How to Get the Most out of Your Credit Card Rewards

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Written by: Alayna Okerlund | Best Company Editorial Team

Last Updated: August 27th, 2020

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When you see a credit card commercial on TV or receive an offer in the mail, chances are the first thing that grabs your attention isn’t the interest rate, but the amazing rewards you could receive for making purchases. Rewards may include airline miles, cash back, hotel points, and more. But with so many rewards programs, how do you know which one is right for you? And how do you get the most out of the rewards you have chosen?

Choose Rewards You Will Use

The variety of rewards may seem overwhelming at first, so the first thing you should consider is rewards you will truly use—the perks that you truly value. What card best fits your spending and living habits? For example, if you like to fly or travel frequently, then cards that advertise airline miles would be a smart choice for rewards.

Credit card rewards come in two main categories:

Travel redemption reward cards

Each time you use a travel redemption award card, you earn points or miles that you can put toward your next trip. Common types of travel credit cards include:

  • Capital One® Venture® Rewards Credit Card: This card claims to have reward flexibility, simple earning and redemption processes, and foreign travel.

  • Chase Sapphire Preferred Card: This card includes reward flexibility as well, foreign travel, and a sign-up bonus.

Cash back rewards

Instead of collecting points, cash back credit cards give you real cash that you can spend on anything you'd like. When you use the card on certain purchases, you'll earn cash rewards on each transaction, generally ranging from 1%-6% of the total amount. Common types of cash back credit cards include:

  • Chase Freedom Card: Includes rotating bonus categories, sign-up bonus, and no annual fee.

  • Blue Cash Preferred Card From American Express: Provides everyday rewards, has a relatively simple redemption process, and a welcome offer.

  • Citi Double Cash Card Reward: This card is designed for flat-rate cash back and gives simple rewards, provides a free FICO score, claims to a high rewards rate, and allows balance transfers.

  • Discover it Card: This card is designed for online shoppers, provides a free FICO score, a bonus to new cardholders, no annual fee, and rotating bonus categories.

Keep an Eye Out for Annual Fees

Rewards are important, but so are annual fees. If you choose a card for the rewards, you want to make sure that the annual fees are not going to negatively affect you. According to Next Advisor, credit cards with rewards are more likely to have high annual fees than non-reward cards. These annual fees are charged each year to keep your card active no matter how frequently you use the card. If you choose to close your card, be aware that your credit could be impacted if it leads to a higher utilization rate (total credit debt versus total credit card limits).

Although annual fees are never fun to pay, The Simple Dollarclaims that the benefits and rewards can outweigh whatever you pay toward an annual fee, depending on your spending habits. Before you apply for a card, examine the annual fee closely, and make sure you’re prepared to earn enough rewards to offset that fee. 

Do Your Research

Your research shouldn't stop with just the rewards offered and the annual fees. Anyone looking for a rewards card should look into reward rates, overall perks, sign-up bonuses, annual percentage rate (APR), additional bonus rewards, balance transfer rates, and rewards redemption options.

You should also avoid carrying a balance on your card when you are using a rewards credit card. Carrying a balance on your rewards card will cost you more money and stress, and could ruin your overall points balance. No balance also means that you will not have to worry so much about APR rates. If you do carry a balance, remember: the lower the APR, the better! Thesimpledollar.com suggests that you use at least two reward cards to double up on points. If you choose to use two rewards cards, have a plan for accumulating points.

Overall, consider credit cards that offer reward programs when looking to open either a first or additional credit card account. If you think you’re ready to start making your purchases work for you, then take a look at our ranked and reviewed credit card companies to help you find the best card to fit your spending and reward goals.

The Top Credit Cards Companies

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#1 Capital One chevron_right
9.4 Overall Score
4.3
starstarstarstarstar_half
(513)
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#2 American Express (Amex) chevron_right
9.3 Overall Score
4.3
starstarstarstarstar_half
(463)
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#3 Discover chevron_right
8.8 Overall Score
4.4
starstarstarstarstar_half
(385)

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