Are you looking for the best rewards credit card?
Perhaps you’ve been using rewards credit cards for years, or maybe you’re brand new.
Today, I am going to answer common questions about getting started with rewards credit cards, as well as list some of the best rewards credit cards to sign up for.
I’ve been using rewards credit cards for years, and they are pretty much all that I use now. It helps me save money on travel, I earn cash back, and more.
There are many different kinds of rewards credit cards, but the ones you hear the most about are travel rewards credit cards. That means you earn points that you can use to get free or nearly free travel.
You earn simply for using your credit card, but you need to make sure you’re paying your balance in full each month for the rewards to be worth it.
Cash back cards are another kind of popular rewards card. These cards typically pay you a percentage of your purchases back in cash, and it can add up very quickly.
If you are going to pay for something anyway, then you might as well get something for free out of it, right?
If you travel a lot and/or already use credit cards, then signing up for one of the best rewards credit cards can help you save some extra money.
However, this is only a smart money move if you are able to use credit cards responsibly. Taking on debt to earn rewards isn’t wise.
Disclosure: Making Sense of Cents has partnered with CardRatings for our coverage of credit card products. Making Sense of Cents and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses, and recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Best rewards credit cards FAQs.
What is the best credit card for rewards? What credit cards give the best rewards?
There are lots of great rewards cards out there, but what is best for you depends on what you’re looking for. Maybe you want travel points? Maybe you want cash back? Or maybe you want a card that pays you for grocery shopping and eating out? Fortunately, there is something for everyone.
Here are some of the best rewards credit cards based on the kind of offer or reward you’re interested in:
- Best cash back credit card: Chase Freedom Flex is a new rewards credit card that allows you to earn a $200 bonus after spending just $500 in the first 3 months after you open your account. You can earn 5% cash back up to $1,500 each quarter. There is also no annual fee!
- Best airlines credit card: The Southwest Rapid Rewards Credit Card has been a favorite for years. With the Southwest Rapid Rewards® Premier Credit Card, you can earn 75,000 bonus points after spending $3,000 on purchases in the first 3 months.
- Best travel rewards credit card: The Chase Sapphire Preferred is the most popular travel rewards card for those new to rewards credit cards due to its high intro bonus and low annual fee of $95. The sign-up bonus is 60,000 points after spending $4,000 within 3 months of opening your account. This is worth $750.
- Best sign-up bonus credit card: The Capital One Venture Rewards Credit Card is one of the best rewards credit cards with its 75,000 miles sign-up bonus. You will have to spend $4,000 in the first 3 months to qualify, and you earn 2x points on all purchases after that. This card does have an annual fee of $95.
- Best rewards credit card for dining and groceries: The American Express® Gold Card is a very popular dining rewards credit card, and it’s one of the best credit cards for points. You can earn 60,000 rewards points after spending $4,000 within the first 6 months. You also can earn 4% return on restaurant and grocery store spending. The annual fee for this card is $250. Terms Apply. Rates & Fees.
- Best rewards credit card with no annual fee: The Chase Freedom Unlimited has no annual fee, and is a rewards credit card that allows you to earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back.
How do rewards credit cards work?
Using a rewards card means that you earn points and get things for free or cheap for simply using your credit card. This means you can earn airline points, gift cards, hotel stays, cash, etc.
Credit cards can be used to pay for many things – almost anything and everything that you can think of.
If you know you can use credit cards responsibly, then you can use them to pay for your day-to-day purchases. You are earning points for spending how you normally spend.
Paying for gas, groceries, even some utility bills with a rewards credit card means you will be earning points. And, those points are basically free money.
Now, if you want a really simple rewards card, then a cash back credit card may be something to look into. You simply make a purchase using your cash back credit card, and you’ll earn a percentage back as cash back. Super easy!
That’s what I like about rewards credit cards. I’m already going to use my credit card, so if there is a bonus, then I definitely want that as well!
Here is a quick summary if you’re wondering how rewards credit cards work:
- You find and sign up for a credit card with some kind of reward that you’re interested in, such as points, cash back, or travel rewards. One of the best travel credit cards, and my favorite, is the Chase Sapphire Preferred Card.
- These cards ask you to meet a certain spending requirement to receive your rewards, like spending $4,000 in the first 90 days.
