Best Reward Credit Cards and How to Use Them

Reward cards are some of the most diverse and popular credit cards around. You can choose from thousands of different cards offered by all major banks, providers, and even retailers, and every time you spend on these cards, you’ll earn points that you can exchange for cash back, air miles, and a bunch of other rewards.

These cards are far from perfect—they may have high interest rates, fees, and some very demanding requirements—but if you’re in the market for a new credit card, it’s worth taking a look at a credit card with rewards.

What are Reward Cards?

A rewards credit card is simply a credit card that allows you to convert regular purchases into cash benefits. The rate at which these benefits are paid, as well as the interest rates charged, will depend on the card and your credit score. However, these cards typically have the following features:

  • Payout: Reward payouts aren’t always straightforward. Just because you’ve earned a free ticket to fly to Europe, doesn’t mean you can fly completely free. There may be taxes, insurance, transfers, and baggage costs. As for cash back, this may be offered as statement credit, which means your balance will be reduced.
  • Points, Cash or Miles: Traditionally, reward credit cards offered consumers air miles every time they used their card. These air miles could then be used to book flights all over the world. These days, however, there are other reward systems in place offering everything from straight-up cash back, often displayed as a percentage of the total spend, to points, which can then be converted into rewards. 

  • Intro/Limited Percentages: Many reward credit cards offer a higher rate for a specific period. Some cards offer this rate during your first few months, others offer a higher cash/points rate for the first few months of the year or the first few thousand dollars you spend. After this, the rate generally drops.

  • Unlimited: Once the rate drops, it often triggers an “unlimited” rate, which means you will earn those points on every dollar you spend. However, some providers add further restrictions, so this is something you need to pay close attention to before you apply.

How do Reward Cards Work?

Credit card providers charge retailers every time you use your card in their store. These “merchant fees”, as they are known, are how the providers make their money and they are generally low enough not to eat into the retailer’s profits.

Where reward cards are concerned, the provider often increases these merchant fees and then shares the additional profits with the user in the form of cash back and airmiles. Therefore, the provider is not the one footing the extra cost, the retailer is. 

As you can imagine, many retailers have an issue with this. The big chain stores don’t care as they can absorb the hit and benefit from the extra impulsive spending that these cards trigger. However, smaller independent stores have less buying power, more fierce competition, and less room to maneuver, so those extra fees have more of an impact and leave them out of pocket.

The problem is, they can’t simply stop accepting credit cards. 170 million consumers own at least 1 credit card and an increasing number are relying on them to make their day-to-day purchases. 

By refusing to facilitate credit card payments, retailers would be shooting themselves in the foot. They’re also not allowed to charge extra fees for consumers who use these cards. Instead, they either increase their prices to account for these additional costs or they offer discounts and other benefits for cash purchases.

Are Reward Cards Beneficial?

Before we look at the best reward cards on the market today, let’s see just how beneficial these cards are. Many consumers seem to have an inflated sense of worth before they apply, only to discover that the actual benefits are minimal. 

This is important, because while reward cards can be great for some users, others are better suited to using traditional credit cards as they may have lower fees and interest rates.

Let’s use one of the more generous cashback cards as an example, the Discover It. This card offers 5% cashback on every day purchases up to $1,500 and then 1% on all other purchases. Assuming you spend the full $1,500 on qualifying purchases, you will earn $75 per year. If you match the average spend on reward cards, which is $890 a month, you’ll earn an extra $8.90 a month or $106.80 over the year.

All things considered, you’ll have an extra $181.80 in your pocket at the end of the year. It’s nice to have if it’s free, but if you’re spending more and acquiring extra debt, it’s probably not worth it.

The Best Reward Cards

What works for one person may not work for another. Some reward cards will only benefit big spenders, others are aimed more at students or families. We’ve compared hundreds of the most popular reward cards on the market and hand-selected the very best based on interest rates, fees, and potential payouts.

The Discover It

The Discover It credit card comes in many forms, including a version aimed at students and a secured version. All these are part of Discover’s advanced rewards network, and with the main Discover It card you can get 5% cash back on spend of up to $1,500, and 1% cash back thereafter.

There is no annual fee and Discover also provides additional rewards and bonuses for new customers and loyal users. You can even use your Discover rewards during the Amazon checkout, getting money off the products you buy regularly or saving on Christmas and birthday presents.

The Discover network is the third largest credit card network in the United States and is a long way behind MasterCard and Visa in terms of coverage. It’s also rare outside of the US and as a result it’s not the best card for travelers. For domestic users, however, it’s one of the best credit cards on the market and you shouldn’t have an issue finding points of sale in the United States.

  • Network: Discover
  • Rewards Scheme: 1% to 5% cash back
  • Annual Fee: $0
  • Interest Rate: 13.49% to 24.49% Variable APR
  • Intro Bonus: Discover matches all cash back earned during 1st year.
  • Intro Offer: 0% for 14 months on purchases and balance transfers

Chase Freedom Unlimited

The Chase Freedom card is one of the most popular reward cards in the United States and you can find it on every list of top reward cards. There are no gimmicks here and there are very few restrictions as well. With Chase Freedom, you earn 1.5% cash back on all purchases—it’s as simple as that.

