Reward Credit Cards

Whether it's points, miles or cash back, a great rewards card puts extra money in your pocket. Our list of the latest offers makes it easy to find the one that's right for you. Many come with no annual fee and introductory rates and bonuses. Review this listing of offers from our partners and click to apply securely at their website.

See offers from our partners below.

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 APPLY ONLINE

at Capital One's
secure site

Credit Needed
Excellent, Good
  • Enjoy a one-time bonus of 20,000 miles once you spend $1,000 on purchases within 3 months from account opening, equal to $200 in travel
  • Earn unlimited 1.25 miles per dollar on every purchase, every day and pay no annual fee
  • Fly any airline, stay at any hotel, anytime
  • Enjoy a low intro APR on purchases for 12 months; 12.99%-22.99% variable APR after that
  • Travel when you want with no blackout dates
  • No foreign transaction fees
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • See additional Capital One® VentureOne® Rewards Credit Card details
 APPLY NOW

at Capital One's
secure site

Credit Needed
Excellent, Good
  • Purchases Intro APR
    0% intro on purchases for 12 months
    Balance Transfers Intro APR
    N/A
    Regular APR
    12.99% - 22.99% (Variable)
    Annual Fee
    $0
    Credit Needed
    Excellent, Good
 APPLY ONLINE

at Chase's
secure site

Credit Needed
Excellent/Good
  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
  • See additional Chase Sapphire Preferred® Card details
 APPLY NOW

at Chase's
secure site

Credit Needed
Excellent/Good
  • Purchases Intro APR
    N/A
    Balance Transfers Intro APR
    N/A
    Regular APR
    16.99% - 23.99% Variable
    Annual Fee
    Introductory Annual Fee of $0 the first year, then $95
    Credit Needed
    Excellent/Good
 APPLY ONLINE

at Discover's
secure site

Credit Needed
Excellent/Good
  • New! Free Social Security Number alerts, we'll monitor thousands of risky websites when you sign up.*
  • You could turn $150 into $300 with Cashback Match™. Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically.
  • Earn 5% cash back in rotating categories each quarter like gas stations, Amazon.com, restaurants, wholesale clubs and more, up to the quarterly maximum each time you activate. Plus, 1% cash back on all other purchases.
  • Redeem your cash back for any amount, any time. Cash rewards never expire.
  • 100% U.S. based customer service.
  • Get your FICO® Credit Score for free on monthly statements, on mobile and online.
  • No annual fee.
  • See additional Discover it® Cashback Match™ details
 APPLY NOW

at Discover's
secure site

Credit Needed
Excellent/Good
  • Purchases Intro APR
    0% for 14 months
    Balance Transfers Intro APR
    0% for 14 months
    Regular APR
    11.99% - 23.99% Variable
    Annual Fee
    $0
    Credit Needed
    Excellent/Good
 APPLY ONLINE

at Wells Fargo's
secure site

Credit Needed
Excellent/Good
  • Earn a $200 cash rewards bonus after spending $1,000 in the first 3 months
  • Earn unlimited 1.5% cash rewards on purchases
  • Enjoy 1.8% cash rewards on qualified mobile wallet purchases, like Apple Pay® or Android Pay™, during the first 12 months from account opening
  • No category restrictions or sign ups and cash rewards don't expire as long as your account remains open
  • Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Cash Wise Visa® Card
  • 0% Intro APR for 12 months on purchases and balance transfers, then a 13.99%-25.99% variable APR; balance transfer fees apply
  • $0 Annual Fee
  • Select "Apply Now" to learn more about the product features, terms, and conditions
  • See additional Wells Fargo Cash Wise Visa® Card details
 APPLY NOW

at Wells Fargo's
secure site

Credit Needed
Excellent/Good
  • Purchases Intro APR
    0% for 12 months
    Balance Transfers Intro APR
    0% for 12 months
    Regular APR
    13.99%-25.99% (Variable)
    Annual Fee
    $0
    Credit Needed
    Excellent/Good
 APPLY ONLINE

