Tuesday, March 21, 2023

How To Compare Credit Card Rewards

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Bank Of America Premium Rewards Credit Card

Best Credit Card Offers – Top Tips on Comparing Reward Credit Cards

Our pick for: Relationship rewards

Like some other travel cards at its price point, the Bank of America® Premium Rewards® credit card gives you bonus rewards on travel and dining. But you also earn a higher rate on “other” spending than many competing cards offer. There’s a great sign-up bonus and some other good perks. And if you’re a Bank of America® Preferred Rewards customer, your rewards get even better. Read our review.

Cards With Annual Fees Are Generally Not Worth It

Some rewards cards charge an annual fee for using the card. These cards typically have very nice rewards programs, but the annual fee ends up eating a lot of the benefit of that program.

For example, if you have a card that gives you 3% cash back and charges a $100 annual fee, and theres another card that gives you 2% cash back without an annual fee, you have to put $10,000 on that 3% credit card over the course of a year to make up for that annual fee.

Without diving too deep into the math, if youre not regularly putting thousands of dollars in purchases on your credit card each month meaning that youre running most of your regular expenses through it a credit card with an annual fee probably isnt worth it compared to the cards available without an annual fee. However, if you put most of your expenses each month on your credit card and pay it off in full at the end of the month, a reward program that generates an extra percentage point in rewards will pay off for you eventually.

Give Investing Your Rewards A Try

Now, this approach works for me because I don’t need to use my credit card rewards for other things, such as funding vacations . And I like the fact that every time I’m spending, I’m doing a little bit to increase my net worth.

If you aren’t counting on your cash back for other purposes, consider getting a card that lets you deposit that money into a brokerage account so you can also turn your rewards into a hefty sum over time.

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Survey: 31 Percent Of Rewards Card Holders Didnt Redeem Them

According to a new Bankrate survey, nearly 1 in 3 rewards credit cardholders didnt redeem any rewards last year. While 69 percent of cardholders did redeem cash back, points or miles last year, 55 percent of those did so for less than $300 in value.

Findings from the survey also suggest that rewards cardholders arent using credit cards to pay for smaller, everyday purchases as often as they could but are more likely to use credit for travel-related purchases.

Among rewards cardholders who typically pay their balances in full each month:

  • 51 percent who buy groceries prefer to pay with credit
  • 56 percent who spend money at restaurants typically use credit
  • 59 percent who buy gas usually pay with credit
  • 83 percent who buy plane tickets pay with credit
  • 79 percent who stay at hotels put the charges on a credit card

Using rewards cards, while keeping your monthly payments up to date to avoid interest, offers an opportunity to earn rewards on large and small purchases, said Bankrate.com credit card analyst Ted Rossman. Many credit card issuers leaned hard into groceries, food delivery, streaming services and other everyday categories in 2020, so it is easier than ever to earn and burn routine rewards for routine expenses.

Get the full story with Bankrate: Read more on the .

Other Types Of Rewards Cards

How Does our Business Rewards Credit Card Compare to Others?
  • Gas: Gas cards reward you generously for each gallon you buy and sometimes only require fair credit. You can get a credit card that rewards purchases at any gas station, or one that rewards purchases at a specific gas station chain. A great option: the Costco Anywhere Visa® Card by Citi
  • Retail: Sometimes called a co-branded card, retail credit cards are a type of loyalty card that is tied to department stores or other store brands. These cards can offer high percentages of cash back for first purchases and more, though the rewards are generally limited to the specific retailer and the APRs on these cards can be quite high. A great option: the , which offers rewards on Amazon Prime and Whole Foods purchases.
  • Business: Business credit cards are designed for business owners and generally offer cash back or points on business-related spending, like office supplies or internet services, as well as money-saving perks and flexible financing benefits. A great option: the Ink Business Unlimited® Credit Card, which rewards cardholders with 1.5% cash back on all purchases for your business.

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Types Of Travel Cards

Travel credit cards are popular because you can earn travel rewards with your spending. Additionally, many travel cards offer elite status and other perks that save money and improve how you travel.

Most travelers would do well by having one card of each type: a credit card for the airline and hotel that they use most often, plus a flexible points card that they can use for other travel expenses.

  • Airline cards

Look At Other Reviews

You should also take the time to look at online reviews from other people who have signed up for the same rewards card before you make up your mind. This will allow you to learn more about how quickly and efficiently you can earn rewards, how easy they are to access, and even what level of service you can expect from the provider.

These are all key considerations that will make it easier to find the right rewards credit card.;

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Best For Investment Rewards: Fidelity Rewards Visa Signature

What to Know About This Card

  • Annual Fee: None
  • Rewards Program Highlights: Unlimited 2% cash back awarded as $50 credit to your Fidelity account for every $2,500 in spending
  • Top Perks: No rewards cap, limits or expiration, and flexibility to redeem for travel, merchandise, gift cards or statement credit
  • Team Clark Card Review

Why We Like It: Much like the Citi Double Cash, this card offers a simple and straightforward path to 2% cash back on every dollar you spend. And since were big proponents of making sure you stay on top of your retirement savings, having this reward dump straight into your Fidelity investment account is a stress-free way to add to your long-term savings. This card is on our list of best credit cards for savings and investments.

