Home > Choosing the Best Rewards Credit Cards

Choosing the Best Rewards Credit Cards

Whether you seek airline miles, points or cashback rewards, the best rewards credit card for you may not be the one with the most generous rewards program. When you are selecting a rewards credit card, factors such as interest rates, annual fees, and 0% APR offers should be given substantial weight in your decision making process.

In order to determine what type of rewards credit card is best for you, three factors need to be considered: how much debt do you carry from month to month, how much spending do you do in a year, and whether an annual fee is worth the money.

The first and most important issue is your credit card usage. If you pay your credit card bills in full every month, skip this paragraph. However, if you carry a balance from month to month, the best type of rewards program is one that offers a low interest rate and a 0% introductory rate. Generally, one can find cash back or airline miles cards that provide low interest rates, 0% introductory rates and charge no fees. These offers may not provide the most rewards, but the money you will save on interest will more than make up for the miles you don't earn.

If you don't carry a large balance from month to month and you put all of your expenses on a credit card, choosing a credit card that offers a richer rewards program may be worth your while. Oftentimes, credit cards that let you earn double miles or extra cash back will charge a slightly higher interest rate. However, if you do a lot of spending with your card, you should be able to offset the higher interest rate with more rewards.

Lastly, if you pay your balance in full every month and charge a lot, a rewards credit card with an annual fee might be useful. Annual fees vary greatly, with some cards charging as little as $29 and others charging $495. As a general yardstick, one can assume that, at best, one point or mile translates into about one cent. Thus, to earn $29 in rewards, you may have to spend $2,900 to break even. And for a card with a $495 annual fee, your break even point starts at close to $50,000!

Ultimately, the best rewards credit card is the one that provides you with the most value, not the most free miles or the highest cash back percentage. By keeping this in mind, you can minimize the money leaving your wallet to pay interest expenses and maximize the money coming back to you from rewards.

To compare and apply for a rewards credit card, please start your search below.