at Barclaycard's
secure site

Credit Needed
Excellent
  • Get a $200 cash rewards bonus after you spend $1,000 in purchases in the first 90 days after account opening
  • Earn unlimited 1.5% cash rewards on every purchase. Every time you redeem, get a 5% cash rewards redemption bonus to use toward your next redemption
  • Redeem your cash rewards for a deposit into a U.S. checking or savings account, a statement credit or gift cards. Redemptions start at $50
  • Cash rewards do not expire as long as your account is open, active and in good standing
  • Enjoy a 0% introductory APR for the first 15 months on purchases.
  • Plus, you'll get a 0% introductory APR for 15 months for each balance transfer made within 45 days of account opening. After that a variable APR will apply, 15.99%, 20.99% or 25.99%, based on your creditworthiness.
  • Please note, there is a fee for balance transfers
  • No annual fee
  • See additional Barclaycard CashForward™ World Mastercard® details
 APPLY NOW

at Barclaycard's
secure site

Credit Needed
Excellent
  • Purchases Intro APR
    0% for 15 months
    Balance Transfers Intro APR
    0% for 15 months (on balance transfers made within 45 days of account opening)
    Regular APR
    15.99%, 20.99% or 25.99% Variable
    Annual Fee
    $0
    Credit Needed
    Excellent
 APPLY ONLINE

at Chase's
secure site

Credit Needed
Excellent/Good
  • Unlimited 1.5% cash back on every purchase — it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 15.99-24.74%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
  • No annual fee
  • See additional Chase Freedom Unlimited® details
 APPLY NOW

at Chase's
secure site

Credit Needed
Excellent/Good
  • Purchases Intro APR
    0% for 15 months
    Balance Transfers Intro APR
    0% for 15 months
    Regular APR
    15.99% - 24.74% Variable
    Annual Fee
    $0
    Credit Needed
    Excellent/Good
 APPLY ONLINE

at Citi's
secure site

Credit Needed
Excellent/Good
  • Earn 30,000 American Airlines AAdvantage® bonus miles after making $1,000 in purchases within the first 3 months of account opening*
  • First checked bag is free on domestic American Airlines itineraries for you and up to four companions traveling with you on the same reservation*
  • Enjoy preferred boarding on American Airlines flights*
  • No Foreign Transaction Fees on purchases1
  • Receive 25% savings on inflight food and beverage purchases when you use your card on American Airlines flights*
  • Double AAdvantage® miles on eligible American Airlines purchases*
  • Earn 10% of your redeemed AAdvantage® miles back — up to 10,000 AAdvantage® miles each calendar year*
  • See additional Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® details
 APPLY NOW

at Citi's
secure site

Credit Needed
Excellent/Good
  • Purchases Intro APR
    N/A
    Balance Transfers Intro APR
    N/A
    Regular APR
    16.74% - 24.74%* (Variable)
    Annual Fee
    $95, waived for first 12 months*
    Credit Needed
    Excellent/Good
 APPLY ONLINE

at Citi's
secure site

 APPLY BY PHONE
Credit Needed
Excellent/Good
  • Earn cash back twice on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
  • Balance Transfers do not earn cash back
  • 0% Intro APR on Balance Transfers for 18 months. After that, the variable APR will be 14.49% - 24.49% based on your creditworthiness
  • Click 'Apply Now' to see the applicable balance transfer fee and how making a balance transfer impacts interest on purchases.
  • No categories to track, no caps on cash back, no annual fee*
  • See additional Citi® Double Cash Card details
 APPLY NOW

at Citi's
secure site

or call Citi at
888-252-3753


Credit Needed
Excellent/Good
  • Purchases Intro APR
    N/A
    Balance Transfers Intro APR
    0% for 18 months*
    Regular APR
    14.49% - 24.49%* (Variable)
    Annual Fee
    $0*
    Credit Needed
    Excellent/Good
 APPLY ONLINE

