Best Rewards Credit Cards

Written by Robert Ferry on April 23, 2022
Best Rewards Credit Cards

The credit card industry has evolved into different branches, one of which is the best rewards credit cards. These specific cards are designed to give people rewards, benefits, perks, and other incentives applying for them. Several companies have marketing strategies designed to attract customers to their rewards credit cards by providing competitive rewards. People's needs tend to exceed what they can afford, and that is where the rewards credit cards come in place and help such people.

People's incentives for using rewards credit cards start from accumulating points, gathering miles on purchasing tickets to travel for domestic and international flights. Moreover, individuals can earn cashback on their purchases as part of the reward cards scheme. These features make a person earn every dollar they spend using the card, and the card provider will credit the account when those rewards are cashed.

Such reward cards come in different categories, with some having an unlimited flat rate on all the purchases, which is usually 1% of the overall transaction amount. People can earn cashback through the purchases made by the person. Other reward cards have different rates specific to a category, like 2% on groceries, 1.5% on gas, 1% on dining in a restaurant, etc. Some types can have higher cashback rates to earn up to 6% as rewards. For instance, all travel-related expenses and costs will incur a cashback reward of 5%.

Each credit card offers unique or competitive rewards relative to other card issuers, making them different from other card providers in the market. These rewards are also specific to the type of cards a person utilizes to pay for the purchases.

Credit card companies have created a 'redemption minimum,' which is the basic level at which cardholders can redeem their rewards. But some credit card companies do not follow such a technique. Hence, some of the rewards cannot be redeemed at any time. It is better to redeem the rewards as soon as possible because some rewards have an expiration date. People tend to accumulate reward points and realize that some of those rewards have crossed the expiration date and cannot be of any use.

Card issuers give the customer the monopoly to use the rewards in any way they see fit. Since these rewards count as benefits, cardholders are not obligated to a specific use. Some people tend to pay their dues like credit card bills or cover up some loan amount. Others choose to savor the rewards to get free products and services like complimentary air travel.

This article will discuss the different types of rewards credit cards and highlight the benefits and drawbacks of selecting and using them. The guide will cover the best credit cards for rewards and look at the main features of that card.

Let us look at the various rewards credit cards in the industry.

What Are the Different Types of Rewards Credit Cards?

This section will cover the various rewards credit cards for customers under different categories. Let's get to it!

Cashback Credit Cards

Cardholders can earn a set percentage for each transaction they make, ranging from as low as 0.5% to as high as 6%. The card issuers deposit the cashback rewards a person earns every month into the cardholder's account, which can be used for multiple purposes. For instance, a person can use that money to pay for a car mortgage.

Some common types of cashback credit cards include the following:

Flat-Rate Cashback Credit Cards

As the name suggests, these cards provide a fixed rate on all the purchases a person carries out using the card, where they will get a flat cashback which can be anywhere between 1% to 3%. Some cards offer a lower flat-rate cashback, while others provide a much better rate. The flat-rate card is suitable for those people who ignore minor details like which categories will yield a better cashback.

Tiered Cashback Credit Cards

These cards are prone to different cashback rates, which can vary from one category to another and the card a person uses. With this card, a person can enjoy a more significant amount of purchases as the cashback rate is higher than other cards. For instance, people who like using a credit card for buying groceries can use a tiered cashback card as the percentage of the amount they will earn as rewards will be higher.

Dynamic Bonus Category Cards

The Dynamic bonus category cards are similar to tiered cashback cards as the cashback rate is specific to categories in which some classes have a higher percentage than others. The alignment with tiered credit cards ends where the dynamic bonus card is considered a seasonal card, as some categories have a higher percentage because of their seasonal demand.

Travel Rewards Cards

Travel rewards cards are another type of card through which people can benefit by earning rewards that can involve discounted trips, seat upgrades or moving from one class to another, travel insurance benefits, etc. These cards can be used for domestic and international occasions as the card issuers have set up business connections with airlines, hotels, rental services, etc.

Some common types of travel reward cards include the following:

Co-branded Travel Card

As the card's name suggests, the card issuer has developed connections with other businesses, including a specific hotel or airline. For a limited time, the cardholder can get high rewards. The airline cards will provide air miles to the cardholders as rewards, and the person can redeem these miles to cover partly or wholly the cost of travelling. The hotel cards offer reward points for using the card and using the hotel and its services. The person can redeem such points for a complimentary night at the hotel during his stay. The person can also enjoy other benefits, such as the different services that the hotel provides.

