With the US credit card space becoming somewhat over-competitive in recent years, consumers are now able to get some super good deals.
This is especially the case with rewards credit cards. As long as you are able to clear your monthly balance each and every month, you stand the chance of obtaining rewards simply for purchasing things that you were going to buy anyway.
Moreover, by never allowing your monthly statement to go unpaid in-full, the underlying APR attached to the rewards credit card is effectively irrelevant. With that being said, not all consumers are eligible for the very best deals, as the top-rated cards are typically reserved for those of you with good or excellent credit.
Nevertheless, if you are thinking about obtaining a rewards credit card for the very first time – or you simply want some guidance on which providers are offering the best deals – be sure to read our comprehensive guide.
We cover the ins and outs of how rewards credit cards work, and what you need to do to ensure you consistently obtain the benefits without spending a cent on interest.
Best Rewards Credit Cards
- 1 Best Rewards Credit Cards
- 2 What are Rewards Credit Cards?
- 3 How do Rewards Credit Cards Work? Cashback, Rewards, and Points
- 4 Rewards Credit Cards: APR% and Fees
- 5 Other Fees to Consider
- 6 How do Introductory Offers Work on a Rewards Credit Card?
- 7 What to Consider When Taking out a Rewards Credit Card
- 8 Compare Reward Cards
So now that you have a full grasp of what a rewards credit card is and how you can best utilize one for your benefit, we are now going to present the best 5 cards currently in the market.
Capital One® Quicksilver® Cash Rewards Credit Card
First up on our list of the best rewards credit cards is the Capital One Quicksilver Cash Rewards Credit Card. First and foremost, the card comes with a somewhat juicy introductory offer. If you are able to make at least $500 worth of purchases in the first 90 days of taking the card out you will receive a one-time cash bonus of $150. This will be paid to you as a statement credit, meaning that your $500 purchases will only cost you $350 in real terms.
As long as you ensure you are making purchases that you would have made anyway (such as groceries, gas, etc.), then you should most definitely take full advantage of the offer. In terms of the long-term rewards that come with the card, this centres on a 1.5% cashback program on each and every purchase that you make. While 1.5% is much lower than some of the other rewards credit cards on our list, this is highly competitive for two main reasons.
Firstly, the cashback will be paid irrespective of the spending category, meaning that you will earn the rewards every time that you use the card. Secondly – and perhaps most importantly, there is no limit to the amount of cashback that you can earn. This is in stark contrast to other rewards credit cards operating in the market, which typically place a monthly or annual limit on the amount that you can claim back. Outside of the 1.5% rewards program, the Capital One Quicksilver Cash Rewards Credit Card comes with a range of other benefits.
This includes 15 months worth of 0% interest on both purchases and balance transfers. Take note, if you are planning to transfer your existing balances over from a different provider, you will need to pay a 3% balance transfer fee. Moreover, if you continue to use the card after the 15 month period has concluded, the standard long-term interest rate will sit between 15.74% and 25.74% APR – depending on your individual credit profile. Finally, not only does the card offer fee-free foreign transactions, but there is no annual fee to pay – period!
Wells Fargo Propel American Express® card
Next up on our list is that of the Wells Fargo Propel American Express Credit Card. Before we unravel the fundamentals – and as the name suggests, the credit card is backed by American Express, as opposed to the more commonly accepted Visa or MasterCard. As a result, you might be somewhat limited in where you can use the card – especially if you are travelling overseas. Nevertheless, the card does come with a number of competitive benefits, including that of its rewards program.
Firstly, the Wells Fargo Propel American Express Credit Card comes with a super tempting introductory offer that allows you to earn 30,000 points when you spend $3,000 in the first three months. While the amount of purchases required is much higher than the $500 demanded by the Capital One Quicksilver Cash Rewards Credit Card, you should be able to meet this target if you put your everyday expenses on the card. Once again, you might need to be somewhat selective in where you make your purchases when you factor in the American Express conundrum.
Once you have utilized the introductory offer, you will then be able to get 3 points for every dollar spent on specific spending categories. This includes dining, gas, online streaming and travel. Out of these spending categories, gas is definitely the most attractive. For all other purchases made outside of the aforementioned spending categories, you will get 1 point for every dollar spent.
