Find the Best Rewards Credit Card for You

I love rewards credit cards. Getting paid hundreds of dollars a year to use my credit card to buy things I would buy anyway is, well, rewarding.

With a multitude of rewards cards available and so many categories to choose from (cash back, travel, gas, retail), it’s easy to get lost in the sea of rewards cards. So how do you know which one is best for you?

There isn’t one single rewards card that I can say is perfect for everyone. To find the one best suited for you, take a look at your spending patterns. Do you travel a lot? Are you a college student? Maybe the bulk of your spending is groceries and gas. For each of these situations, there are several cards that could potentially work for you.

Before I discuss how to find the best rewards cards, I should mention that if you carry a balance — no matter how large or small — rewards cards aren’t for you. They typically charge higher-than-average interest rates, so any rewards you might get are negated by fees and interest charges. In this case go with a low-interest card, perhaps from a credit union.

My favorite site for comparing rewards cards is CreditCardTuneUp.com. This site lets you input your average monthly spending in 15 categories such as restaurants, department stores and hotels. To get your monthly spending figures, I recommend looking at your credit card statements from the last 12 months.

Based on the information you provide, you get a list of the cards that best match your spending pattern. It’ll tell you what your first year rewards total would be, minus any annual fee.

Another great resource is NerdWallet.com. The idea is the same, but this site also lets you input your credit score and preferred network (Visa, Mastercard, etc.) You have a choice of either a customized list of your best matches or their list of the best credit cards for 2012. On this list they divide cards by category (rewards, no interest, college, etc.) and tell you why they love the card.

More credit card companies are offering a cash or gift card bonus to entice new members. I’ve seen offers worth as much as $625, but more typical offers range from $100-$200. These signup bonuses are definitely worth a look as you search for your best card.

There are other things to consider as well. If you frequently travel outside the country, look for cards with no foreign transaction fee such as Capital One and some Discover cards. If you fly a lot, be aware of blackout dates and mileage redemption rates. If the card has an annual fee, make sure you’ll spend at least enough to offset the fee.

The key to finding the best rewards card is to look at your spending patterns. Then, use one or both of these websites to compare offers and methodically find the best card for you.

Photo by blog.chargesmart.com

8 thoughts on “Find the Best Rewards Credit Card for You

  1. I love rewards credit cards too. As long as you use them responsibly, the card issuer will essentially pay you to use their card. My personal preference is a cash back credit card since it doesn’t cost me anything extra to use the rebates. Some rewards such as travel or store discounts just forces you to spend additional money to get your rewards.

    • I agree with you about cash back cards. Some issuers make it really easy to redeem points for cash starting at any amount, and some make you jump through more hoops to get your money. You shouldn’t have to spend extra money to access your rewards.

      Thank you for your comment!

  2. I use cash back cards which I find are the best bet for my situation. I have come across not liking some of the rewards that the rewards cards offer. Then usually the rewards cards offer less cash back than a cash back card. Well atleast the one I am using. Also I feel that some spend additional money to get that next level reward.

  3. I love the last point you made there “The key to finding the best rewards card is to look at your spending patterns”. That’s SO true! If someone travels a lot, then of course a card with travel rewards and points is best. If you carry a balance, then perhaps a debit card is a better idea.

    • Thanks! It does seems like common sense, doesn’t it? But so many people don’t consider their spending pattern when signing up for a rewards card. If you’re going to use a credit card for your purchases, you might as well maximize your rewards.

      Thank you for your comment!

  4. I really like the NerdWallet tool as well. The most important thing about rewards cards though is to make sure that if you’re going to carry a balance the interest doesn’t exceed the rewards. Obviously by not carrying a balance you maximize the benefits.

    • I recommend people don’t sign up for a credit card if they’re going to carry a balance. The interest rates are so high compared to any benefits you’d get that you end up worse off than before.

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