at PNC Bank's
secure site

Credit Needed
Excellent, Good
  • Get 30,000 bonus miles when you make $3,000 in purchases in the first 3 billing cycles following account opening - a $300 value when you redeem miles for travel rewards
  • Earn 2 miles for every $1 spent on purchases
  • Intro 0% APR on Balance Transfers for the first 12 billing cycles following accounts opening. Then, a variable APR, currently 16.99%.
  • There is a fee of 3% of the amount of each balance transfer
  • No foreign transaction fees on purchases made abroad
  • Introductory $0 annual fee for the first year, then $85
  • See additional PNC Premier Traveler® Visa® Signature Credit Card details
 APPLY NOW

at PNC Bank's
secure site

Credit Needed
Excellent, Good
  • Purchases Intro APR
    N/A
    Balance Transfers Intro APR
    0% for 12 billing cycles on balance transfers made within 90 days of account opening*
    Regular APR
    16.99% *
    Annual Fee
    Introductory $0 annual fee for the first year, then $85**
    Credit Needed
    Excellent, Good
 APPLY ONLINE

at Bank of America's
secure site

 APPLY BY PHONE
Credit Needed
Excellent/Good
  • No annual fee
  • $150 online cash rewards bonus after you spend at least $500 on purchases in the first 90 days of account opening
  • Earn 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter
  • No changing categories and no expiration on rewards
  • 0% Introductory APR for 12 billing cycles for purchases and for any balance transfers made in the first 60 days, then, 13.99% - 23.99% Variable APR. 3% fee (min $10) applies to balance transfers
  • Get a 10% customer bonus every time you redeem your cash back into a Bank of America® checking or savings account
  • If you're a Preferred Rewards client, you can increase that bonus to 25% - 75%
  • See additional Bank of America® Cash Rewards Credit Card details
 APPLY NOW

at Bank of America's
secure site

or call Bank of America at
877-831-6028


Credit Needed
Excellent/Good
  • Purchases Intro APR
    0% Introductory APR on purchases for 12 billing cycles
    Balance Transfers Intro APR
    0% Intro APR for 12 billing cycles for balance transfers made in the first 60 days
    Regular APR
    13.99% - 23.99% Variable APR on purchases and balance transfers
    Annual Fee
    $0
    Credit Needed
    Excellent/Good
Show More Results


Compare Rewards Credit Card Offers

Updated: September 1, 2017

Card Welcome Bonus Bonus Requirement Rewards Rate
Capital One® VentureOne® Rewards Credit Card 20,000 Miles Spend $1,000 on purchases within 3 months from account opening Unlimited 1.25 miles per dollar on every purchase, every day
Chase Sapphire Preferred® Card 50,000 Bonus Points Spend $4,000 on purchases in the first 3 months from account opening 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases
Discover it® Cashback Match™ Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically Automatic Earn 5% cash back in rotating categories each quarter like gas stations, restaurants, Amazon.com, wholesale clubs and more, up to the quarterly maximum each time you activate

Unlimited 1% cash back on all other purchases
Wells Fargo Cash Wise Visa® Card $200 Cash Reward Bonus Spend $1,000 in the first 3 months Earn unlimited 1.5% cash rewards on purchases
Barclaycard CashForward™ World Mastercard® $200 Cash Reward Bonus Spend $1,000 in purchases in the first 90 days after account opening Earn unlimited 1.5% cash rewards on every purchase
Chase Freedom Unlimited® $150 Bonus Spend $500 on purchases in your first 3 months from account opening Unlimited 1.5% cash back on every purchase
Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® 30,000 American Airlines AAdvantage® Bonus Miles Make $1,000 in purchases within the first 3 months of account opening Double AAdvantage® miles on eligible American Airlines purchases
Citi® Double Cash Card N/A N/A Earn cash back twice on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases

The Rewards of Rewards Cards

Rewards programs are great for maximizing the value of your spending in a way that best suits your lifestyle. Rewards cards come in a variety of types, all with their own advantages. Whether you want cash back or a travel card with a strong brand, a business card or a great general product, rewards cards offer excellent benefits, including points or miles, cash back, access to airport lounges, shopping portals and more.