Similarly to the previous card we discussed, we really like the fact that Wells Fargo will not place any limits on the amount of points that you can earn. Furthermore, there are no blackout dates, nor will the points ever expire. In terms of actually using the points, this can typically be used to purchases goods and services surrounding travel and merchandise, and even gift cards or cashback. Finally, there is no annual fee to contend with, and the standard APR comes in at between 15.74% and 27.74%.
Capital One® Ventureone® Rewards Credit Card
If you find yourself spending a lot of money on travel-related goods and services, then it might be worth considering the Capital One VentureOne Rewards Credit Card. The reason for this is two-fold. First and foremost, you will earn 10 miles for every dollar that you spend on hotels. Take note, you will need to make the booking via Hotels.com, which might end up costing you more if other hotel websites are offering a more competitive rate on your chosen hotel.
If you plan to use your credit card on purchases outside of the travel arena, then you still have a chance to earn rewards. However, at a rate of 1.25 air miles for every dollar spent, this is much lower. To make up for this somewhat niche spending category restriction, the rewards card does at least come with an attractive introductory offer. If you are able to spend $1,000 in the first three months, you will earn 20,000 air miles. There is no spending category to contend with when tackling the introductory bonus, which is great.
In terms of the fundamentals, the card does not come with any annual fees, and your air miles will never expire. As an added bonus, there is no limit to the amount of air miles that you can earn in a single calendar month or year, even at the 10x rate. The card does not come with any 0% balance transfer or purchase offers, so you will need to take the standard APR into account. At the time of writing, this will sit between 13.74% and 23.74%.
Bank of America® Cash Rewards credit card
Next up on our list is the Bank of America Cash Rewards Credit Card. In a nutshell, the card allows you to pick a spending category of your choice, which will then earn you 3% cashback on purchases made. This covers a plethora of possible categories, such as gas, dining, online shopping, and drug stores. As such, try to think where you typically spend the most money throughout the month, and choose that as your category of choice!
Outside of your chosen category, you will earn a competitive 2% cashback on purchases made in grocery stores and wholesale clubs. It is important to note that both the 3% and 2% cashback rates are capped at $2,500 per year. As such, if you are able to make all of your $2,500 purchases at the 3% rate, the maximum cashback on the table would be $75. On the other hand, you will revert to a new cashback rate of 1% once you exceed the $2,500 limit. Not only is the 1% rate uncapped, but you will also get it for all other purchases that fall outside of the remit of the 2% and 3% rate.
The Bank of America Cash Rewards Credit Card also comes with an introductory bonus that is well worth considering. This consists of a $200 reward when you spend $1,000 in the first three months of obtaining the card. The purchases can be made on any spending category, and the $200 reward can be used to make a purchase online. The cashback that you earn will never expire, and you can redeem your rewards as soon as you have accumulated $25 worth of cashback.
Furthermore, the card doesn’t come with an annual fee. On the flip side, it is a shame that the card doesn’t offer a 0% rate on purchases and/or balance transfers. As such, any outstanding balances will come with an APR of between 15.74% and 25.74%.
Capital One® SavorOne® Cash Rewards Credit Card
Capital One seems to be really keen to take the lion’s share of the rewards credit card space, as the SavorOne Cash Rewards Credit Card is the provider’s third entry on our list. One of the overarching benefits to this particular card is that it rewards users heavily on grocery purchases – which is potentially one of your largest monthly outgoings.
At a rate of 2% cashback, this is much higher than what other providers are willing to pay on grocery-based purchases. We should also note that you have the chance to earn a whopping 3% cashback on purchases made on entertainment (such as cinema tickets, Netflix subscriptions, etc.) and dining.
Furthermore, you will also earn 1% cashback for everything outside of the dining/entertainment/grocery spending categories, meaning that you will earn something every time you use the card. The SavorOne Cash Rewards Credit Card also comes with a modest introductory offer, which consists of $150 cashback when you spend $500 in the first 90 days of obtaining the card. Finally, there are no annual fees, and the card comes with a standard APR of between 15.74% and 25.74%
Capital One® Venture® Rewards Credit Card
While we have already discussed the Capital One ‘VentureOne’ card, the provider also offers a ‘Venture’ rewards card. The main difference between the two is that the Venture card comes with a slightly better cashback structure. You will still earn 10x air miles when you make purchases on hotels via Hotels.com, however, all other purchases are paid out at 2x miles. On the contrary, the card’s VentureOne counterpart pays just 1.25x miles.
