Cash Back Rewards
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What is a rewards credit card and is it worth it?
There are some questions in life you need to know the answers to before you proceed. Finding the best credit cards to help build your credit or provide a little bit of a financial cushion is one of the times you want to know as much as you can before applying for one. Some of the questions you may want to be answered about credit cards are what is a rewards card or is one reward credit card better than the other?
If you watch TV, you’ve seen countless credit card ads throughout your life where someone is pitching a credit card’s benefits through their points, cash back, or travel miles. Those are the three most common credit card rewards. You gain points, cashback, or travel miles by using the rewards credit card and making purchases.
Any credit card reward usually has criteria you need to meet to get the reward. The reward criteria revolve around you having to spend a specific amount of dollars in a certain amount of time. Sometimes you can gain benefits from reward credit cards when you refer someone.
No matter what the reward or criteria, it’s important to know about certain credit cards and rewards programs before you get one. Read on to learn all you ever wanted to ask about but never did so you can find the one that best fits your needs.
Why do you even need a credit card?
If you’re living on the grid and want to buy a car, a home, rent an apartment, stay in a hotel, and do other countless activities in your day-to-day life, you need credit. Not having credit means your credit history is void. Having no credit history means no one knows if they extend credit, you’ll pay them back.
What’s more, by having a positive credit history, you can provide proof that you know how to manage money. By having a credit history, every loan payment you made, or credit card you paid off, help build your future. In the current economy, a lot of credit card issuers are giving front end bonus benefits and rewards to entice you into signing up with them so you want to know what the rewards are and what they do for you.
Almost all cards offer at least 2% cashback on any purchases you make. There is a downside to having rewards credit cards and that is 2% doesn’t cancel out their average annual percentage rate, which runs on average between 16.89% to 24.25%. That’s when knowing what rewards card is best and using it responsibly so it helps build your credit sync up perfectly.
What is a rewards card?
The difference between a credit card and a rewards credit card is a credit card only charges you for buying a product or service. A rewards credit card gives you incentives every time you charge a product or service using the rewards credit card. The incentives and rewards are given to you in different forms like cashback, mileage or points.
When you’re actively looking and researching which rewards card best suits your needs, you want to know if they’re worth getting. Credit cards are great to have when you’re building your credit or need access to money quickly, but every time you use it without paying off your balance, you’ll start seeing your credit card monthly bills reflect their annual interest-rate. The below detailed and specific information will help you determine if you want to proceed in finding a great rewards card that matches your needs.
How to pick the right rewards credit card
With so many rewards cards out there, how do you choose the best one for you? We’ve isolated some of the biggest attributes of these cards down to the rewards programs, reward yields, redemptions, sign-up bonus and annual fees. Rewards programs often favor the card issuer vs. the cardholder so its important to find one that works for you. Some cards carry pretty large annual fees so it is important to weigh your card perks vs. this fee.
Best cash-back reward cards
The cash-back rewards cards are some of the most common and used in the market. Every consumer loves to earn a mini refund just because they used their credit card to make a purchase. One of the best cash-back rewards card is Capital One Quicksilver Cash Rewards credit card. The Capital One Quicksilver credit card has an uncapped 1.5% flat rate with no annual fee.
When you apply for the card, you get a $150 if in the first three months you have spent $500. You also get some additional bonuses with this card, like travel accident insurance and extended warranties. Most of you can redeem your rewards anytime you want as there are no blackout dates or times.
Blue Cash Preferred Card from American Express is another rewards card that maximizes your cashback while also maximizing excellent benefits. You get $300 back if, within your first three months, you spend $1000 on purchases. This rewards card offers some extra bonuses like 6% cash back at U.S. supermarkets or 3% cashback at gas stations when you use your Blue Cash Preferred Card from American Express.
The Chase Sapphire Preferred® Card vs. The Chase Freedom®
The most premium travel card around also has one of the biggest bonuses you’d ever want, and that’s the Chase Sapphire Preferred Card. The Chase Sapphire Preferred Card gives you a 2 point spending bonus on any travel or restaurant purchase you make and a 1 point bonus for every dollar you spend on general purchases. You get 60,000 points if, in the first three months, you spend $4000 in the first three months with a yearly fee of only $95.
When you compare the Chase Freedom card you’ll notice you do get a cashback reward credit of 5% for any rotating categories like gas or groceries if you spend $1500 a quarter. You also get 1% cash back on general purchases and you’ll get $150 if in the first three months you spend $500. A true benefit with the Chase Freedom card is you don’t pay an annual fee, and your cash back rewards never expire as long as your account is open.
The Capital One® Venture® Rewards Credit Card vs. the Capital One® Savor® Cash Rewards Credit Card
Many people never notice the difference between the Capital One Venture Rewards Card and the Capital One SavorOne Cash Rewards credit card. That’s because they both offer the same redemption options. It’s important to note, the Venture Rewards credit card is the one that offers you a larger sign-up bonus with over 50,000 miles if, in three months, you spend $3,000.
The Venture Rewards credit card also gives you a higher 2-percent earnings rate and no annual fee the first year. Some extra advantages offered through the Venture Rewards credit card is you earn unlimited 2 miles per dollar on every purchase. You also receive ten miles per dollar on hotel bookings if you use hotels.com/venture to make your reservations.