One drawback of co-branded cards is that they are specific to a particular business or name and can only be used where they are applicable. If a person does not like that business's service, they will have to go elsewhere and not redeem points.

General-Purpose Travel Cards

The General-purpose travel cards are linked to the card issuer and not just some business or category so that people can use this card anywhere they feel like travel cards are accepted. The cardholder can earn reward points to redeem for free travel or upgrade the class of travel and other benefits with every transaction. Such cards can also be used on every hotel and the different brands since they accept such a card.

To make things exciting and different, the card issuers differentiate the general-purpose card they offer compared to other cards in the market. For instance, some airlines will allow a cardholder to transfer the rewards points to a specific airline or hotel loyalty program that they like or use often. Those who follow a particular brand like Emirates, Etihad, etc., can earn many reward points from this card.

Business Rewards Cards

Credit card issuers have introduced business rewards cards mainly to cover the business expenses while earning rewards. The concept is similar to the consumer reward cards, but it is meant for business purposes in this category. So business owners would need to show proof of a legit business in operation to get approval from a credit card company for business rewards cards.

Every day, a business incurs several expenses, including cartages for photocopying machines, flight itinerary, and advertising expenses. Card providers offer a competitive cashback rate of 5%-6% for office supplies and utility bills, including internet costs. Moreover, the card issuers also cover elective expenses like dinner or lunch costs between employees, employers, and clients. If the company has vehicles for business purposes, there will be some percentage of cashback on gas and fuel.

Many businesses purchase business reward cards through which they get benefits like free employee cards that will cater to their needs for travel, car insurance, and travel expenses. Business owners can keep a check and balance on the spending the employees are doing and how much of it is relevant to the business.

Store Credit Cards

Store credit cards are specific to the store you often visit to shop and make purchases. These cards are at the discretion of the stores and brands as they control who gets them and who cannot qualify for them. A store cardholder will be able to gain loyalty points from the purchases. After a particular accumulation of those points, they can be redeemed to either pay for current purchases or buy something free of the cost covered by the points.

Other store cards like Costco offer cashback rewards on the purchase amount to its customers. So people who prefer to shop at Costco can earn by spending. Some businesses provide storecards that provide a discount on their products, usually 10%-15% of the product's overall value. People in possession of the particular storecard qualify for a discount.

Store cards are segregated into two different branches, either closed-loop or open-loop depending upon the business and the card they offer to their customers. A closed-loop card is only applicable to the store or brand that introduces it or the franchise linked to the brand, whereas the open-loop card can be used at any store, brand, franchise, etc., that accepts store credit cards.

Stores also check the credit score of the person applying for the store card and determine whether they are suitable for closed-loop or open-loop cards. However, any business operating in the market will have a policy that can only offer one of the two cards. However, it is seen that those with a poor credit score are given a closed-loop card, but those with a good credit rating receive an open-loop card.

Let us look at the benefits and drawbacks of using credit cards for rewards.

What Are the Pros and Cons of a Rewards Credit Card?

In the previous section, we looked at the different types of rewards credit cards that card issuers offer to the people in the industry, with each card having its features. Here, we will discuss the pros and cons of using those rewards credit cards. Let's get started!

Pros of Rewards Credit Cards

Earn Rewards on Purchases

The main reason for purchasing rewards credit cards is to earn rewards on every purchase carried out using the card. People can earn reward points and cashback percentages on their purchases. Cardholders also enjoy other perks and incentives using travel reward cards like mileage points and upgrading the class during a flight. With these rewards, people can enjoy a relaxing family vacation abroad and take souvenirs and gifts as memories back home that won't cost them anything.

Sign-up Bonuses

After getting accepted for a rewards credit card, an individual can enjoy the complimentary sign-up bonus, which will differ from one card issuer to another. For example, regarding travel rewards cards, the sign-on bonus could be some mileage points to attract the user to use the card for travel-related expenses. Similarly, for cashback rewards credit cards, the cardholder will be given a certain higher percentage on the overall amount if they spent a particular amount on purchases in a given time.

Card Perks and Additional Benefits

The rewards credit cards come with some hidden benefits that most people are unaware of, so they should inquire about it from their card issuer. For instance, certain travel reward cards have access to a VIP airport lounge that people can use while travelling to domestic and international places. Some card issuers provide an extended warranty on a person's luggage and travel and life insurance, which is complimentary and covered under the card. People can also get hotel upgrades as an additional perk.