Furthermore, the Venture rewards credit card comes with a much more competitive introductory offer. This consists of a 50,000 air miles bonus when you spend $3,000 on the card within the first three months. In real terms, this amounts to a $500 cash bonus that can then be used on travel-related purchases. On the other hand, the Venture rewards card does come with a couple of slight negatives.
Firstly, at a variable APR of between 17.49% and 24.74%, this is slightly higher than the rate that comes with the VentureOne card. Moreover, although the annual fee is waived for the first year, you’ll then need to pay $95 annually. As such, you will need to weigh up the pros and cons of each card to determine which offer is best for your individual needs.
What are Rewards Credit Cards?
First and foremost, the overall concept of a rewards credit card is no different from any other card you have held in the past. By this, we mean that the credit card will allow you to make purchases on credit, which you will then need to repay once your monthly statement arrives. Failure to repay your balance in full will, of course, lead to interest kicking in on your purchases.
However, the key difference between a rewards credit card and that of a conventional card is that you will have the opportunity to earn rewards when you use the card. These rewards can come in a range of shapes and sizes, and the amount you get will depend on a number of different factors. Most commonly, this will either come in the form of a cashback program, points, or air miles.
Regardless of how the rewards are paid, the end-to-end process typically remains constant across the board. For example, you might receive ‘points’ every time you make an ‘eligible’ purchase. Furthermore, the specific amount is based on a percentage of the total purchase amount, with most providers offering different rates for different spending categories.
For example, a rewards credit card might give you 3x points for every purchase that you make on gas, 2x points on travel, and 1x points on everything else. Alternatively, you might get 5% cashback using the card anywhere in-store, and 1% cashback for anything purchased online.
The reason that rewards credit cards are so popular in the US is that when used correctly, you stand the chance of acquiring the rewards without needing to pay any interest. This would require you to settle your monthly statement in full every month – otherwise, interest would be liable. This should never be an issue anyway, as shrewd consumers will only use their rewards credit card on things they were going to purchase with cash anyway.
Here’s a quick example of a sensible credit card rewards exercise.
- You obtain a rewards credit card that offers 5% cashback on all purchases made on groceries.
- As you have a family that consists of 5 people, you find yourself spending around $1,000 per month in your local supermarket.
- By making the same purchase with your rewards credit card, you will receive 5% in cashback.
- When you receive your statement at the end of the month for $1,000, you are only required to pay $950. This is because your 5% cashback ($50) was subtracted from the amount owed.
- As you put the cash to one side every time you used the card in-store, you proceed to pay the statement off in full.
As you can see from the above example, by using your rewards credit card instead of paying with cash, you saved yourself $50 throughout the month. Over the course of the year, that amounts to an annual saving of $600!
So now that you have a basic grasp of what a rewards credit card actually is, in the next section of our guide we are going to explore the three main types of rewards you are likely to get.
How do Rewards Credit Cards Work? Cashback, Rewards, and Points
Each credit card comes will come with its own rewards structure, so it’s crucial that you understand how each one works before proceeding. Otherwise, you’ll end up making an application for a card that doesn’t suit your everyday lifestyle.
If you’re aware of how a typical cashback scheme works, then you hopefully know the drill here. In its most basic form, a rewards credit card that comes with a cashback program simply means you will get a percentage of some, or all, or your purchases back as cash. The amount that you can get – as well as what is deemed as eligible, can vary quite considerably depending on the card in question.
Nevertheless, most cashback-driven rewards cards will give you a different amount of cashback depending on the specific spending category. For example, you might get 3% cashback on all purchases made on dining and groceries, 2% on gas, and 1% on everything else. As you make more and more purchases throughout the month, your cashback tally will continue to build-up.
In terms of redeeming the cashback that you earn, this is either paid on a monthly basis and subsequently reduced from your statement, or in some cases, it will be paid annually.
It is also important to note that some cashback rewards credit cards will come with a limit on the amount that you can claim. For example, while you might be able to claim 5% cashback on all of your gas purchases, the provider might cap this at $5,000 per year.
This means that by maximizing the offer throughout the year, the most that you would be able to get back would be 5% of $5,000, which is $250.
