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How To Pick The Best Credit Card Based On Rewards

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Which Cash Back Card Is Right For You

How to Pick the Best Rewards Credit Card

If youre trying to decide which card will make the best fit for your wallet, start by figuring out how much effort youre willing to put into your card strategy. Then, look at your budget to see where you spend most of your money.

If you dont want to plan where you spend to maximize rewards each quarter or many of your expenses fall outside of typical bonus categories, then a flat rate card will offer more simplicity and flexibility. If maximizing the amount of cash back you earn every year is a priority and you dont mind planning a budget in advance, a rotating bonus category card may be a better fit and with 5% back, could potentially result in more rewards over time.

Rewards programs can either be simple, like a flat rate card, or it can be more complicated, says Harzog. The possibility of earning great rewards is higher when it takes a little more work.

Meet Our Credit Cards Expert

Ben Woolsey is Investopedia’s Senior Editor for Credit Cards. He has more than 30 years of experience in the financial services industry, including marketing for banking and financial institutions such as Associates First Capital and Bank One. Prior to Investopedia, he managed credit card content for CreditCards.com and Bankrate.com.

To see the rates and fees for the featured American Express cards, please see the following links:

Know What You Want In A Credit Card

First and foremost, what matters most to you in a credit card? Here are some of the perks that credit cards can offer:

  • Travel rewards
  • Loyalty program rewards
  • Travel insurance
  • Purchase protection insurance and extended warranties
  • Concierge services
  • Cash back
  • Low or no annual fees

Assuming you can only get a few of those things, pick two or three that are the most appealing to you based on your goals and your life.

If youre a frequent traveller, travel insurance and rewards might top your list, and they might also more than make up for an annual fee. On the other hand, if youre focused on saving money and you dont spend all that much, a no-annual-fee card that offers cash back on regular purchases might be the best credit card for you.

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Types Of Rewards Credit Cards

If you meet one or more of the conditions above, determine your goals. Do you want to have some extra cash at the end of the month? Do you want to rack up points for a big trip? Maximize your miles on a particular airline? Your answers will help you choose what kind of rewards credit card works best.

» MORE: NerdWallet’s best airline credit cards

Recommended No Annual Fee Credit Card Chase Freedom Flex

Reward Credit Cards: How to Choose the Right One For You ...

The is a great no annual fee credit card that offers a bonus and regular cash back. The card also offers a 0% Intro APR on Purchases for 15 months intro APR for 15 from account opening. The regular APR is 14.99 – 24.74% Variable.

You can earn 5% cash back on bonus categories that change quarterly on up to $1,500 in combined purchases each quarter, activation required. You can also earn 5% back on travel purchases , 3% cash back on dining and drugstore purchases, and 1% cash back on all other purchases. If thats not enough, new cardholders will get a $200 bonus for spending $500 within three months of opening your account.

Read Also: Which Credit Card Has No International Fee

Cash Back Vs Travel Credit Cards

Cash back cards and travel cards are both types of rewards credit cards, but they can serve very different purposes in your wallet.

Cash back credit cards offer low-cost, straightforward rewards focused on everyday spending, which can be a great option for someone looking to keep things simple. Travel credit cards, on the other hand, often have more complex rewards structures and high annual fees. But they can also be more lucrative long-term, with higher rewards, valuable benefits, and more flexible redemptions.

Capital One Savorone Cash Rewards Credit Card

Our pick for: Dining and groceries + no annual fee

Love the night life but dead-set against paying an annual fee? Consider the Capital One SavorOne Cash Rewards Credit Card. It pays a lower cash-back rate on dining and entertainment than the regular Savor card, but the rewards are nevertheless quite good. The sign-up bonus is smaller than on the annual-fee version, too, but it’s still solid. Read our review.

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Consider The Cards Value

If youre struggling to choose between credit cards, take a step back and assess the cards overall value. Here are some questions to ask:

What is the welcome bonus worth? Sign-up incentives like bonus points, additional cash back, or a first-year annual fee waiver certainly sweeten the pot. But it must be an incentive that you can actually use for it to have value. For instance, a credit card offering bonus Aeroplan Miles is worthless if youre not an Aeroplan member.

Is the annual fee justifiable? Rewards credit cards frequently charge an annual fee, typically ranging from $120 to as high as $699 . However, look for value: Whats the point-earning potential? Does the card include travel, new mobile device, or car rental insurance? Is there an annual fee rebate in the first year? These extras may cancel out the cost of an annual fee.

Are the perks worth it? Some premium cards come with high annual fees, but are the extra perks really worth the price? These little luxuries may include complimentary airline lounge access, enhanced hotel experiences, priority treatment on certain airlines, or access to exclusive entertainment events. These can add great value if you use them frequently, but if these perks dont matter to you, you might want to consider getting a card with a lower annual fee.