What’s more, if you spend just $500 in your first three months, you will receive a $150 cash back bonus. On top of this, there’s no annual fee to worry about and the cash back offers never expire, so you can just keep accumulating rewards until you’re ready for a big payday.

  • Network: Visa
  • Rewards Scheme: 1.5% cash back on all purchases
  • Annual Fee: $0
  • Interest Rate: 16.49% to 25.24% Variable APR
  • Intro Bonus: $150
  • Intro Offer: 0% for 15 months on purchases and balance transfers

Blue Cash Preferred

The Blue Cash Preferred is one of the better American Express reward cards on the market, and that’s saying a lot for a company that has created some of the biggest and most generous reward programs over the years.

As standard, you will earn at least 1% on all purchases, but there are boosts that take this to as much as 6%. For instance, a couple years ago they added 3% cash back on transportation and 6% on streaming subscriptions offered by US companies. Consumers can also get 6% cash back (up to $6,000) on purchases made in US supermarkets.

This is a premium card with terms that suit non-premium members. For instance, while there is a $95 annual fee, you can also get $250 cash back when you spend just $1,000 over your first 3 months. Add lots of grocery shopping, subscription services (Hulu, Netflix, Apple) and transportation costs to the mix and it could save you a few hundred bucks a year. 

It’s an ideal choice for big families, as they’re the ones likely to be spending the most on media subscriptions and supermarket shopping.

  • Network: American Express
  • Rewards Scheme: 1% to 6% cash back
  • Annual Fee: $95
  • Interest Rate: 14.49% to 25.49% Variable APR
  • Intro Bonus: $250
  • Intro Offer: 0% for 12 months on purchases and balance transfers

Blue Cash Everyday

If the Blue Cash Preferred Card is a little too rich for your blood, then maybe the Blue Cash Everyday will have what you need. The Blue Cash Everyday doesn’t have cash back rewards of up to 6% and the intro bonus pays $100 less, but the annual fee is non-existent, and you can still earn up to 3% on everyday purchases.

All money spent at US supermarkets can earn you 3% cash back on your first $6,000 and 1% after that. You can also earn 2% at gas stations and department stores and the introductory period on purchases and balance transfers is 3 months longer than the Blue Cash preferred.

  • Network: American Express
  • Rewards Scheme: 1% to 3% cash back
  • Annual Fee: $0
  • Interest Rate: 14.49% to 25.49% Variable APR
  • Intro Bonus: $150
  • Intro Offer: 0% for 15 months on purchases and balance transfers

Chase Sapphire Preferred

The Chase Sapphire credit card is a premium rewards card that offers many of the same benefits as the Freedom Unlimited but is better suited to big spenders. The biggest difference, at least as far as the disadvantages are concerned, is a $95 annual fee.

For the average consumer, this is enough to wipe out most of their rewards, which means it is not a viable option. But for big spenders, this fee is offset by a point-based rewards scheme that gives all users $750 worth of points when they spend $4,000 in their first three months.

They can also earn twice as many points when they dine and travel, and until March 2022 they will secure 5 times more on Lyft rides.

  • Network: Visa
  • Rewards Scheme: Point-based. Earn 2x on travel and dining; 5x on Lyft rides
  • Annual Fee: $95
  • Interest Rate: 17.49% to 24.49% Variable APR
  • Intro Bonus: $750 (60,000 points)
  • Intro Offer: Free DashPass subscription for one year.

Bank of America Cash Rewards

The Bank of America Cash Rewards offers 3% cash back for purchases in a category designated by the user; 2% at grocery stores, and 1% on everything else. These rewards don’t expire, there is no annual fee, and preferred members can get between 25% and 75% extra.

The only downside to this card is the introductory bonus, which is a little more demanding than many other entries on this list. Reward cards typically require you to spend between $1,000 and $2,000 in the first three months to qualify for a cash reward. Bank of America Cash Rewards does the same, but the difference is that you need to make two single purchases of $1,000 each to qualify.

  • Network: MasterCard
  • Rewards Scheme: 1% to 3% cash back on all purchases
  • Annual Fee: $0
  • Interest Rate: 15.49% to 25.49% Variable APR
  • Intro Bonus: $200
  • Intro Offer: 0% for 15 months on purchases and balance transfers

Capital One Quicksilver Cash Rewards Card

This is a simple but generous rewards card, offering 1.5% cash back on all purchases and giving all new users $150 when they spend $500 within the first three months. It’s a no-nonsense card with no annual fee, 15 months of no-interest balance transfers and purchases, and the backing of one of the biggest credit card networks in the world.