Unsure where to start? We’ll walk you through the types of rewards cards, what makes them so awesome and potential drawbacks – none of which are insurmountable.

You can also check out our rewards credit card reviews to get a more detailed look at what each card has to offer. Here's what you need to know:

What is a rewards credit card?

A rewards credit card is a product that gives you financial benefits for card loyalty. They often have signup bonuses and offer points or miles back for spending on certain types of purchases.

A rewards card is sometimes called a cashback card or a travel card, depending on the benefits offered.

With a cashback card, you can use it and forget it, earning a percentage back with every purchase. With a travel card, you can earn benefits for loyalty to airline or hotel brands.

Many rewards cards have an annual fee, which is not necessarily a bad thing (more on that later), and they frequently offer a signup bonus that you get for spending a certain amount within a certain period of time, usually 90 days or 3 months.

Rewards cards can come both as consumer or business cards, which can have rich benefits.

Why use a rewards credit card?

A rewards card can be used not only for convenience, but as a way to earn cash back or enjoy benefits from travel points. In fact, used correctly, you can get hundreds of dollars back a year, even after an annual fee.

The trick is to make sure you don’t carry a balance and that you use it enough to make it worth your while.

You want to avoid carrying a balance, because otherwise, you undo any benefits the card offers you. So, if you use your rewards card to buy $500 in clothes, and you get 2X points back for your spending, you'll get $10 back. Easy money, right? But then, if you pay the minimum each month on the $500 at a rate of 17% APR, it will take you 24 months and you will pay $92 in interest charges. So, instead of making $10, you spent more than $80 you could have used on groceries or other expenses.

You also want to make sure you spend enough (without incurring debt) to get the full benefit of the card.

For example, after your first year with the Chase Sapphire Preferred, you'll pay a $95 annual fee. If you spend $4,000 on dining for the year, that comes to 8,000 points, because travel and dining at restaurants worldwide get you 2X points for every dollar. If you use those 8,000 points in the Chase Ultimate Rewards portal on travel, they become $100 in redemption, more than covering the annual fee.

If you plan to spend less than $4,000 on dining and travel, the card isn't worth it for you, because you will not have cleared the annual fee hurdle, assuming you do no other spending.

So, think about how you'll use your rewards card before applying.

How do I get a rewards credit card?

When you apply for a rewards credit card, the card issuer will gather some information, including Social Security number, name and address, and income. Fill out the form honestly, because you can have the card revoked if you’re caught in a lie. Income can be money you have access to, rather than just your salary, so if you and your spouse are employed, you can combine the incomes. This is helpful if you are an at-home parent and the family has just one income.

Many cards will approve or decline you within minutes. If you are approved, you may be able to shop online immediately. Your card will arrive within a few days in the mail.

How do rewards work on a credit card?

Rewards on a credit card can work as cash back, statement credit or through a portal, and can be used for redemption in travel or shopping.

Say you take out a Barclaycard Arrival Plus. You'll get 50,000 miles after a $3,000 spend in the first 3 months of card membership, which turns into $500 in travel. Here's how it works: Once you make a travel purchase with the Arrival Plus, you'll choose your redemption through a travel portal and get a statement credit. Your rewards don't expire, but you have 120 days to redeem a travel event from the day it posts.

Other cards, such as the Chase Sapphire Preferred, offer a portal that you redeem through, in this case, the Chase Ultimate Rewards. It's actually to your advantage, because the points you've earned get 25% more value through the portal.

You can also earn and redeem your points for hotel stays or flights with loyalty brand cards. In some cases with hotel brands, you can double up on points both as a loyalty brand member and a cardholder.

Another way to use rewards points is through a shopping portal, such as Discover Deals, which allows you to get cashback bonuses or money off your purchases. Through these portals, you can shop for clothing, gifts, health and beauty aids, travel and more.

