How to Choose the Perfect Rewards Credit Card

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Last updated on August 24th, 2023

With so many credit card offers on the market today, how do you choose the ideal card? Finding the right credit card is as easy as asking the right questions and seeing which offers fit your specific needs. Here are some tips for choosing the perfect rewards credit card:

Is a Rewards Credit card Right for You?

Rewards credit cards are among the most popular card types on the market. The reason for this popularity s the sheer versatility of these rewards – be they miles, points, or cash back.

But that access to rewards comes at a cost – not an annual fee (though one may apply), but rather a cost to your credit report. Beyond a potential annual fee, credit cards with rewards require a “good” or “excellent” credit score to apply.

Where Do You Spend Your Money?

Beyond credit score, the most important thing to consider when choosing a new rewards credit card is where you plan to use it. Rewards cards come in several types and amounts. There are retail cards for big brands and department stores; cash back cards that offer enhanced rewards on specific categories; airline and hotel credit cards that reward you for current and future travels, and more.

For instance, if you plan to use the card to pay for vacations, a travel credit card might be your best bet. Cards like the Chase Sapphire Preferred might be a good bet. With a $95 annual fee, the card earns 5X Ultimate Rewards points on Chase travel bookings, 3X on dining and 2X on all other travel purchases, and 1X on everything else.

If you prefer more flexibility with your bonus categories, why not consider the Citi Custom Cash℠ Card? The Custom Cash earns 5% back on your highest spending category up to $500 each billing period, with the following eligible categories:

Dining Fitness clubs Grocery stores
Drugstores Gas stations Home improvement stores
Travel & transit (select) Live entertainment Streaming service (select)

All other purchases with the card earn unlimited 1% cash back, with no caps on that earning.

Or, if you prefer to shop but don’t want to be tied down to a store card from one brand, why not look at the U.S. Bank Shopper Cash Rewards™? Unlike most retail cards – which offer around 5% back on stores associated with a single brand – the Shopper Cash Rewards earns 6% cash back at not one – not -two – not even three retailers, but rather 24 brands! Yes, you read that right – here are the eligible stores:

Ace Hardware Home Depot QVC IKEA Restoration Hardware
Anthropologie Kohl’s Target
Apple Lowe’s Walmart
Bed, Bath, & Beyond Lululemon
Best Buy Macy’s Williams Sonoma Menards Pottery Barn
Crate & Barrel Nordstrom Disney

Related Article: How to Maximize Cash Back

Are You Willing to Pay an Annual Fee?

If “where do I plan to use this credit card?” and “do I qualify?” are your first questions to consider, “how often do I plan to use it?” should be next on the list. Knowing how often you plan to use a rewards credit card can help you decide if it’s worth paying an annual fee for the card.

Take the previously mentioned Sapphire Preferred from Chase. Beyond UR points, the Preferred version of the Chase Sapphire also provides an impressive selection of premium features, including:

  • $50 annual Ultimate Rewards Hotel Credit
  • DoorDash DashPass membership
  • $10 GoPuff monthly statement credit
  • Instacart+ membership

The Preferred’s annual fee is understandable for cardmembers who plan to use the statement credits (especially the food delivery credits). If you don’t plan on activating those rewards, it just isn’t worth the fees. Here is how the Sapphire Reserve compares to other cards:

Citi Premier® Citi Custom Cash℠ Chase Sapphire Preferred
Rewards Earn 3X points on dining, groceries, gas stations, air travel, and hotel stays, plus 1X on all other purchases Earn 5% on purchases on your highest eligible spend category each billing cycle up to $500 spent, plus 1% on all other purchases Earn 5X on travel purchased through Chase Ultimate Rewards, 2X on all other travel purchases, 3X on dining, 3X on groceries and streaming services, and 1X on all other purchases
Other $100 annual hotel credit 0% intro APR for 15 months from account opening on purchases and balance transfers $50 annual hotel credit
Annual fee $95 $0 $95

The same principle applies to cash back cards. The Blue Cash Preferred Card from American Express offers 6% back on U.S. streaming services and U.S. supermarkets, plus 3% back on gas stations and transit. However, those impressive rewards come with a $95 annual fee (which is waived for the first year).

If you don’t plan on using your card that much, consider the Citi® Double Cash Card– from Citi. That card offers an unlimited 2% cash back on all purchases – unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases – a 0% introductory APR offer, and more, for no annual fee.

How Can You Redeem the Rewards?

Finally, always know your redemption options when choosing your next rewards credit card. How can you cash out your rewards? Do points or miles expire? Can you transfer your points to another program? These are all examples of the types of questions you should ask yourself. Doing so will set you up to take full advantage of what a rewards credit card offers.

Most rewards credit cards give similar award options. These redemption choices include:

  • Statement credits
  • Gift cards
  • Merchandise purchasable via online shopping portals
  • Charitable donations
  • Travel that can be booked via online portals

As with hotel cards and airline credit cards, some specialized rewards cards also allow accounts to transfer rewards to other loyalty programs. Moving these points or miles to other programs comes with additional questions, such as how much those points are worth after transferring? If you fly with Delta, for example, but prefer to use points with Marriott, how much value will those rewards retail after moving SkyMiles to Marriot Bonvoy points?

Related Article: 2023 Discover & Chase Freedom 5% Cash Back Calendar

Featured photo by TheDigitalArtist / PixaBay

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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