- When you reach that spending requirement, then you receive your points.
- Those points can be used towards some sort of reward, which may be cash back, hotel stays, airfare, or something else.
- To use your points or miles, you may have to spend them through your credit card company’s website, transfer them to an airline partner, etc.
I also recommend reading How Do Credit Cards Work?
How do I earn the sign-up bonus?
I know that some of you may be thinking that earning the sign-up bonus seems like it could be very difficult. Can I really spend $4,000 in three months?
People who regularly use and earn points with rewards cards use their credit cards to cover almost all of their normal purchases. That sounds like bad personal finance advice to use a credit card for everything, but it’s okay as long as you can pay off the balance. The goal is to not pay interest!
If you have a budget, then you already know how much you pay every month for regular expenses, and this can quickly add up.
Another way that some people use rewards credit cards is to sign up for one right before they make a large purchase because they know they will be able to earn the sign-up bonus. These people often have cash saved to pay for the purchase, and they are simply signing up for a rewards card to earn free stuff.
A large purchase may be something like buying a new washer and dryer, replacing your roof, doing home renovations or repairs, etc.
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How can I use my credit card for free travel?
One of the more popular ways to use rewards credit cards is for travel because it can greatly reduce the cost of taking a vacation. With a rewards credit card, you can earn points, miles, or cash back to use for free or nearly free travel.
Most of the cards pay in points that you can redeem for airline miles, to book hotel stays, gift cards, and cash back.
Each of the rewards credit cards has different affiliate airlines and hotel chains they work with, and using their affiliates is often how you get the most out of your points.
For example, the sign-on bonus you receive with the American Express Gold Card is enough to cover two round-trip tickets to almost anywhere in the U.S. when you fly on Delta. Now, that depends on where you’re flying from and to, but you get the idea. If you used your points to cover airfare, then that’s one of the biggest expenses taken care of already.
More advanced rewards credit card users get more mileage out of their points by transferring them to different airlines, but this can get confusing. I definitely recommend keeping it simple in the beginning.
Also, you don’t have to fly or stay in a hotel to make your travel more affordable with rewards cards. Earning cash back on a credit card can help pay for camping, staycations, road trips, and more.
Why do credit cards give rewards?
The credit card companies aren’t just giving away points and cash back because they are nice, so I’m sure you’re wondering what the catch is.
Credit card companies offer these great bonuses and rewards because they are hoping to gain new, loyal customers. They also know they have to compete with other credit card companies to gain your loyalty.
And credit card companies are still making money even when you use a rewards credit card. Here are some of the various ways credit card companies make money:
- Interest charges
- Taking a percentage of each transaction when you use your credit card at a store
- Annual fees
What credit score do I need to get a rewards credit card?
The best rewards credit cards usually want you to have a good to excellent credit score. That is a score of around 690-850.
So, yes, your credit score can impact what rewards credit card you can get.
Below are three actions you can take to improve your credit score so that you can get better rewards credit cards:
- Pay your bills on time
- Regularly check your credit report
- Keep your balances and utilization rate low
Learn more at Everything You Need To Know About How To Build Credit.
Do I have to pay interest when using a rewards credit card?
Surprisingly, many people don’t know how credit cards actually work. Many people think that you always have to pay interest when using a credit card.
However, that is not true.
I use a credit card all the time and have never paid a penny towards interest, late charges, or anything like that.
The key here is that I always pay my balance in full before it is due.
As long as you pay your bill in full each month by the required date, you will not pay interest.
Are credit card rewards worth it?
Credit card rewards points are great, but if you spend more than you can actually afford so that you can earn vacations, gifts, and more, then nothing is actually free.
Some people will spend more money than they have so they can reach the spending requirement needed to earn rewards points. Remember, though, those rewards are only rewards if you are using your cards responsibly.
This can spiral out of control if you do not keep track of how much money you are spending.
If you are careful, then credit card rewards can be well worth it. They can help you save extra money by doing something that you are already doing – paying bills and other expenses.
Then, you can use your points or cash back on things like travel, saving more money, and more!
Do you have a rewards credit card? Which card do you think is the best rewards credit card?
Disclosure: Making Sense of Cents has partnered with CardRatings for our coverage of credit card products. Making Sense of Cents and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses, and recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.