We’re often warned about the perils of credit cards: Don’t open too many at once because you might hurt your credit score. Don’t carry a balance over because the high interest rates can spiral out of control. Credit card debt is the worst kind of debt!
But if you’ve done your due diligence with your monthly payments and you never carry a balance forward on your credit card, then the world of rewards credit cards is worth looking into.
Rewards cards are those CCs you often hear about in commercials where talk of “points” and “travel” is front and center. They’re a great option for shoppers who are diligent about paying their balance in full every month and have good credit scores. After all, any rewards you might reap from the program are more or less canceled out if you end up having to pay interest or pay a late fee.
The right rewards card for you will depend on your specific situation, shopping habits, and which perks suit you best. You don’t, for instance, want to opt for a rewards card that gives you a lot of travel points if what you really need is cash back on your grocery bill.
We’ve rounded up the best cards currently available on the market across a few different categories. Keep in mind that this is a general overview; it’s always worth your time to read the fine print on the qualifying terms for each card. It’s good practice to consider when certain perks expire, what the annual fees are, and whether your interest rate will fluctuate.
Some cards, for instance, offer 0 percent introductory APR for a set period of time: Say six, 12, or 18 months, after which it expires and a much higher rate kicks in. You’ll also want to do the math to see if you can cancel out any annual fees with the rewards you might reap. Finally, some cards might require you to make certain purchases during an allotted time frame or within a certain category in order to reap the rewards. Make sure you can check off the boxes before committing to a new credit card!
Here are the some of the best rewards cards available right now:
Best for travel perks
Rewards cards that help you accumulate points for travel are different than the frequent flyer programs airlines employ. Incentives from airlines are usually limited to a particular airline or airline group and come with blackout dates that restrict your potential travel arrangements. The Chase Sapphire Preferred Card was named one of the ‘Best Travel Credit Cards’ by MONEY Magazine in its most recent roundup. If you’re a frequent traveler, this card is great for you. You earn twice the amount of points on travel and dining purchases while maintaining 1 point earned for every $1 purchase on other items.
A key distinguisher from other travel cards is the ability to redeem your points 1:1 through other leading airline loyalty programs so you’ve got good options. If you spend $4,000 on purchases within the first three months of opening the account, you’ll earn 50,000 bonus points. If you redeem those points through the Chase Ultimate Rewards program, you’re looking at $625 you can use toward your next trip.
Best for cash back deals
The Citi Double Cash Card doubles the percentage that’s typically allotted by other cash back rewards cards. You’ll earn 1 percent cash back on every dollar you spend, along with an additional 1 percent cash back for every dollar you pay off. Consider it your added incentive to pay back your balance in full asap. There are no caps on the total amount of cash back you can earn and you don’t pay a fee. The freedom to earn cash back on purchases across categories makes it a standout among cash back rewards cards.
Best for groceries and gas
The Blue Cash Preferred Card from American Express offers 6 percent cash back on grocery store purchases up to $6,000 over the course of a year, after which purchases will earn you 1 percent. That’s higher than the typical 1 to 3 percent on other cards. You can also earn 2 percent cash back at gas stations and select department stores. The downside? Your cash back is in the form of “Reward Dollars” that are redeemed as statement credit which help wipe out your total debt.
Best for dining out on the town
The Savor Card from Capital One is a great option for foodies with excellent credit. If you’re someone who spends a lot on dining out or even if you’re regularly cooking up a feast at home, the Savor Card helps you earn cash back on your dining and grocery expenses. Expect 3 percent cash back on dining, 2 percent on groceries, and 1 percent on other purchases. Plus, Capital One gives you a $150 cash bonus once you spend $500 during the first three months of opening an account. Even better? Your rewards don’t expire.
Best for those with bad credit
If you have bad credit, you’re probably thinking you can’t open a rewards credit card. This is mostly true, but there’s another option available to you: a secured credit card. When you open a typical credit card, the bank approves you for a set credit limit based on your credit score. While you’re entrusted with making payments to the bank to pay down your balance, ultimately, the bank is the entity that’s forking over the cash for you to make those initial purchases. With a secured credit card, you open a smaller line of credit with a bank and you “secure” your card by putting forth a security deposit. Essentially, you provide the financial backing for the card to establish the credit line that will help you establish a positive credit score.
The Discover it Secured card has no annual fee and offers cash back on all purchases. If you use your card for gas station fill-ups and dining at a restaurant, the card is especially good: It gives you 2 percent cash back at gas stations and restaurants, up to $1,000 combined each quarter. You’ll also earn 1 percent cash back on other purchases. At the end of the year, Discover will match your cash back on the card. Another bonus: Your monthly statements will also come with a free FICO Credit Score so you can more easily monitor your score.
Reminder: Always speak to a licensed financial services provider or specialist before making decisions that could affect your financial wellbeing.