The Capital One Savor Cash Rewards credit card gives you 3% cashback on your dining and entertainment purchases. You also get 2% for purchases made at grocery stores and 1% for any other purchases made. If you’re a new credit card customer, you get a one-time $150 cash bonus if, in your first three months, you spend $500.
There’s no annual fee for fifteen months, and then it changes into a variable APR range (see terms). The Capital One SavorOne Cash Rewards card gives you bonuses with never having to pay foreign transaction fees if you’re using your card to make purchases outside the U.S. and your rewards never expire as long as you have an account
Wells Fargo Cash Wise Visa Credit Card
The final rewards card profiled is the Wells Fargo Cash Wise Visa credit card. The Wells Fargo Wise Visa credit card gives you an unlimited 1.5% cash reward on all credit card purchases and there are no category criteria attached. You get $150 if in three months you purchase at least $500.
You have 0% intro APR for up to 15 months upon account opening. After that, cardholders pay an APR range (see terms). As an added incentive, Wells Fargo Cash Wise Visa offers you 1.8% cashback in the first twelve months of you opening your account through Google PayTM or Apple Pay digital wallets.
Your Way Forward Through the Credit Card Reward Products
Now you know what rewards card are and what some of them provide you. Also, you can now use this information and decide which card fits your needs best. Once you learn who gives you the greatest rewards that are simple enough to understand and use, then you have a place to start in determining which ones you want to apply for.
It’s by learning tips and details like the ones above per rewards credit card that can help you obtain a credit card that grows or enhances your credit score. Always find out how and when you redeem your credit card reward points, travel miles, or cashback. The most positive and lucrative way to earn cashback on your purchases is to pay your credit card bill each month.
Rewards cards give you amazing rewards but they also can hit you up with some significant annual fees and interest if you don’t pay your credit card bills on time. You’re over halfway there in getting the best rewards card on the market. Find the best card for your lifestyle so you can get cash rewards from the cashback credit cards you carry in your wallet.
With each passing year, it seems as though credit card rewards only get better. Competition has never been higher in the credit card industry, and this has led to increasingly generous rewards programs and introductory offers. The best credit card rewards programs now offer extremely lucrative sign-up bonuses for new cardholders, plus high rewards yields on every dollar charged to the card. The most rewarding card on our list offers as much as $750 in travel value in the form of a new cardholder bonus, and a rewards yield as high as 4.5% in travel value for spending on restaurants and travel purchases, which showcases the value offered by the top rewards cards.
What about other types of rewards cards like travel credit cards?
Travel credit cards are another popular card, especially for those with excellent credit scores looking for rewards points on airfare, car rentals, and hotel stays. Travel credit cards usually earn miles or points for specific dollars of spending. Some of the best credit card rewards can be found in travel cards, but are usually only beneficial for consumers that travel a lot. These travel rewards cards come in the form of travel portal rewards cards where points can be transferred to travel partners for those that want to redeem their points through hotel and airline loyalty programs. An example of this type of rewards program is the Chase Ultimate Rewards program. Travel rewards cards also come in the form of statement credit rewards cards where consumers can be much more flexible in how they book travel purchases because these can be redeemed anytime you make a travel purchase and aren’t subject to blackout dates.
Rules to live by when using rewards cards
As you begin to unlock the power of rewards cards, cardholders should be cognizant of a few no-no’s with cashback cards such as not carrying a balance, not redeeming travel rewards for cash and being smart about cards that have an annual fee with the prevalence of so many no-annual-fee credit cards. You should beware of these rules when as you compare the best rewards credit cards.
When should you use your credit card to get more rewards?
Add an authorized user on your new card
- You could get bonus points for adding an authorized user who makes a purchase in the first few months. You should just make sure you have trust in this person as if they make a late payment it could affect your credit score.
Pay your bills on your credit card
- Put all your re-occurring expenses on your credit cards such as streaming services, insurance, and mortgage payments.
Use your card for big expenditures
- You can take advantage of 0% credit card offers to put home improvements on your card or even pay your taxes on your credit card
Buy gift cards
- You can use your credit card to buy gift cards on your credit card in order to get cashback, as well as hit any minimum spend requirements your card may have. Pro Tip: if you have a 5% cash back card on groceries, you can potentially buy gift cards at your grocery store to get 5% cashback even though these gift cards aren’t specifically apart of your bonus category.
The Bottom Line
There are many kinds of cashback rewards cards offered from every financial institution from Bank of America to Citi to Discover and can offer all sorts of perks outside of cashback including free global entry and TSA precheck. It is important to match the credit card with your spending habits and match that with specific spending categories that you can get more cashback for. For instance, if you spend a lot on gas, find a card that offers a great % cash back at U.S. gas stations or if you shop at wholesale clubs, find cards that offer a great cashback rate for this type of spending for the life of the account.
If you travel a lot, look for a rewards card that offers bonus miles, rental car discounts and other amazing membership rewards. Remember, credit cards can work on your behalf for big purchases by finding those that offer a 0% introductory APR for a certain number of days of account opening that will allow you to make the purchase and even get money back on the purchase whether it offers 1x points or a straight % back. In the end, rewards cards, when used responsibly and especially when tailored to your lifestyle, can provide a big benefit to your every day lifestyle.
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