If your chosen rewards credit card comes with a points system, this operates in a somewhat similar way to that of cashback. You will be able to earn points when you make purchases with your card, with certain categories paying more than others. For example, you might get 3x points when using the card overseas, and 1x on everything within the US.
Either way, it is important that you understand how reward points work, as you need to assess whether or not the value of the points is worthwhile. Firstly, every point will have a dollar value. For example, the credit card company might give you 1 point for every $1 that you spend. As such, a $120 purchase on groceries would yield 120 points.
However, you also need to factor in the specific spending category, as some purchases will pay more than others. This is usually displayed as a multiple, such as 1x, 2x, 3x, and so on. For example, while you might get 3x points on purchases made on travel, you might only get 1x points at the gas station. Once you know how much each category pays, you can then figure out the dollar amount.
Sticking with the same examples given above, if you were to spend $300 on travel, you would get 900 points. This is because although 1 point amounts to $1, you are getting 3x on travel purchases, so you’re getting 900 points instead of 300 points on a $300 purchase. If you were then to make a $50 purchase at the gas station, you would only get 50 points, as gas is paid out at 1x.
As you begin to accumulate more and more points, you will then be able to redeem them. The specific reward will depend on the credit card in question, as this will vary from provider-to-provider. For example, while some cards might allow you to exchange your points on travel, others might simply convert them to statement cashback.
If you decide to obtain a rewards credit card that comes with air miles, then you need to be somebody that frequently spends money on travel. In its most basic form, air miles work in a very similar nature to points, insofar that you will increase your air miles every time you make a purchase.
Moreover, the specific amount of air miles that you get will also depend on the spending category. It is likely that the highest amount of points will be offered when you use your rewards credit card on something related to travel. For example, you might get 10x air miles for using the card when booking flights, 5x air miles when booking hotels, and 1x on everything else.
When it comes to spending your air miles, this will also need to be on something related to travel. While you will likely have the option of exchanging them for flights, or flight discounts, it doesn’t necessarily need to be on flights per-say. For example, most cards also allow you to redeem your air miles for hotels, and even airport lounges.
We should also note that some air miles rewards credit cards will often give you additional travel-related perks, such as a discounted TSA Pre-Check at the airport.
Ultimately, there would be no point in obtaining a rewards credit card that focuses on air miles if you don’t find yourself spending a lot of money on travel.
Rewards Credit Cards: APR% and Fees
As is the case with any credit-based product, you need to make some serious considerations regarding fees. First and foremost, this will center on the interest rate that comes with the card. Once again, this will vary depending on the card and provider in question, as well as your individual credit profile.
Regarding the final point, the very best rewards credit card offers are usually only available if you have at least a ‘Good’ credit score. If you don’t, credit card companies will be reluctant to offer you a card, as the risks of default typically outweigh the potential benefit of taking the customer on.
Nevertheless, it is important to note that if you use your card correctly, you should never have to worry about paying a single cent in interest. In fact, the underlying APR rate will be totally irrelevant if you are able to pay your balance off in full each month.
At the same time, if you do find yourself in financial difficulties and subsequently unable to clear your balance, the interest will completely wipe out the benefits you make in rewards. For example, let’s say that throughout the month of December you spend $2,000 on groceries – all of which comes with a cashback reward of 4%.
This means that you will have saved yourself $80. Great! However, if you then decide to only pay the statement minimum, and the card comes with an APR of 14.5%, then your 4% cashback exercise was a pointless task!
Other Fees to Consider
On top of the APR that comes with your rewards credit card, you also need to make some considerations regarding the annual fee. Although this isn’t always charged by credit card providers, we find that more often than not this is the case with a rewards card.
If an annual fee is charged, then you need to factor this into your rewards calculations. For example, let’s say that over the course of the year, you spend $1,000 on travel, which comes with a cashback of 5%. While you will have received $50 in rewards, if the card comes with a $95 fee then you are actually losing money!
You might find that your chosen rewards credit card waives the annual fee for the first year. If they do, it might still be worth taking the card out if the rewards are notable, as you can simply switch to another provider at the end of the 12 months. If you do, just make sure that you clear the card in full, otherwise the three main credit bureaus will view this unfavorably.
Other Types of Credit Cards
- What Are the Best Secured Credit Cards?
- What Are the Best Balance Transfer Credit Cards?
- Best Credit Cards for People With No Credit
- What Are the Best Credit Cards for Students?
