How to Choose a Rewards Credit Card

First, consider your credit history and habits. Then, think about what kind of rewards you want: cash back, miles or points.

Chanelle BessetteMay 28, 2020

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Rewards credit cards have the potential to help you stretch your budget, offering cash back, airline miles or hotel points for your spending, along with other benefits.

Getting the most out of these cards depends on choosing the right one for you, paying off your balance each month, and maximizing your rewards with your redemption choices.

Is a rewards credit card right for you?

You may want to apply for a rewards credit card if you meet some or all of the following criteria:

  • You have good or excellent credit. Most rewards cards require good credit scores (a FICO score of at least 690), although there are some exceptions. The Discover it® Secured, for example, is a secured credit card that earns cash-back rewards for spending, and it's accessible without good credit scores.

  • You generally don't carry a balance. Rewards credit cards tend to have higher APRs, so if you carry a balance, the interest you accumulate will likely cancel out the value of your rewards.

  • You travel regularly. If you’re a travel junkie, you can use your regular spending to help you build points toward your next trip, especially if you have a travel credit card.

  • You’re loyal to a particular airline or hotel. When it comes to travel rewards, co-branded cards can help you rack up points faster for your preferred lodging and flights.

  • You spend a lot in specific categories like gas, groceries and restaurants. Some rewards cards offer additional points for common spending categories, such as in the case of the Blue Cash Preferred® Card from American Express, which offers 6% cash back on spending at U.S supermarkets on up to $6,000 a year. Terms apply.

Types of rewards credit cards

If you meet one or more of the conditions above, determine your goals. Do you want to have some extra cash at the end of the month? Do you want to rack up points for a big trip? Maximize your miles on a particular airline? Your answers will help you choose what kind of rewards credit card works best.

  • Cash-back credit cards with bonus categories. Some cards offer standard rates for certain categories (e.g., 2% cash back on gas and groceries), while others offer rotating categories that change every quarter. These categories might include restaurants, gas or groceries, as well as more specific spending opportunities such as movie theaters, Amazon.com and wholesale stores.

  • Flat-rate cash-back credit cards. If keeping track of bonus categories sounds like a chore, a flat-rate cash-back card will give you a decent percentage back (usually from 1% to 2%) on all purchases, regardless of spending category. The Citi® Double Cash Card – 18 month BT offer, for example, offers 1% back when you make purchases and an additional 1% back when you pay them off.

  • Co-branded credit cards. If you have a preferred retailer, airline or hotel chain, a co-branded credit card (one that bears the name of both the merchant and the bank) can snag you discounts with that merchant or get you to your next trip faster by earning you airline miles or hotel points.

  • General travel credit cards with flexible redemption options. A general travel card is a low-maintenance way to earn points for flights and hotels by spending as you usually would. These types of cards allow you to spend your points at a variety of airlines or hotel chains, as opposed to a co-branded card that restricts you to redemption within that one brand. Many general travel cards also feature an online portal that allows you to book travel with your points at a special rate.

Additional considerations

  • Annual fees. Annual fees can sometimes amount to hundreds of dollars, so it’s important to make sure you're earning enough rewards from your card to offset them.

  • Foreign transaction fees and card acceptance. Some rewards cards may charge fees for purchases made overseas. Also, depending on your credit card’s payment network, you may encounter limited card acceptance outside the U.S. Factor these potential drawbacks into your decision.

If you’re in good financial standing with an above-average credit score, a rewards credit card can help you earn benefits by doing your regular shopping. Pay off your balances so that interest doesn’t eat up your rewards, and choose the right kind of rewards card for your lifestyle.

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