Travel and Theft Benefits

A lot can happen and go wrong on a vacation that no one can predict, including theft, fraud, etc. So card issuers ensure that the travel card covers such mishaps by providing fraud coverage, identity theft support, and purchase protection from everything bought during the vacation using the card. These coverage and protection reimburse you for any inconvenience you went through, and some issuers even replace the items.

Improvement in Credit Score

Travel rewards cards can improve individuals' credit ratings if they pay their dues on time. The card issuers report the customers' account activity to the major credit bureaus to improve the credit score of their customers. It is essential not to delay payments as that can hurt the credit score. People can apply for better cards that offer more favorable terms and conditions with improved credit scores.

Cons of Rewards Credit Cards

Rewards Caps

Some travel reward cards limit how much you can spend and the number of rewards you can earn on the purchases, so this cap limits the person from spending more and achieving more rewards. People will not approve of the cap on mileage and reward points, but it is in the terms and conditions when signing up for the card. As a result, the value of the card is substantially decreased.

Higher APRs

Rewards credit cards have a higher APR rate than other credit cards like the no-interest and low-interest credit cards. Due to this high APR, the cardholder has to pay a hefty interest payment, and there are fees and costs linked to the card that increases the billing value. People who do not have the financial ability to pay their entire dues tend to keep a certain balance in their account, which will be prone to APRs resulting in higher payments.

Higher Annual Fees

The best reward credit cards carry a greater annual fee that the cardholders have to pay. Some people use their rewards earnings to pay for the yearly fee, but that is only applicable if they pay for all the purchases using the card to earn reward points. Some reward cards have an annual fee greater than their rewards.

Bonus Spending Requirements

Companies offer sign-on bonuses to attract prospective cardholders but have a bonus requirement that involves spending a lot using the card to qualify for the bonus. Hence, some companies offer bonuses less than the amount spent by the individual. As a result, people overspend that they cannot pay back on time, hurting their credit score.

Minimum Redemption Amounts

Several companies have requirements to abide by to qualify for the redemption amount. For instance, they need to spend and reach a certain amount of redemption points before withdrawing or redeeming the amount into their account. For example, a person may have to spend $2000 such that each dollar counts for 1 point, and after the entire amount is paid, the person can redeem 2000 reward points.

Other Limitations

Most credit card companies issue the top reward credit cards to those that possess a good credit score which means they will be offered favorable terms and conditions. In contrast, people with poor credit scores will get low-tier reward credit cards with unfavorable terms like high APRs and a short repayment period.

Let us look at the best credit card for rewards available in the industry.

Best Rewards Credit Cards

The previous section looked at how the reward credit cards benefit people and what they cost. Here, we will discuss the top rewards credit cards in the industry and their features. Let us dive into it!

American Express Gold Card

The American Express Gold Card is considered ideal for those who want one rewards card that fits all in every category. The card is labeled as the best overall rewards card in the industry. The reason for it having such a reputation includes the features it offers.

They consist of the following

  • Annual fee: $250
  • Credit score: Minimum 670 to Maximum 850
  • Opening APR: N/A
  • Regular APR: To be paid overtime
  • Foreign transaction fee: None
  • Balance transfer fee: None

Pros include:

  • Strong rewards programs where a person can earn four times points on every dollar spent at a restaurant and three times points on every dollar spent on travel expense
  • People can benefit from the complimentary baggage insurance coverage of up to $1250 for carry-on bags, while $500 is covered for every checked-in baggage
  • The company does not charge any fee for all the purchases and expenses incurred using the card
  • People can earn rewards between $1000 to $3000 from year 1 to year 5. 

Cons include:

  • People have to pay an annual fee of $250
  • There is no introductory APR which means less interest payment and other related costs.

Capital One Venture Rewards Credit Card

The Capital One Venture Rewards Credit Card is considered the ideal runner-up card after the Gold card by American Express. There is a reason why some people do not prefer this card. Hence, it was deemed a runner-up card that can be used as a backup option after the Gold Card.