Scotiabank Momentum Visa Infinite

How to Pick a Credit Card Rewards Strategy

If you want to maximize your cashback from a credit card, the Scotiabank Momentum Visa Infinite is your best bet. It is an excellent credit card that gives you a total of 4% cashback on recurring bills and grocery purchases.

Everyone buys groceries, and you can get rewards for paying with this card. Lets say you spend a monthly of $500 on groceries, and you can get up to $20 of extra cash every month on groceries alone. You can also get 2% on gas and daily transit and 1% cashback on every other purchase. Just by using this card and paying it off at every billing cycle will make you more money just by purchasing your needsmaking it the better choice for cashback rewards.

If that is not good enough, the first year is free, and you can get 10% cashback for the first three months. If you spend $2,000 in the first three months, you can earn up to $200 just by purchasing your essentials. It is one of the best credit cards for prominent families who spend a lot on groceries and gas money. However, the annual fee is $120. But if you spend a lot on groceries, the rewards alone can pay the yearly fee itself!

Also Check: What Is The Annual Fee For First Premier Credit Card

National Bank World Elite Mastercard*

As one of the most valuableand potentially life-savingperks in a travel credit card, insurance is a highly competitive part of any package. The National Bank World Elite Mastercard gets our nod for two main reasons: It offers a higher than average coverage amount and it has an excellent package for people over 65 years.

Cardholders of the National Bank World Elite Mastercard have included trip cancellation , trip interruption , flight delay , and insurance against baggage theft, loss or delay. Additionally, theres up to $5,000,000 in out-of-province-of-residence medical or hospital insurancefor 60 days for folks under 54 years old, 31 days for those between 55 and 64, and 15 days for travellers aged 65 to 75.

This insurance package is outstanding on its own, but coupled with extra perks like VIP lounge access at the Montreal airport, travel rebates and overall travel assistance, the National Bank World Elite Mastercard is setting itself up to be an excellent all-around travel card.

Listed in no particular order

How We Picked The Best Cash

To determine the best cash-back credit cards, we researched 18 popular cards and looked for those that offer the best overall financial value. This means we looked at net overall value for each rewards credit card, rather than prioritizing perks or offers that quickly lose value after the initial sign-up. In the end, the rewards credit card with the largest sign-on offer will not always be deemed the best card.

We prioritized the cash-back credit cards that reward broad spending categories where Americans tend to spend significant amounts of money , instead of narrow categories like streaming services or “home improvement.” Then we compared reward offerings with potential returns based on hypothetical spending budgets. Those hypothetical budgets are based primarily on the Bureau of Labor Statistics’ Consumer Expenditure Survey, with several members of the CNET staff’s subjective input, as well.

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Understand Your Spending On Credit Cards

Lastly, this is by far the most important factor: You need a solid understanding of your spending in order to choose the right credit card for you. Specifically, you need to know how much youll spend, roughly, every month on your credit card in order to judge whether a cards rewards programs and offers are really the best bang for your buck.

Take a look at your past few months of spending to estimate what you spend monthly in each of these categories, which are commonly used to offer credit card rewards:

  • Groceries
  • Pharmacy
  • Other

This is one of the most important factors in choosing the right credit card, because your rewards can vary significantly based on which categories you spend the most money in.

If youre spending most of your money on grocery and gas, youll want to look for a card that offers preferential rewards on that spending, like a higher cash-back rate or additional reward points.

Alternatively, if you mostly pay for meals out, movies, and other entertainment on your credit card, you may not care about good rates on gas and groceriesand you can likely find a card that rewards the spending youre doing instead.

Chase Sapphire Preferred Card: Best For Travel

How To Pick The Best Rewards Travel Credit Card For You: A ...

Top card benefits:

  • Earn 60,000 bonus points after your spend $4,000 in purchases in the first three months
  • 3X points on dining , select streaming services and online grocery purchases
  • 5X points on travel booked through Chase Ultimate Rewards
  • 5X points on Lyft rides
  • 2X points on general travel
  • 1X points on everything else
  • $50 annual hotel stay credit
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for one year with DoorDash DashPass
  • Trip cancellation/interruption insurance, auto rental collision damage waiver, lost luggage insurance

For full details, see our in-depth, expert review of the Chase Sapphire Preferred.

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How To Maximize Credit Card Rewards

In general, you will get the most value out of your points redeeming them for luxury travel if you earn miles directly with an airline or transferable points that can be transferred to an airline partner. For instance, a business class flight may cost four or five times the amount of an economy flight in dollars, but in miles only costs twice as much.

