This article is being updated.
When you’re just starting out with rewards credit cards, it can be overwhelming to sift through the many options. Nearly every major airline and hotel rewards program offers at least one credit card — and that’s only part of the picture.
It’s a jungle out there, and you may be confused about how to pick the right rewards credit card for you. We’ve got your covered with the following five tips.
Set your travel goals
Before considering anything else, it’s important to set a travel goal. Whether it’s a specific destination or a style of travel, the right rewards credit card for you depends a lot on how you end up using those rewards. Do you want to travel to the Maldives? Do you want enough miles to fly Emirates first class? Or do you typically fly on cheap fares and just want a fancier hotel room booked on points?
Set a goal, then determine which credit cards can help you get there. A flexible rewards card like the Chase Sapphire Preferred® Card or Citi Premier℠ Card is often ideal because you can transfer your points to a variety of airline and hotel rewards programs. This way, you’re not locked into a single rewards program.
Analyze your spending habits
Beyond credit card welcome bonuses, it’s important to choose a rewards card based on your spending habits. Make a list of your biggest spending categories and then get a rewards credit card that pays out the most in those categories. For example, if your top three spending categories are travel, dining and gas, consider the Citi Premier℠ Card, which pays out 3 points per $1 on travel (including gas stations) and 2 points per $1 on dining.
If you’re a Hilton loyalist, you might opt for the Hilton Honors Aspire Card, which earns 14 points per $1 spent at Hilton hotels, 7 points on flights booked directly with the airline and travel booked through amextravel.com and U.S. restaurants, and 3 points per $1 on all other purchases. Or maybe the Chase Freedom® is a better fit, with rotating quarterly 5x categories (limited to the first $1,500 per quarter).
» Learn more: Chase Freedom review: $150 bonus and 5% cash back
If your spending habits can’t be pinned down to a few lucrative categories, then you might opt for a card that pays out more than 1 point per $1 on everything. A great option is the Chase Freedom Unlimited®, which earns 1.5% cash back on all purchases. However, if you have another Chase Ultimate Rewards®-earning credit card, then you can convert your cash back to points. Essentially, that means you can earn 1.5 Chase Ultimate Rewards® points per $1 spent, and those points can be worth more than 1.5% cash back.
» Learn more: Chase Freedom Unlimited review: A winning combination
Pay close attention to cards that earn flexible rewards currencies
You may have noticed a pattern: Most of the cards we’ve mentioned so far are credit cards that earn flexible rewards currencies. These points are issued by big banks and can be transferred to a variety of transfer partners. This is key to any great rewards credit card strategy because you’ll have more options on the table.
There’s certainly merit in carrying a hotel- or airline-branded credit card, though. They come with valuable benefits like priority boarding and free checked bags or upgraded hotel status and a free night every year.
However, flexible rewards cards can really come in handy when co-branded cards can’t. For example, if United has no award availability or requires too many miles for the flight you want to book, you could transfer your Chase Ultimate Rewards® points to Southwest instead.
The main three bank rewards programs are Chase Ultimate Rewards®, American Express Membership Rewards and Citi ThankYou Rewards. Some of the transfer partners overlap between the three programs; review them all to find out which lineup works best for you. Then choose a rewards credit card that helps you maximize spending to earn the most rewards within that program.
Decide which perks you value most
There are many impressive rewards credit cards on the market nowadays. For example, The Platinum Card® from American Express offers tons of upscale benefits like Centurion Lounge access, Priority Pass Select membership, an annual $200 airline fee credit, a $100 Global Entry fee credit every four years, Hilton Gold elite status, a $200 annual Uber credit and more. Terms apply.
» Learn more: American Express Platinum review: Luxury isn’t cheap
Tally these benefits up and the value exceeds the $550 annual fee on this card.
So everyone should apply for it, right? Wrong. The value of all these perks lies in how much you utilize them. It’s easy to get caught up in the idea of a perk without really thinking through how useful such perks are to you. For instance, there are plenty of people who let the $200 airline fee credit on The Platinum Card® from American Express expire every year, or they rarely stay at Hilton hotels and lose out on all the benefits afforded to Gold elite members.
On the other hand, maybe you don’t need the $200 Uber fee credit from The Platinum Card® from American Express but you like to fly American Airlines — the Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® free checked bag benefit can save you a few hundred dollars on checked bag fees, so carrying the card could still be worth it to you.
When choosing the right rewards credit card, it’s important to think about which travel perks fit your lifestyle.
Annual fees: What can you actually afford?
This goes back to evaluating the perks you’re using the most. A lot of high-end credit cards come with annual fees of $450 or more. While it may sound like you’re getting your money’s worth on paper, it’s important to think about whether you can afford the annual fee — especially if you’re picking up multiple rewards credit cards with high annual fees.
It can be easy to lose sight of that and wind up spending thousands of dollars a year in credit card annual fees without even realizing it. Stay cost-conscious, regardless of what it seems like everyone else is doing.
The information related to Citi Premier℠ Card, the Hilton Honors Aspire Card and CitiBusiness® / AAdvantage® Platinum Select® World Mastercard® has been collected by NerdWallet and has not been reviewed or provided by the issuer or provider of this product or service.
How to maximize your rewardsYou want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
- Airline miles and a large bonus: The Chase Sapphire Preferred® Card
- No annual fee: The Wells Fargo Propel American Express® card
- Flat-rate rewards with no annual fee: The Bank of America® Travel Rewards Visa® credit card
- Premium travel rewards: The Chase Sapphire Reserve®
- Luxury perks: The Platinum Card® from American Express
- Business travelers: The Ink Business Preferred℠ Credit Card
Planning a trip? Check out these articles for more inspiration and advice:
Find the best travel credit card for you
Airline credit cards that offer free checked bags
Earn more points and miles with these 6 strategies