How Does A Rewards Credit Card Work

Best Credit Card Rewards – Your Guide on How to Select a Rewarding Credit Card

Regardless of how youre rewarded, the basic principle is the same: the more you spend on your credit card, the more youll receive in rewards .

Cashback reward cards work on the same principle, but you get money back instead. This could be cash credited to your card account or current account. Learn more aboutcashback reward cards.

Alternatively, some cashback cards convert points into redeemable vouchers. If the credit card is associated with a specific store, youll usually be encouraged to spend there and be offered extra cashback for doing so.

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Dont Overvalue Welcome Bonuses

Many credit card rewards programs offer some form of welcome bonus. If you spend a certain amount within a certain period after signing up, you get a big allotment of points or miles in their program, or even a cash back bonus.;

That can seem great, but those cards tend to have mediocre ongoing rewards and are often paired with annual fees. To really get the value out of welcome bonuses, you need to get into a cycle of card hopping, in which you sign up for and cancel cards regularly, and that can have consequences for your credit if youre not very on top of things.;

If you simply want a card you can consistently use to generate useful rewards over a longer period of time without swapping cards frequently, dont worry about the value of the welcome bonus and instead focus on the long-term rewards that the card gives you.

Chase Freedom Unlimited: Best For Flexible Rewards

Sign-up bonus: $200 after you spend $500 on purchases in the first three months of account opening. Earn 5% cash back on grocery store purchases on up to $12,000 spent in the first year.

Rewards rate:;Earn 5% on travel booked through the Ultimate Rewards portal; 3% on dining and drugstores; unlimited 1.5% cash back on all other purchases.

Annual fee:;$0

Who should apply:;Everyone needs a card that earns rewards on those purchases that dont fall under any other bonus categories. Thats where a card like the Chase Freedom Unlimited shines especially for existing Chase Ultimate Rewards cardholders.

If you also have the;Chase Sapphire Preferred,;Chase Sapphire Reserve;or;Ink Business Preferred Credit Card, you can transfer your cash back rewards from the Chase Freedom Unlimited to your Ultimate Rewards account. You can then redeem those points at an elevated rate through the;Chase portal;or transfer them to travel partners.;TPG values Ultimate Rewards points;at 2 cents each, which doubles the value of your rewards.

Chase also recently;announced changes;to this card, making it one of the most valuable;no-annual-fee credit cards;out there.

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Best For Everyday Purchases: Citi Double Cash Card

What to Know About This Card

  • Annual Fee: $0
  • Rewards Program Highlights: Earn unlimited 2% cash back on all purchases .
  • Introductory Offers: 0% APR on balance transfers for the first 18 months of card membership
  • Top Perks: $0 fraud liability and access to the Citi Entertainment portal
  • Team Clark Card Review

Why We Like It: Its incredibly simple. There are no limits to the amount of 2% cash back you can earn with this card, so you can spend it anywhere Mastercard is accepted and know exactly what youll get in rewards each time. This no-annual-fee card is in Clarks wallet, so it has his stamp of approval.

Pay Your Bills In Full

38 best images about FINANCIAL

Otherwise, youll just lose your points, miles or cash back to interest and rather quickly, given rewards credit cards tend to carry slightly higher interest rates than some of their counterparts. In order to earn rewards while minimizing the odds of overspending, consider paying your bills every week, instead of the end of every month.

Learn more ways to maximize credit card rewards.

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Discover It Cash Back: Best For Rotating Cash Back Categories

Why we picked it: Savvy spenders can really rack up rewards with this classic cash back credit card that offers a whopping 5% back on up to $1,500 in purchases in rotating bonus categories per quarter and matches all the cash back you earn at the end of your first year.

Pros: This card fires on a lot of cylinders, offering competitive cash back for no annual fee, no foreign transaction fees, an ultra-generous sign-up bonus and a lengthy promotional APR on balance transfers and purchases . See more of the best zero interest credit cards.

Cons: You have a little bit of legwork to do to earn your bonus cashback namely, enrolling for the rotating categories each quarter and shifting your spending habits to maximize your earnings. Plus, the bonus categories arent always the same year-to-year, so you may find it harder to maximize cash back in some years versus others. See the 2021 Discover it Cash Back calendar.

Who should apply? If youre looking for a card with a little bit of everything and dont mind some friction when it comes to earning rewards , this consumer-friendly card is a top choice.

Read our full Discover it Cash Back review or jump back to this cards offer details.

How Much Effort Are You Willing To Put Into Maximizing Your Earnings

To get the most out of your rewards card, you need to strategize and identify the things you spend money on most. Many rewards cards are relatively low-effort as they provide rewards on all everyday eligible purchases or may encompass a broad category, such as dining or travel. However, its important to read the issuers fine print as there may be some exceptions. If you are willing to use a more complex strategy to extract the most value, you may need to take advantage of rotating bonus categories or transferring points and miles to partners.

