A great deal of credit cards offer you rewards in the form of points awards, airline miles, cash back, and a huge variety of options. You’ll accumulate these rewards as you make purchases on your card.
Essentially, every dollar spent is tied to a certain numeric point system, and when there is enough points accumulated, you can then convert them into airline tickets, travel, cash rebates on major purchases and special offers.
Naturally, not all reward credit cards are the same. Following is my choice of top rewards credit cards.
What will I learn?
1. Discover it – Best No Fee Cash Back Card
The Discover it scores well in probably all prominent categories: 5% cash back on quarterly rotating purchases that are usually capped at $1500 purchases within each quarter. These rotating purchases are interesting for their wide appeal. The purchases could include gas, online shopping and restaurants.
- During the first 18 months of account opening, there is no charge on balance transfers.
- And it offers 0% interest rate purchases in the first six months. It also helps on warranty issues and return protection for some selective purchases.
- The card does not charge any annual fee.
- There is no foreign transaction fee.
- In addition, it offers a waiver for cardholders who miss their payment date for the very first time.
The Discover It also has a more aggressive sign-up bonus among the rewards credit card competitors. During the first three months of account opening, you will get a sign-up bonus of $150 cashback as long as you spend at least $750 on the card.
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This is a great card to have as you pay down your debt. Moreover, you actually get to earn rewards as you make all your necessary purchases.
2. Barclaycard Arrival™ World MasterCard® – Best Flat-Rate Rewards Card
This Barclaycard Arrival World MasterCard beats all other airline miles cards flat. You get 2 miles for every dollar spent, and a full 2.2 miles per dollar when you use your miles to make travel booking. This is way better than its nearest competition: Capital One Venture Card.
Redemption can also come in the form of statement credits for any travel-related expense, be it gas, hotel stays, airfare and whatever.
There is a bonus to earn 40,000 bonus miles when at least $1,000 is spent during the first 90 days from account opening. That 40,000 bonus miles translate to $400 saving on your next trip.
- The annual fee is $89 but waived for new members in the first year.
- The World MasterCard also offers features like baggage insurance and travel insurance.
- The best part is that it does not charge foreign transaction fees, which can amount to 3% of your overseas purchases with some cards.
If you enjoy traveling or travel a lot, you simply can’t go wrong with the Arrival.
3. Capital One® Quicksilver® Cash Rewards Credit Card – Best Flat-Rate Cash Back Card
When it comes to no fees, hassle-free and high rewards, the Capital One® Quicksilver® Cash Rewards Credit Card is the top pick. The cash back is offered at 1.5% flat, which applies to all purchases, thus saving you the trouble of bonus categories, caps, points and etc.
- When you spend $500 during the first 3 months, it awards you a generous signup bonus of $100.
- There is no charge on foreign transactions.
- No annual fee.
The no foreign transactions fee feature represents huge savings, especially if you make regular purchases overseas.
If the annual fee is something you will never agree to and find the bonus categories too messy to deal with, this card is for you.
4. Chase Freedom® – Best 5% Rewards Cash Back Card
This Chase Freedom card offers one of the best cashback rates that does not commit you to upfront fees and hassle you with annoying rewards programs.
By participating in their bonus categories (they change every quarter), you stand to receive 5% cashback from purchases like gas, grocery items, restaurants and Amazon.com, take note there is a cap of $1,500 purchases every quarter.
For all other purchases, you get back 1%.
- You will also benefit from its Earn $100 Bonus Cash Back assuming you spend $500 on the card in your first 3 months upon account opening.
- There is no annual membership Fee.
- There is however a foreign transaction fee at 3% of each transaction in U.S. dollars.
If nothing else, this card wins me over for its high rewards rate and user-friendliness.
5. American Express Blue Cash Preferred – Best Grocery and Gas Rewards Card
Households turn to the Amex Blue Cash Preferred. The emphasis here is not travel-related expenses, but purchases on every item like gas and grocery.
This card has high appeal to families – 6% cash back on groceries, capped at $6,000 spent every year, plus an unlimited 3% rewards on gas and department stores.
And you can play the system to up your reward rate to 6%: just buy gift cards to Starbucks, Gap, Home Depot, etc at the grocery store checkout line.
- If you spend $1,000 on your new card in the first 3 months, you will get a signup bonus of 100 Reward Dollars which you can redeem as a $100 statement credit to offset your $75 annual fee.
- Annual membership fee is $75 which can be waved as explained above.
- For foreign transactions you’ll pay 2.7% of each transaction after conversion to US dollars.
In addition, you receive one-year free membership on Amazon Prime if you sign up with your Card and satisfy the spending requirement.
6. Chase Sapphire Preferred – Best Travel Credit Card
When it is about lucrative signup bonuses, the Chase Sapphire Preferred features among the best. Upon signing up, there would be a bonus waiting for you courtesy of their Earn 40,000 bonus points after $3,000 spent in the first 3 months.
And it does not stop there: you will be awarded 25% more points when you choose to redeem for travel booked through Chase’s tool.
- Signup bonus aside, the Sapphire gives 2 Ultimate Rewards Points for every $1 spent on travel and restaurants, and 1 point for $1 with all other purchases.
- After you stay with it for a year, it gives out extra 7% points bonus, and the 25% points addition is an ongoing deal.
- Your effective rewards rate, then, can be as high as 1.34% base and 2.68% bonus.
- To entice travelers, there is no foreign transaction fee, so all these add up to become significant savings.
Few can get better than this signup bonus. Since the $95 annual fee is exempted for the first year, it is definitely a net gain for new cardmembers.
Getting the Most Out of Your Rewards Card
You can take a systematic approach to your spending in order to only leverage such reward systems. Screen through your bank and credit card statements to find out the sort of purchases that constitutes a huge part of your money budget.
You may also make a choice on the kind of rewards that particularly appeal to you.
Once you get the first part sort out, you just look for the right credit card that offers the maximum benefits over the budget you have on those purchases.
How Much Can You Earn?
Typically, every dollar you spend will earn you 1-2 points.
There will also be regular occasions when the credit card issuers may offer you more points (up to 15 points usually) for every dollar spent. Such promotions typically come in the form of rotating bonus point deals and online shopping sites.
Of course, there would be the usual conditions for all these cards: applicants are expected to have excellent credit scores (FICOs of 750 or above) before they can be issued any card.
And my final advice is that if you are looking out for a major loan like a mortgage or auto loan, do suspend any credit card applications, as it would reflect badly on your loan application.
That said, a rewards credit card is an excellent way to earn rewards for purchases you already make anyway.