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Many of the cards examined in this study have changed their rewards structures since this was published in 2015, while others have been discontinued. As a result, this page is out of date. See our Credit Cards Data page for more NerdWallet research on credit cards and rewards rates.
You’ve seen the commercials: Celebrities hold a shiny credit card and talk about the ample rewards you can earn on purchases. What they may not talk about is how much those points or miles are actually worth when you redeem them.
Valuing the ongoing rewards for credit cards is more complex than you might think. You have to consider two factors: the card’s earning rate and its redemption rate. NerdWallet’s rewards program reviews calculate and rank redemption values for your credit card rewards, but they don’t include the earning part of the equation.
So the Nerds created a methodology that takes earn rates and redemption rates into consideration to determine which cards provide the most value for average American household spending.
Earn and burn rates: The basics
The earn rate is the amount of cash back, points or miles you receive on every dollar you spend with your credit card. Some cards have the same earn rate for every purchase; others provide extra rewards for certain types of purchases, like groceries or airfare. Our earn rates also factor in any applicable annual fees or quantifiable annual benefits.
A burn rate, or redemption rate, is the value of the cash back, or points and miles that you redeem for rewards. The industry standard is 1 cent per point or mile. But as you’ll see from our list, some cards offer more value, some less.
Using the most recent spending data from the Bureau of Labor Statistics, we calculated the rewards based on the average American household. We also determined each card’s redemption rate. Multiplying these two factors gives us an earn-burn rate, which is the average value of the rewards you’ll receive on every dollar you spend.
Nerd notes: (1) This ranking is based on average spending data for U.S. consumers, and may not be representative of your personal spending and credit card habits. Always do your own research before choosing a card; check out our in-depth credit card reviews to get started. (2) Ranking doesn’t include the value of applicable sign-up bonuses or waived annual fees. (3) Ranking doesn’t reflect how easy it is to redeem rewards or how useful redemption options may be.
NerdWallet’s most valuable credit cards
(rates as of October 2015)
Cash back is king.
Cash back cards provide the best value for consumers, according to our findings. In fact, six of our top 10 cards offer cash back, including the first four: Blue Cash Preferred® Card from American Express, Citi® Double Cash Card – 18 month BT offer, Chase Freedom® and Blue Cash Everyday® Card from American Express. The value of these cards is in the earn part of the equation, since the burn rates of the cash back cards on our list are 1 cent per dollar.
Regular travelers may benefit more from a travel rewards card.
Although travel rewards credit cards didn’t rank high on our list, regular travelers may get more value with a travel card than a cash back card. While many U.S. consumers don’t travel — or travel sparingly — consumers who do travel spend an average of over $3,000 more on trips than the national average.
Travel cards often have substantial sign-up bonuses and waive their annual fees the first year — increasing their value for the right spender. For example, if you take sign-up bonus and waived annual fee into consideration, the earn-burn rate of the Chase Sapphire Preferred® Card goes up to 2.01 cents — assuming you keep the card for at least three years and hit the minimum spending requirement to qualify for the sign-up bonus.
Lots of points don’t necessarily mean lots of value.
Credit cards with high earning rates may seem to offer the best value, but they don’t necessarily come with the best redemption rates. Sometimes modest rewards cards can deliver a higher value.
A couple such high-value cards are the Starwood Preferred Guest® Credit Card from American Express and Gold Delta SkyMiles® Credit Card from American Express, which both have significantly higher burn rates than earn rates.
It may be worth it to pay an annual fee.
Annual fees aren’t typically worth it for light spenders, according to NerdWallet’s annual consumer credit card report. However, three of our top 10 cards — including our No. 1 card — come with annual fees.
Why did they top our list? Because the rewards are valuable enough to offset the annual fee and still provide more value than a no-fee card. So before you rule out cards with annual fees, examine your spending habits to figure out if you can benefit from the card.
The calculated value of these points is based on estimated average earn rates and redemption rates, based on the Bureau of Labor Statistics’ data on average household spending.
These calculations include annual fees and easily quantifiable annual benefits, but not sign-up bonuses. Therefore, you may notice that these numbers don’t match the rewards rates on our credit card finder tool. Check out our full methodology to learn how we estimated point values.