Types of rewards credit cards

There are actually a number of different types of rewards credit cards, including cash back, hotel and airline loyalty cards, and even retail. In fact, more than 60% of credit cards issued in the U.S. are tied to a rewards program, according to The Wall Street Journal. Here are some different types of rewards cards:

  • Rewards Points — Rewards date back to S&H Green Stamps, which were popular from the late 1800s until the early 1980s. The stamps were earned with purchases at gas stations, supermarkets and elsewhere, then redeemed for products featured in the S&H catalog. Today, rewards cards are a catch–all for cash back, travel, hotel and airline, and gas cards.
  • Gas — Also called fuel cards, this product dates back to the 1920s when their primary purpose was convenience. With the advent of rewards cards that also reward you for groceries, wholesale clubs and restaurants, cards like the Blue Cash Preferred have all but replaced the gas credit card. That said, gas cards like the ExxonMobil Gas Card reward you for $0.06 on the gallon and only require fair credit.
  • Airline miles — Frequent flier programs became popular in the 1980s. You can choose between a single loyalty card, such as Chase's Southwest Rapid Rewards Plus and a card with multiple airline partnerships, such as the Chase Sapphire Preferred.
  • Hotel — A version of the airline loyalty card, this type of card product is good for the consumer who has a favorite hotel brand. Because hotel partnerships are so large today, you can access hotels in the hundreds with a single card. For example, The Hilton Honors Card from American Express allows you access to more than 540 properties in 78 countries.
  • Cash back — Originating in 1986, Discover developed its products as a way to give money back at the end of the year based on the amount of charges. The cashback product has expanded to cards that give cash back in statement credits, checks and deposits in bank accounts. Cash back can be 1%–2% back for everything or for quarterly categories, which typically have a greater reward.
  • Retail — Sometimes called co–branded cards, this product is a type of loyalty card that is tied to department stores or other brands. For example, the Toys R Us Store Card offers 15% off your first purchase and 8% back on regular rewards.
  • Luxury — These cards tend to have a higher annual fee, sometimes in the thousands, but their rewards are significant for the frequent traveler who wants 24/7 concierge service, access to exclusive events and gifts, and more.
  • Business — With rewards tailored to the business owner, entrepreneur or solopreneur, these cards give points back for such spending as advertising, utility bills and more, and have benefits specifically for the frequent traveler.

What are signup bonuses on rewards credit cards?

Many rewards cards offer a signup bonus in cash, miles or points, with a required spend within a certain amount of time, usually 90 days or 3 months. The required spend of a cashback card is usually below that of a travel card, typically $1,000 or less. This makes it easier to meet the requirements and earn the cash bonus. For example, the Chase Freedom Unlimited offers $150 after a $500 spend within your first 3 months of card membership.

But don’t let the higher spend of the travel cards scare you away. Although the spend can be $3,000 and even $4,000, the rewards can be for 50,000 points/miles or more, which can translate into $500 and even $625 equivalent in travel.

Make sure you have the cash to pay back the required spend, because if you carry the charge over month-to-month, you basically undo the benefit of the bonus by paying interest fees.

How do you use rewards credit cards to save money?

Using a rewards card to save money only works if you use your card for purchases you plan to make anyway and if you pay your card bill in full and on time each month. That way, you avoid late fees and interest charges.

You also want to make sure that your planned spending will put your rewards above any annual fee. So, if you have an annual fee of $95, and the redemption is at 2X points on every dollar spent, you want to make sure you plan to spend at least $4,750 in a year.

Ideally, you want to focus on your best cashback, travel or rewards card, and put as many purchases as possible on it so that you earn maximum miles.

Do credit card reward points expire?

Credit card reward points can expire, but increasingly, as long as you keep your account open and active, the points won't expire. Read the fine print, because you don't want to be in a rush to use your points because they are about to expire. Often, however, as long as you make a small charge each month, those points will be there for you when you need them. Just be sure to pay in full and on time, because carrying a balance negates those points you've collected, and by paying on time, you are building your credit.