The features that it includes are the following

  • Annual fee: $95
  • Credit score: Minimum 670 to Maximum 850
  • Opening APR: N/A for all purchases and balance transfers
  • Regular APR: Between 17.24% to 24.49% on all variable purchases and balance transfers
  • Foreign transaction fee: None
  • Balance transfer fee: APR offers will be charged at 3%, and N/A for balance transfers

Pros include:

  • People can earn five times reward points on every dollar spent on booking hotel rooms and rental cars through the Capital one travel service
  • People can earn rewards between $1500 to $3000 from year 1 to year 5. 

Cons include:

  • People have to pay an annual fee of $95
  • There is no introductory APR which means less interest payment and other related costs.

Alliant Cashback Visa Signature Credit Card

The Alliant Cashback Visa Signature Credit Card is considered ideal for those who value cashback and use the card often to make transactions. The card issuer offers this card to prospective cardholders in the market looking for the best cashback card on every purchase they make using it.

The features that it includes are the following

  • Annual fee: $99 to be applicable after year 1
  • Credit score: N/A
  • Opening APR: None
  • Regular APR: Between 12.24% to 22.24% on all variable purchases and balance transfers
  • Foreign transaction fee: None
  • Balance transfer fee: APR and balance transfer offers will be charged at 3%
  • Welcome bonus: None

Pros include:

  • People can earn 2.5% cashback on all the purchases
  • No annual fee is the first year as it is waived off
  • The cashback programs are not prone to any caps or limitation
  • The company does not charge any fee for all the purchases and expenses incurred using the card
  • People can earn rewards between $500 to $2500 from year 1 to year 5. 

Cons include:

  • Cardholders have to pay an annual fee of $99 after the first year
  • There is no welcome bonus which usually most companies offer
  • The company does not provide any special financing offers to the cardholders

Chase Sapphire Reserve Card

The Chase Sapphire Reserve Card is considered ideal for those who wish to enjoy luxury travel domestically and internationally. The card has an excellent reputation in the market and is the best luxury travel card. So travel enthusiasts approach the company for this specific card due to its features.

The features for which it is well-known include the following

  • Annual fee: $550
  • Credit score: Credit score: Minimum 740 to Maximum 850
  • Opening APR: None
  • Regular APR: Between 17.24% to 24.24% on all variable purchases and balance transfers
  • Foreign transaction fee: None
  • Balance transfer fee: APR and balance transfer offers will be charged at 5% or $5, whichever is greater
  • Welcome bonus: Spending $4000 in the first three months of the account activation will get you 50,000 bonus points

Pros include:

  • $300 annual travel amount is given to the cardholder to cover partly expenses incurred
  • Cardholders will have a priority pass giving them access to the majority of VIP lounges globally
  • The card provides specific benefits at The Luxury Hotel & Resort Collection
  • The card comes with a complimentary Lyft Pink membership that the users can enjoy during vacation
  • People can earn rewards between $1500 to $3500 from year 1 to year 5. 

Cons include:

  • The card has a hefty annual fee attached to it which can be covered if all the benefits of rewards are used up
  • There is no welcome bonus which usually most companies offer

Blue Cash Preferred Card from American Express

The Blue Cash Preferred Card from American Express is considered the ideal card for groceries by the people who use it. Cardholders consider it the best card for groceries, especially for those with a large family resulting in a significant expense.

The features that it offers are the following

  • Annual fee: $95 fee after the first year
  • Credit score: Credit score: Minimum 670 to Maximum 850
  • Opening APR: 0% on purchases for the first year only and then applicable; N/A for balance transfers
  • Regular APR: Between 14.24% to 24.24% on all variable purchases and balance transfers
  • Foreign transaction fee: None
  • Balance transfer fee: APR and balance transfer offers will be charged at 2.7%
  • Welcome bonus: Spending $3000 in the first six months of the account activation will get you a $300 statement credit

Pros include:

  • Earn 6% cashback on all purchases from USA supermarkets having a cap of $6000 in one year and then 1% cashback if the cap is exceeded
  • Earn unlimited 6% cashback on all USA based streaming services like Netflix, HBO Max, Prime Video, Disney+, etc.
  • Earn unlimited 3% cashback on all USA based gas stations
  • Offers buy now pay later plan
  • People can earn rewards between $500 to $2500 from year 1 to year 5. 