How do Introductory Offers Work on a Rewards Credit Card?
As we noted earlier, the rewards credit card arena is now a somewhat over-saturated battleground. As is the case in any industry that encounters fierce competition, credit card providers are upping the ante in what they are prepared to offer you for obtaining their card. In most cases, this centers on an introductory offer that gives you an enhanced number of points for a certain number of months.
For example, let’s say that a rewards credit card offers a standard rate of 2 air miles for every $1 that you spend. However, in order to entice you in, the card might give you 30,000 air miles when you spend at least $1,000 in the first three months.
Here’s where things get a bit tricky, as you will need to calculate the value of the introductory offer to ascertain whether or not it’s worth taking out.
To do this, you need to assess:
- What the standard dollar-to-points rewards system is
- What the promotional dollar-to-points rewards system is
- What you can exchange the points for
Sticking with the above example, we know that the standard rewards system is 2 air miles for every $1 spent. Next, we need to calculate the introductory offer. As we will get 30,000 air miles for spending $1,000, we simply need to divide the spending amount by the reward. As such, this amounts to 30 air miles per $1 spent ($1,000 x 30 points = 30,000 points).
With that being said, while the standard promotion pays just 2 air miles per $1 spent, the introductory offers pays 30 air miles per $1 – which is 15 times higher. So far, so good.
Finally, we then need to evaluate what the air miles are actually worth. If we don’t, it might turn out that the air miles have a low redemption rate, meaning that you need to spend significantly more than what the rewards are actually worth. For example, if it costs $1,000 to earn 30,000 air miles, and you can then redeem your 30,000 air miles for a $1,000 flight, this offers excellent value.
What to Consider When Taking out a Rewards Credit Card
If you have read our guide up to this point, you should now have a firm grasp of what a rewards credit card is, how they work, and what you can typically exchange your rewards for.
However, before you proceed to take out a new card, it is crucial that you know what you should and shouldn’t do. Ultimately, you want the rewards credit card to work for you, not the other way around.
Check out the following tips:
Make sure the purchase is eligible
First and foremost, you need to have a good understanding of what purchases are eligible for rewards. This shouldn’t be too difficult, as most providers will clearly breakdown what purchases are covered, and how much the respective rewards will pay.
Just make sure that you never use the card on something that doesn’t come with a reward, as this will defeat the object.
Check whether any limits are in place
You also need to assess whether the credit card provider places any limits on the amount of rewards you can claim each year. For example, while you might get 3% cashback on all gas purchases, this might be capped at $2,500 annually.
If there is a cap, and you end up reaching it, there is no point in continuing to use the card on that specific spending category. On the other hand, some providers will simply reduce the cashback rate once the cap is reached. Sticking with the same example as above, gas purchases might be reduced from 3% to 1% once you reach $2,500.
Check what rewards are available
On top of knowing which spending categories are eligible and whether or not any limits are in place, you also need to assess what rewards you will actually get. For example, will you be getting a bog-standard cashback program, or do the rewards come in the form of travel credit?
Either way, you need to ensure that it is something that actually benefits you. If you obtain a rewards credit card that pays out in miles, but you rarely travel overseas, there is no point in having the card!
Ditch cash for everyday purchases.
If you aim to maximize the amount of rewards on offer, then you will need to get in the habit of using your rewards credit card whenever you can. Take note, we don’t mean to use the card aimlessly on things you don’t actually need.
On the contrary, we mean everyday purchases that you would typically make anyway. This could be anything from your morning cup of coffee to your weekly gas top-up. In being regimental with your card, you stand the chance of building your rewards up in the quickest time possible.
Always pay your balance in full each month
This point is by far the most important. In order to make the rewards credit card beneficial for you long-term, it is crucial that you always clear your monthly statement off in full – each and every month. In doing so, you will ensure that the credit card is not accustomed to any interest. Furthermore, this also makes the APR rate on the card irrelevant.
The easiest way to meet this objective is to set up an electronic debit agreement with the credit card company. You should instruct them to take the full statement amount from your checking account each month, meaning that you’ll never face the risk of incurring interest.
It is also a good idea to put cash to one side every time you make a purchase with your card. If this sounds too cumbersome, check your credit card account balance at the end of each week via your online portal, and then transfer the money to the checking account you have the electronic debit agreement set up with!