  • Network: Capital One
  • Rewards Scheme: 1.5% cash back on all purchases
  • Annual Fee: $0
  • Interest Rate: 15.49% to 25.49% Variable APR
  • Intro Bonus: $150
  • Intro Offer: 0% for 15 months on purchases and balance transfers

Wells Fargo Propel American Express Card

The Wells Fargo Propel card uses the American Express network and benefits from its generous point-based system. Users can earn 20,000 points when they spend $1,000 in the first three months. This equates to around $200, with the rest released every time the credit card is used.

The Wells Fargo Propel card pays three times as many points for money spent at gas stations, ride shares, flights, hotels, and more. There is also a 300% bonus available on all streaming service purchases. 

  • Network: American Express
  • Rewards Scheme: Point-based system
  • Annual Fee: $0
  • Interest Rate: 15.49% to 25.49% Variable APR
  • Intro Bonus: $200 (20,000 points)
  • Intro Offer: 0% for 12 months on purchases and balance transfers

What Credit Score Do You Need for a Rewards Credit Card?

Credit cards span the full range when it comes to credit scores. Consumers with high scores can get the very best rates and the most generous cards; consumers with no credit or bad credit can apply for high-interest unsecured cards and most secured cards.

Many reward cards are somewhere in the middle. The ones mentioned above typically require a credit score of at least 620, but you may face issues if you have anything less than 700, and the closer your score is to being “exceptional”, the easier the application process will be. 

Higher credit scores also lead to better interest rates, although they won’t necessarily improve the reward scheme as this is standard for all users.

Top Tips for Using Reward Credit Cards

Before you apply for any of the above reward cards, keep the following tips in mind. This will allow you to get the most from these cards and help you to protect your credit report and keep your credit score stable. 

Calculate Everything Beforehand

Before you sign up for a reward credit card, calculate how much it will actually earn you. Look at the interest rate and at your current balance (if you have one) and calculate how much you would be paying with the rewards card. If you don’t have a credit card balance, calculate your monthly outgoings instead to see if those rewards are worth the higher APR you’re being charged.

Use Only If You’re Repaying Your Balance

Rewards can be earned whether you repay your balance in full or not. However, if you’re not paying your balance every month, the card will likely cost you much more than it earns you. What’s more, if you’re paying a higher rate of interest just to get those rewards, those extra percentage points will cost more than the card earns.

All this boils down to one simple truth: If there’s a chance that you won’t repay your balance at the end of the month, forget about reward cards. Focus on the rate of interest only and look for the card with the lowest one. If it happens to be a rewards card, great; if not, keep looking.

A balance of $10,000 with an APR of 24% and a monthly payment of $300, will cost you $6,644 in interest over a 56-month term. If you get a card with an APR that is just 2% less, you’ll pay $5,596 over 52-months. This means that an APR difference of just 2% will save you $1,048 and reduce your term by 4 months.

Don’t Spend More to Get More

There are hundreds of millions of credit cards in the United States, accounting for a sizeable percentage of the country’s consumer debt and amounting to between $5,000 and $6,000 per user. That’s a lot of debt and it’s an issue that a little cash back won’t fix.

It’s important to remember that reward cards are still credit cards, they still carry a massive risk, and they can still cripple your finances if you accumulate too much debt. Don’t spend more money just so you can accumulate extra points. You’ll earn a few extra bucks here and there, but only at the expense of higher interest, extra fees, and a mountain of debt.

Spend on the Card with the Highest Return

If you have multiple credit cards and acquire a reward card, it’s time to forget about the cards that don’t reward you and focus on the one that does. There is no benefit to spreading your costs over multiple cards if only one is rewarding you and you’re paying them all off every month.

But don’t close those other accounts just yet. While it’s wise to stop using them if they’re not providing you with any benefits, closing them could impact your credit utilization ratio. This ratio calculates your total available credit and compares it to your total used debt. Every time you clear a balance, that card counts 100% towards your total, but every time you cancel it, those benefits disappear.

For example, let’s suppose that you have 3 credit cards, each with a credit limit of $10.000 and a balance of $5,000. This puts your total credit at $30,000 and your total debt at $15,000, which means your credit utilization score is a high 50%. If you clear two of those balances, your debt drops to $5,000 while your credit remains the same, putting your credit utilization score at 16%.

If you then cancel those cards, however, your available credit will drop by $20,000, leaving you with credit of $10,000, debt of $5,000, and a credit utilization score that returns to 50%.

Be Wary of the Annual Fee

We mentioned how much the average person can expect to earn from a rewards card and noted that if they spend over $10,000 a year and exploit the intro period to the fullest extent, they will earn less than $200 in cash back rewards. It’s not great, but it’s better than nothing if you’re not carrying a balance.

However, this can be offset by an annual fee, which could cost you anywhere from $35 to $100 a year. Such a fee could slash your rewards in half and put them into the negative if you accumulate additional fees or spend less than the average.

Check Expiration

Point based reward cards may require you to use your rewards within a specific period. If you don’t use them, you may lose them, which could cost you dearly and cause you to miss out on some serious cash back. 

Check to see when your points expire, if indeed they do.