Advantages to rewards credit cards

Rewards cards have oodles of advantages – it just depends on your spending habits and priorities. Not only do you get cash, miles or points for your spending habits, you can build your credit while using it.

With a cashback rewards card, you can earn cash back almost instantly, and even double your cash back the end of your first year of card membership. You can get a signup bonus of cash back after an initial required spend; up to 5% for quarterly categories; and up to 2% back for all expenditures.

Another option, the travel card, allows you to earn miles or points, as well as a signup bonus of miles or points. Also, you can be rewarded for using a favorite hotel or airline brand.

Finally, as with any credit card, rewards cards help you build your credit, provided you pay in full and on time each month. FICO, the scoring model most used by lenders, loves it when you don’t have a balance on your credit card, and FICO really loves it when you pay on time.

Disadvantages to rewards credit cards

From incurring additional debt to impacted credit, there can be disadvantages to rewards credit cards, but nothing insurmountable. On the plus side, you can earn cash back and other rewards for using your rewards card. On the downside, you can end up owing more than you can pay off or even harming your credit. Here are possible drawbacks to rewards cards and what you can do about them:

  • Annual Fee
    Many rewards cards carry an annual fee. While that isn't necessarily a drawback, you want to plan out the use of your new card to make sure you will benefit in the long run if it has an annual fee. Say your card has an annual fee of $89 and you get 2X points back on all purchases. That means you want to make sure you will spend at least $4,500 for the year on your card if the redemption is $0.01 for every point. Here's how it works: You spend $1,000 a month on your card, using it for groceries, gas, clothes and other expenses. That comes to $12,000 for the year or 24,000 points or $240. After the annual fee of $89, you have $151 left over, making it worth your while to take out the card. Bottom line: Make sure you know if you will earn more points than needed to pay the annual fee.
  • Carrying a Balance
    Carrying a balance can be a detriment with rewards cards. Here's why: Say you have a $3,000 balance on your card, but you can only pay the minimum. That means if the card's APR is 17%, it will take you 126 months and you will pay $2,241 in interest fees. If you spend $12,000 a year on your card, even if you are paying it off as you go, but still are paying the minimum on that $3,000, your rewards will be less than the interest owed, because of that annual fee of $89. In 10 years, you can earn $2,400, but the annual fee comes to $890, meaning the amount earned is far below the amount spent on interest fees and annual fees. Bottom line: Don't incur a balance on your rewards card. Only use the card for expenses you can pay back at the end of the month.
  • Late Payments
    It can be tempting to use your rewards card with wild abandon because of the benefits of points earned. But never spend more than you can afford, and pay in full and on time each month. Why? Because if you are late on your account, that is reported to the credit bureaus, and ultimately, it is reflected on your credit score. In fact, history of on–time payments is the most important aspect of your FICO credit rating, making up 35% of your score. (FICO is the scoring model most used by lenders.) Bottom line: Pay in full and on time each month to maximize your rewards and to build your credit.

Do debit cards have rewards programs?

Debit cards can have rewards programs of up to $0.10 back, but fees vary widely. For example, Discover offers $0.10 cash back on debit purchases, up to 100 transactions per month, but no monthly fee, allowing you to earn up to $120 a year. However, Green Dot gives out 5% back on all purchases, up to $100 annually, but there is a $9.95 monthly fee and there are other charges.

A debit card is really more for convenience, and it won't improve your credit. You might want to opt instead for a secured credit card, in which you pay a deposit in exchange for a few hundred dollars in available credit. Just make sure that the card issuer reports your good payment habits to the credit bureaus so that you are building your credit. And pay in full and on time each month. Also, research the fees. Once you've built up your credit with your secured card, you can apply for rewards credit cards and really enjoy the rewards benefits of a financial product.

How to compare rewards credit cards

When you compare rewards credit cards, look at annual fees, bonus signups and other factors.

