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Which credit card has the best rewards?

Which Credit Card Has the Best Rewards?

Which Credit Card Has the Best Rewards?

When it comes to credit cards, there are a lot of great options out there. That’s why it can be challenging to know which card you should get.

Which credit card has the best rewards?

There are cards for cash back, points, and miles. Visa, MasterCard, Discover or American Express – does it matter? What about store cards? The options and choices available can be overwhelming, even if you already have a credit card (or several). If you’d like to earn more credit card rewards but don’t know where to start, you are in good company. You’re also in the right place! In this post, we’ll break down the main factors most people consider when deciding what rewards credit card(s) to get. And if you want to learn more about how credit cards work, check out this post.

It’s the question we get asked most often, and for good reason – what credit card has the best rewards?

Let’s start with the basics – to earn credit card rewards, the first step is owning cards that offer rewards. The problem is that there are literally hundreds of cards available that offer great rewards. Which is one best? We break it down below, but the short answer is it depends on your personal spending habits and interests.

A brief note on other credit card features:

Before continuing on the topic of credit card rewards, it is worth noting that many credit cards offer features that are not related to rewards. Examples include rental car insurance, cell phone protection, warranty extensions, low or introductory interest rates, and access to exclusive perks. The list goes on. One thing these benefits all have in common, though, is that they are not rewards earned for making purchases with the card.

As you can see from the note above, there are good reasons to get a credit card beyond the rewards you earn from shopping. While these are certainly things to consider, this post is focused exclusively on rewards. Should we cover other card benefits in a future post? Let us know!

Back to rewards – choosing the card that will reward you the most comes down to three main considerations: where you spend your money, reward types, and what cards you already own.

Consideration 1: Where do you spend your money?

There are many types of credit card rewards, but in most cases the two most important types are base rewards and category rewards.

Base rewards are the rewards you earn on every purchase you make with the card. Most rewards credit cards have a base reward rate of 1% – 2% cash back (or the equivalent in points).

Category rewards are the rewards you earn when you spend money in a specific category, such as travel, gas stations, or restaurants. Many cards have higher reward rates at one or more of these categories. For example, a good travel credit card may offer 3% – 4% on travel-related purchases.

A note on other reward types – offers, deals, introductory rewards & shopping portals are just a few of the other reward structures offered by various credit cards. These can provide a great deal of value, but they are less common than base and category rewards. We will explore other types of rewards in a future post.

Consideration 2: What kind of rewards do you prefer?

Credit card rewards come in many types – points, miles, and cash back are the most common, but there are many more. We call these various types ‘currencies’. All reward currencies fall into one of two categories: cash or points.

Cash is the most straightforward, and this is often described as ‘cash back’ or ‘% cash back’. It’s as simple as it sounds – when you spend money with the card, you earn the specified value back in cash. Typically cash is deposited into your account at the end of the billing cycle.

Points (including miles, bonus points, hotel points, and almost every other reward that isn’t cash back) are a bit more complicated to evaluate. This is because the issuer of the card determines how those points can be used, and thus what their value is. They can also change the value of points you’ve already earned without warning. This is often done by changing how many points you have to exchange for a material good or service, such as a gift card or a hotel room. Because of this points can be more risky reward, but they’re not necessarily worse – in some cases, the value of rewards earned via points exceeds that which you could earn via cash back.

Consideration 3: What cards do you already own?

For most people, maximizing credit card rewards requires them to have several cards. This is because most cards focus their best rewards on one or two categories, and offer little-to-no rewards outside of those categories. So unless you buy exclusively gas and groceries, you would probably benefit from having more than one card. But which card you should get next depends on the cards you have – if you already have a card with great rewards for travel, focus on your next highest spending area for which you don’t have great rewards. The goal is to have enough cards so that no matter where you’re shopping, you’re earning great rewards.

Tools to help find the right card

If you could use some help on your search for a new card, our credit card reward comparison tool is a great way to compare cards by earn rate. It allows you to see a list of available cards and the rewards they earn in each category. You can select the categories in which you spend the most to sort the list and see the cards that will maximize your earnings. But ours isn’t the only tool; the list below highlights a several of the comparison tools available and their features.

  • AddUp Rewards: Compare cards by reward rate in various spending categories
  • WalletHub: Filter cards by various features such as credit rating, annual fees, and company
  • Creditcards.com: Compare up to 3 cards side-by-side across various features

In conclusion, there is no such thing as a ‘best credit card for rewards’. This is because ‘best’ is relative to your personal circumstances. While this can make it challenging to choose a credit card, there are several tools (like those listed above) that can guide you along the way.

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