Cons include:

  • Cardholders have to pay a 2.7% fee on all purchases made using the card

Citi Double Cash Card

The Citi Double Cash Card is considered a rewards credit card for those who do not wish to pay the annual fee. Hence, the card is labeled as Best for No annual fee and has a good reputation amongst its users and previous cardholders in the market. The features that it offers are the following

  • Annual fee: None
  • Credit score: Credit score: Minimum 670 to Maximum 850
  • Opening APR: 0% on balance transfer for the first 1.5 years only and then applicable; N/A for purchases
  • Regular APR: Between 14.24% to 24.24% on all variable purchases and balance transfers
  • Foreign transaction fee: 3% on all variable purchases and balance transfers
  • Welcome bonus: None

Pros include:

  • Earn a flat 2% cashback on all the purchases
  • The cashback programs are not prone to any caps or limitation
  • The company offers one of the most extended intro periods for balance transfer relative to other card issuers
  • People can earn rewards between $500 to $2500 from year 1 to year 5

Cons include:

  • There is no welcome bonus, so the cardholder cannot increase the rewards by spending more soon after the activation of the account
  • Cardholders have to pay a 3% fee on all purchases made using the card outside the USA

Amazon Prime Rewards Visa Signature Card

The Amazon Prime Rewards Visa Signature Card is considered ideal for online shopping by most of its users, so people who prefer to shop online often go for this card.

The features that it offers are the following

  • Annual fee: $0 for those that already have Prime membership
  • Credit score: Credit score: Minimum 670 to Maximum 850
  • Opening APR: None
  • Regular APR: Between 14.49% to 22.49% on all variable purchases and balance transfers
  • Foreign transaction fee: None
  • Balance transfer fee: APR and balance transfer offers will be charged at 5% or $5, whichever is greater
  • Welcome bonus: Cardholder will receive a $150 gift card from Amazon.com upon approval from the company

Pros include:

  • There is no annual fee, so the expense is reduced
  • Earn 5% cashback at Amazon stores and Wholefood market
  • There will be no fee charged on purchases made outside of the USA
  • People can earn rewards between $500 to $2500 from year 1 to year 5

Cons include:

  • Prime membership is needed to enjoy the annual fee benefit
  • The 5% cashback cannot be used on specific locations

Chase Freedom Flex

The Chase Freedom Flex is considered the best for rotating bonus categories, so people who prefer to value rotating bonus categories for greater cashback rewards should value this card. The bonus categories can shift from one billing cycle to another, so people need to be vigilant about where the card will benefit them. People who can go through this can surely save a lot from their expenses and earn from it.

The features that it offers are the following

  • Annual fee: None
  • Credit score: Credit score: Minimum 670 to Maximum 850
  • Opening APR: 0% for the first 15 months only on all variable purchases and balance transfers
  • Regular APR: Between 15.24% to 23.99% on all variable purchases and balance transfers
  • Foreign transaction fee: 3% on all variable purchases and balance transfers
  • Welcome bonus: Cardholders will receive a $200 cashback after they spend $500 in the first three months

Pros include:

  • There is no annual fee, so the expense is reduced
  • The welcome bonus is quite generous, and most likely, cardholders are going to avail it
  • People can earn up to 5% cashback on specific categories depending upon the season
  • Cardholders have the option to transfer their credit to other Chase credit cards
  • People can earn rewards between $1000 to $3000 from year 1 to year 5

Cons include:

  • A 3% fee is charged on all foreign transactions, which can increase the costs
  • The bonus category needs to be activated in each billing statement

Conclusion

People need to understand that the industry will have different credit card types. There are other branches, such as the best credit card for groceries, even under reward cards. So each person needs to carry out due diligence at their end, see to their needs and wants, and ensure the chosen card satisfies your preference. At times, people get attracted to a card due to its benefits and overspending, which they cannot pay, which harms their credit score.

The article has covered the different types of rewards credit cards that the card issuers provide, and based on them, we were able to cover the benefits and drawbacks of using rewards credit cards. People who have insufficient knowledge of the reward cards will surely benefit from this guide. And those individuals who want to understand rewards credit cards and how they can help a person can look at the section highlighting it.

This article covers the best credit cards for rewards under different categories. We looked at the best reward credit cards that other companies offer to the people. Based on the customer's experience, we could shortlist these specific cards. The guide will explain the different features that come with these cards and the reasons for you to select them. We also highlighted the drawbacks of each card to give a candid analysis.

Hence, this guide will add more information and knowledge to those looking to purchase a rewards credit card.

Article written by Robert Ferry

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