  • Annual fee — There is no reason to run from an annual fee, but you want to make sure you will earn more than the cost of the fee. Look at the annual fee as a tradeoff. A higher one, above $100, may offer luxury benefits, such as access to airport lounges. Under $100 may mean that you get generous points back, such as 2X points back on everything.
  • Bonus signups — All bonus signups aren't equal. For example, a 60,000–point bonus could be actually worth less than $600, and a 50,000–point bonus could translate into more than $600. Here's the deal: Research the card's rewards system before committing.
  • Rewards benefits — Some cards offer higher points for specific categories, such as 2X for travel and restaurants, while others reward you for all purchases with a 1.5X– or 2X–point benefit. Look at your spending the previous year to figure out how you'll use your card.
  • Fees — While you don't want to carry a balance on your rewards card, be mindful of the APR rate. Likewise with the late fee – you don't want to be late, but check it out just in case. Also, note the foreign transaction fee, and if you are planning to transfer a balance, check to see if there is a balance transfer fee and the terms of the transfer.

Once you've check out the different aspects of several rewards cards, figure out which one you are most likely to use most often. You want a product that will be your go–to card. If you travel a lot, you might want to choose a rewards card that doubles as a travel card. If you have the potential to spend a lot on your card, but in a variety of ways, a cashback card that offers a flat rate may be the best choice.

How do you strategically use a rewards credit card?

7 strategies to maximize your rewards card:

  1. Research thoroughly before choosing your card. Read the fine print.
  2. When choosing a card, assess what kind of card it is, and if it’s a cashback card, whether it has a flat cashback rate or rotating categories. If you like the opportunity to earn as much as 10% back on select categories your first year, then a rotating card might be a good choice. Just make sure you are willing to do the quarterly signups and keep track of the categories. If not, a flat rate card may be best. This way, you can earn up to 2% back on everything. If you are loyal to a specific airline or hotel brand, a co-branded travel card may be a good choice, because you can be generously rewarded for making purchases in flights and at hotels. If you are looking for a good general rewards card that doubles as a travel card, find one that rewards you for all purchases, regardless of brand or type of purchase.
  3. Make it your go-to card. See if you can pay your rent, insurance and utilities with it, but make sure there are no additional charges. Buy your groceries with it, and pull it out at restaurants.
  4. Don’t spend just to earn cash back or points. Only use it to buy what you were going to purchase anyway.
  5. If you can’t pay it off in full each month, there’s no point in acquiring it. The interest fees will overshadow any cash back or points you’ve earned.
  6. Never go over the limit or pay late. These are wasted dollars.
  7. Use shopping portals. Frequently check for deals. Just make sure you are fully rewarded for using points or miles. Some cards don’t reward you for the full amount with their shopping portals or gift cards.

What do you look for in a rewards credit card?

Here are 4 things to look for in a rewards credit card:

  1. Is it flexible enough for your needs? There’s no point in taking out a card if you’ll never use it.
  2. Is there an annual fee? Will you earn more cash back or points than the cost of the annual fee? This is a deal breaker.
  3. Will you use it without overspending? Never carry over a charge from month to month. If you aren’t sure, it might be best to choose a credit-builder card and put a small charge on it each month, paying in full before the due date.
  4. Do you want a card with a shopping portal? This is a great way to save some money.

Why do creditors offer rewards credit cards?

On the surface, it doesn't make sense why card networks and credit card issuers offer rewards credit cards. Used correctly, you can get hundreds of dollars back each year. But it makes sense, once you understand the issuer business model. Here's how it works:

  • Card issuers charge fees such as late payment fees, annual fees, balance transfer fees and cash advance fees. For example, when you transfer a balance to your new card, you are usually charged a 3%-5% fee or $5-$10, whichever is greater. Even if the card offers a 0% intro APR, and you pay your balance by the time the offer ends, the bank still gets a take.
  • Card issuers, as you probably know, benefit from interest fees you pay when you carry a balance past a month. These fees are hefty, with the average APR running at above 16%. If you make a $500 purchase and your APR is 17%, a monthly minimum payment will mean that you pay for 24 months and pay $92 in interest. Great for the issuer, not so amazing for you. That's why it's important not to carry a balance, or you'll wash away the earnings you've made with your rewards card.
  • Card issuers and networks earn a processing fee for each transaction that is typically paid by the merchant. Called interchange fees, they are based on the volume and value of transactions. Usually, the consumer is not impacted by this fee, which can be a percentage of the transaction of say, about 2%, plus a flat fee of perhaps $0.10 per transaction, although there can be what is called a checkout fee that the consumer pays.