Consider that a round trip ticket to Europe costs 60,000 miles in many programs, but with recent sales weve seen flights under $500 with regularity. The same trip may cost 120,000 miles in business class, but could easily cost over $3,000. With the example above, you would receive only about 0.8 cents per mile in value when you redeem for economy but 2.5 cents per mile redeeming for business class travel.

Other types of points, like Southwest Rapid Rewards points, are worth a fixed value, so no matter how you redeem them you can rest assured knowing that you got the most value for your points.

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

While travel isnt back to where it was before the pandemic, for those who have already hit the road again, being able to simplify your travel experience might be exactly what you need. The American Express Platinum card is the ultimate definition of luxury and comes with a slew of VIP perks that rival any card on the market but also a hefty $695 annual fee .

One of the best benefits of the Amex Platinum and an easy way to partially offset the annual fee is the up to $200 in annual airline fee credits. These credits can be used toward many incidental fees, such as checked bags, change fees and in-flight Wi-Fi, on the one carrier you select as your qualifying airline each year.

Other popular credits youll receive with the Amex Platinum each year include up to $200 in Uber Cash which can be used for Uber rides in the U.S. or Uber Eats orders up to $240 in annual statement credits on eligible purchases or subscriptions with Peacock, Audible, SiriusXM or The New York Times, an annual credit of up to $200 for prepaid bookings at Amex Fine Hotels + Resorts or The Hotel Collection properties made through American Express Travel and up to $100 toward purchases at Saks Fifth Avenue, split into portions of up to $50 in each half of the year.

Related: American Express adds new benefits to its Platinum card, increases annual fee.

Related: Score 100,000 bonus points with the American Express Platinum card.

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Rewards Credit Cards: What You Need To Know

Wondering how to choose the right credit card? With so many cards to select from, it can be difficult to narrow down your options. Different rewards cards are better suited to different borrowers, especially those who have a lot of spending in a particular category. The best rewards credit card for you, though, is one that has a high earning potential, competitive rates and attractive perks.

How Do Travel Rewards Credit Cards Work

How to pick the best rewards credit card UK

Travel rewards cards dont just mean airmiles. They bring a whole host of travel perks into your life that youll wonder how you previously lived without like lounge access, seat upgrades, comprehensive travel insurance, statement credits and more.

Similar to cash back cards, there are also different types of travel rewards cards which offer slightly different benefits.

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Read More About The Capital One Venture:

The American Express® Gold Card earns a massive 4x points at restaurants and on up to $25,000 per calendar year at U.S. supermarkets , 3x points on flights booked directly through the airline, and 1 point per dollar on everything else. Based on the fact that you can easily redeem Membership Rewards points for more than 1 cent of value each when you transfer them to airline and hotel partners, this is one of the highest-earning available cards for everything food-related.

Read more: The best credit cards for dining

The American Express® Gold Card offers up to $120 in dining credits per year , broken into chunks of $10 each month. Credits are good for purchases through food delivery services Seamless and GrubHub, and at Boxed, The Cheesecake Factory, Ruth’s Chris Steak House, or participating Shake Shack locations. Cardholders also receive $120 per year in Uber Cash .

These credits can offset most of the card’s $250 annual fee even before factoring in the value of the rewards you’ll earn.

What the experts love: Fantastic rewards on dining and groceries at U.S. supermarkets, statement credits, and benefits to offset the annual fee

Notable Cards That Didn’t Make The Top 10 List

Just because a card didnt make our top 10 list doesnt mean it isnt worth mentioning. There are plenty of rewards cards out there that have great programs and bonus offers, including:

  • Annual Fee: $250
  • Bonus Offer: Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months
  • Other Benefits or Drawbacks: The Amex Gold card has additional perks, such as up to $10 in monthly restaurant statement credits for eligible restaurants when you activate the benefit.

2) Capital One Venture Rewards Credit CardThis popular travel rewards card has a generous welcome bonus and no foreign transaction fees, meaning you can bring it abroad without worrying about added fees on your next adventure.

  • Rewards: Unlimited 2 miles per $1 on eligible purchases
  • Annual Fee: $95
  • Bonus Offer: Enjoy a one-time bonus of 60,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $600 in travel
  • Other Benefits or Drawbacks: No foreign transaction fees.

3) Uber Visa CardThis card is a top pick for dining, considering its high 4% rewards rate for the category. It also has a unique tie-in with Uber, letting cardholders redeem their rewards for Uber Cash. If youre someone who loves spending weekends out on the town, this card can be a great asset.

To view rates and fees of the American Express® Gold Card, please visit this page.

Read Also: First Premier Creditcard

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