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The Platinum Card From American Express: Best For Luxury Travel Benefits

Why we picked it: This premium American Express card comes fully-loaded with luxury travel benefits, including, but by no means limited to, airport lounge access, a $100 Global Entry or $85 TSA Precheck statement credit, up to $200 in statement credits each year on prepaid Fine Hotels + Resorts or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card, automatic gold elite status with Hilton Honors , and no foreign transaction fees .

Pros: Cardholders earn 5X points on flights booked directly with airlines or with American Express Travel and 5X points on prepaid hotels booked with American Express Travel. You get 1X points on other purchases. Theres also a very generous welcome offer: 100,000 points if you spend $6,000 on purchases in the first six months, which we estimate to be worth around $1,000 when you book through American Express Travel, given those points are worth 1-cent each. New cardholders also receive 10X points on eligible purchases at restaurants worldwide and when you Shop Small in the U.S. in their first six months of card membership.

Who should apply? Very frequent flyers who love to travel in comfort and style will enjoy the Platinums bevy of benefits.

Read our full Platinum Card from American Express review or jump back to this cards offer details.

How To Compare Rewards Cards

Best Credit Card Offers – How to Really Maximize Your Credit Card Rewards

We’ve discussed how to evaluate a credit card’s rewards structure. But;rewards rates;aren’t the only factor to consider when choosing a rewards credit card.

Annual fee

The;credit cards with the richest rewards often charge annual fees. This is especially the case with travel credit cards. Typical annual fees range from around $90 to more than $500. Although some people are dead-set against paying them, annual fees;can be worth it ;if the rewards and perks you earn outweigh the cost, and;some cards waive the annual fee for the first year.

Most cash-back cards don’t charge an annual fee. You can;find;good;travel cards without an annual fee, although their rewards rates and sign-up bonuses tend to be small than those offered by their full-fee siblings.

» MORE:;NerdWallet’s best no annual fee credit cards

Sign-up bonus

Also known as welcome offers,;sign-up bonuses can give you a nice;wad of;cash or hundreds or thousands of points or miles for spending a certain amount in the first few months you have the card. But don’t just look at the windfall you stand to receive. Pay attention also to the spending requirement. In general, the bigger the bonus, the more you’ll have to spend to earn it. Avoid overspending;to get a bonus.

» MORE:;NerdWallet’s best offers for new cardholders

0% intro APR period

» MORE:;NerdWallet’s best 0% and low-interest credit cards

Foreign transaction fees

» MORE:;NerdWallet’s best credit cards with no foreign transaction fee


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First Take A Close Look At Where You Are Spending The Most

Thats where your best opportunity is for earning the;best rewards. Analyze your spending to see where you might be able to earn sizeable cash back rewards, rebates, discounts, miles or points.

If youre traveling frequently and staying in certain hotel brands or flying with certain airlines often, you may benefit most from a travel rewards credit card. On the other hand, if youre looking to score free airline tickets, but your spending habits dont fit into the earning categories of the travel card you want to apply for, then spending enough to earn those tickets will be difficult.

Likewise, if you find yourself driving often, or you frequently plan a cross-country road trip, you might be interested in;a gas credit card, like the Discover it®;Chrome Gas & Restaurants card.

Or you might be interest in a card that gives you cash back as a percentage of your spending at everyday spots, in which case a typical cash back credit card is your best bet to earn rewards.

There are a lot of different types of credit card rewards programsonce you determine your spending patterns you can narrow your search to find the best rewards program for you.

Ideally you would choose a rewards program where you earn rewards at places where you already spend.

Look for credit card rewards programs that allow you to redeem cash, travel or hotel credit, and for things you could useincluding gift cards to your favorite restaurants, clothing stores, entertainment, and more.

Types Of Credit Card Rewards Programmes

There are a variety of different rewards credit cards you can compare and choose based on the benefits you want. These can be separated into four types of reward programmes, which weve outlined below.

Frequent flyer programmes

Frequent flyer programmes are traditionally designed to earn you points and other benefits when you travel with a particular airline, such as British Airways or Virgin Atlantic. There are two main ways you can earn frequent flyer points with a rewards credit card:

  • Direct earn frequent flyer credit cards. These cards are linked with a specific frequent flyer programme and rewards are added directly to your airline loyalty account. Frequent flyer programmes that are linked to direct earn credit cards include Virgins Flying Club, Lufthansas Miles & More and >Emirates Skywards.
  • Indirect earn frequent flyer credit cards. These rewards credit cards let you transfer the points you earn to frequent flyer programmes used by multiple airlines. For example, Lloyds Bank offers a credit card that lets you collect Avios, which can be redeemed with a number of airlines.
  • Read our guide to frequent flyer credit cards.

    Many credit card companies have their own branded rewards programmes for customers. These options allow you to redeem points for a variety of rewards, including frequent flyer points travel, merchandise, gift cards and credit on your account.

    Supermarket and retail reward programmes

    Cashback credit cards

    Cashback with other reward credit cards

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