those for you within seconds. 

 

Video: What to do before applying for a new credit card

3. Understand the reward programs.
If you see an ad with a big sign-up bonus, you’ll need to quickly understand what kind of award “currency” those points come in and how to redeem them.

Is the sign-up bonus in airline miles? Bank points? Hotel points? Are they redeemable for travel or cash back? Not all points are equal.

Hotel points tend to be less valuable than airline miles. Bank points tend to have the most flexibility. If you are offered a retail card at a store, how much do you save – not just on its first use, but always? If you can familiarize yourself with the different kinds of reward structures out there, you can more quickly assess offers that you happen to see. 

4. Assess other card perks.
Besides the points, does the card offer other perks you might use?

Airline cards typically offer a free checked bag and early boarding, and some come with lounge access and a credit for Global Entry, which allows you to speed through customs and security. Hotel cards might offer late checkout and room upgrades.

5. Evaluate the costs. 
You might have to read the fine print to see what the downside of getting the card is.

What is the annual fee, and is it waived for the first year? As noted above, the interest rate on the card shouldn’t matter, since you should be paying off your bills on time.

You’ll also want to consider how applying for this card affects your use of other cards. If they are similar, you might want to cancel the existing card, especially if it carries an annual fee.

Finally, think about how applying for this card might limit your opportunities for other cards, since some issuers (notably Chase’s 5/24 rule) limit cards for people with too many recent applications.

Using these questions as your guide, you can learn to make quick assessments of card offers you come across. You’ll probably pass on most of the card offers you see, but occasionally, you’ll come across one worth the space in your wallet.

 See related: Our three best rewards credit cards, Credit card special offers, limited-time promotions, Rewards card reviews


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Updated: 06-18-2018