With all these fees floating around, what do you do? First off, pay in full and on time each month. That will keep you from paying late fees and interest charges. Also, keep an emergency fund so you won't be tempted to take out a cash advance. Finally, ask the merchant if you are being charged a checkout fee for using your Visa or MasterCard. If so and it's a big purchase, you may want to think about shopping elsewhere.

What are typical rewards card rates?

There is no typical rewards card rate. Cashback cards can pay out a flat 1.5% or 2% or they can give a higher rate for specific types of purchases, while travel cards can range in valuation from under 1% to over 2%.

For example, the Blue Cash Everyday offers 3% back on purchases made at U.S. supermarkets for up to $6,000 a year. (It's 1% after that.) That comes to $180 back. Terms apply.

Some cards, such as the Chase Freedom, pay out for categories that you sign up for each quarter. The Freedom, for example, offers 5% back on quarterly categories for up to $1,500 spend, or $75 back each quarter.

Rewards cards that are travel cards can reward you at a higher rate for going to restaurants, a generous number of points for loyalty shopping, or a flat 2X points for every $1 spent.

When choosing your rewards card, look at your spending habits. Do you love one particular travel brand? Are you not a big traveler, but you love The Home Depot, Amazon.com and Sam’s Club? A branded travel card may be a good choice. A cashback card with quarterly categories may be right for you.

Are credit card rewards taxable?

Rewards on your rewards credit card are not taxable, although signup bonuses to bank accounts can be.

"Rewards and airline miles that are provided in connection with a purchase on a credit card are routinely not subject to individual income tax reporting," a Citi spokeswoman told CreditCards.com

On the other hand, "When a customer receives a gift for opening a bank account –– whether cash, a toaster or airline miles –– the value of that gift is generally treated as income and subject to tax reporting. This is separate and distinct from miles or points earned by our credit card customers for their purchases," the Citi spokeswoman said.

Is a rewards credit card right for me?

If you’re wondering whether a rewards card is right for you, ask yourself these 5 questions:

  1. What is your FICO score? If it is below 700 on a scale of 300-850, don’t bother to apply except in a few cases. In some cases, a score higher than 750 is required, so do your research. Check your credit at MyFICO.com or check your Vantage score for free at CreditCards.com. Also, take out one of your free credit reports at AnnualCreditReport.com and check it for accuracy. You can also check your TransUnion report for free at CreditCards.com. Get the credit bureau to correct any inaccuracies, and consider getting a credit-builder card if you need to boost your score. Within months, you’ll see a difference.
  2. Do you have a budget? This is a must to ensure you don’t go over on your spending. You’ll want to only spend on your card what you already have in the bank. Credit cards are for credit building, convenience, and in this case, cash back or points, not to be used as a long-term loan.
  3. Do you pay your bills on time? If you have any trouble paying your bills on time, having a credit card can be problematic. That’s because you can face late fees and hurt your credit. Instead of a card with rewards or cash back, which takes a little organization, see if you can get a credit-builder card to practice on.
  4. Are you intrigued by travel and rewards cards, but not sure if you have the organizational skills to manage them? A cashback cards might be a good choice. If you choose a simple, flat-rate cashback card, you can use it and forget it. It gives you the opportunity to earn money back while focusing on spending and paying the monthly bill. If you want something that gives you a little more in rewards and practice tracking your spending, choose one with quarterly categories or category spending limits.
  5. Feel ready to move to a more advanced card? Take a look at the travel cards out there, and see if there is one that sparks your fancy. Even if you are an occasional traveler, a travel card can be a good choice, depending on the rewards program.

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