We pulled household spending data from the Bureau of Labor Statistics’ consumer expenditures report for 2014, and only included expenses that could reasonably be charged to a credit card — leaving out shelter, most vehicle expenses, insurance and cash contributions. Travel spending was pulled from the BLS’ most recent travel expenditures data, from 2011.
Some cards offer different earn rates for different spending categories. So for each card, we multiplied consumer spending by the advertised earn rates for each category, taking spending caps into account. We added up the rewards totals, subtracting the annual fee — if applicable — and adding the monetary value of ongoing, easily quantifiable card benefits, such as airline credits.
Sign-up bonuses and waived annual fees for the first year weren’t included because they would only reflect valuations for year one, not ongoing earn-burn rates. We also didn’t include other fees — such as foreign transaction or balance transfer — or most benefits, like purchase protection and extended warranty coverage, because they aren’t easily quantifiable and will vary based on credit card usage.
The average earn rate was determined by dividing the total rewards — less annual fee, plus benefits — by the total consumer spending. Then, we multiplied that number by the redemption rate — calculated internally for our rewards program reviews
— to get the earn-burn rate.
One card — The Platinum Card® from American Express — had a negative earn and burn rate. The annual fee is larger than the combined value of the card’s airline credit and the rewards that the consumer would earn on average. That said, this card is meant for bigger spenders and those who would take advantage of the cards’ rich additional benefits.
Here’s an example of how our earn-burn rate was calculated for one of our cards, the Chase Sapphire Preferred® Card:
||Advertised earn rate
||Total rewards earned
Earn rate calculation: (20,852 points – 9,500 point-equivalent annual fee) / $17,288 = 0.66 average earn rate
Earn-burn rate calculation: 0.66 x $0.0125 redemption rate = $0.0082 earn-burn rate
We made several assumptions to calculate these earn-burn rates:
- For cash back, travel and points cards, consumers redeem for the highest value rewards possible, excluding transferring to travel partner programs.
- For airline and hotel cards, consumers redeem for the average rewards value for free flights and hotel stays.
- Clothing is purchased at U.S. department stores, groceries are purchased at U.S. supermarkets, and gas is purchased at U.S. gas stations.
- Rewards earned on the Citi® Double Cash Card – 18 month BT offer are redeemed via check, not statement credit.
- For the 5% quarterly rewards cards — the Chase Freedom® and Discover it® Cash Back — spending is equal in all categories each quarter. We only counted obvious spending categories, leaving out miscellaneous bonus categories, like Amazon.com. Cash back calendars for 2015 were used to determine the bonus categories.
- For airline and hotel cards, all airline and hotel spending is done with the co-branded partner. For example, we assumed consumers with the Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® do all of their airline spending on American Airlines. Also, any other applicable travel spending is with partner programs. For example, we assumed consumers with the Southwest Rapid Rewards® Premier Credit Card book hotel and car rentals with Southwest’s participating travel partners.
For travel spending, we subtracted food and gas spending, as they’re categorized as groceries, restaurants and gas, not travel spending. We subtracted the remaining travel amount from the other expenses category, as travel spending wasn’t broken out in the 2014 BLS data.
For cases where a quarterly spending limit was reached, we allocated the bonus rewards based on a percentage of spending. For example, if a spending cap is $1,500 and the bonus category spending added up to $2,000, we divided the spending for each category by $2,000 to get the percentage; then we multiplied these percentages by $1,500 to determine how much would be counted as bonus spending. Remaining spending was rewarded at the base rewards rate.
We included easily quantifiable benefits for six cards: Discover it® Miles, Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®, Southwest Rapid Rewards® Premier Credit Card, American Express® Gold Card, Citi Prestige® Card and The Platinum Card® from American Express. These benefits were primarily travel credits.
To calculate the alternate earn-burn rates for travel cards, we assumed the cardholder had the card for three years and reached the minimum spending requirement for the sign-up bonus; we added three years of rewards, plus three years of travel credits and any applicable sign-up bonus, then subtracted three years of annual fees — or two years, if the annual fee was waived for the first year. We divided this figure by three years of spending to get the final rate.