How to choose the best rewards credit cards

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What’s better than getting extra bonuses when you spend money? Getting extra bonuses that you actually want. 

Rewards credit cards are, as you might guess from the name, cards that offer you rewards for using them. These could be cash back, travel reward points, miles or a slew of other incentives. Rewards cards are ideal for people who avoid credit card interest charges by paying their statement balances in full and on-time. If that describes you and you’ve decided to use rewards cards, the hard part may be choosing the right one for your needs. Navigating through the options can be tough, but we’ve tried to make it a little easier by selecting top cards in different categories to spotlight so you can find the one that will work best for you.

Related: Top cash-back credit cards

How We Chose the Top Rewards Credit Cards

To find the top reward credit cards, we first divided the market into the following eight sub-categories:

  • No fee
  • Cash-back
  • Premium
  • Travel
  • Airline
  • Hotel
  • Store
  • Business

We then looked at the cards that best fit each of these subcategories from over a dozen major card issuers and credit unions. We included only cards that are offered to all applicants, which leaves out products offered by credit unions that not everyone can join. For each subcategory, we looked at the factors that were likely to be most important to someone choosing a card from that group. For example, when selecting top hotel credit cards, the most important factor was the value of the rewards offered, followed by the benefits, since receiving perks at the hotel is also a major reason that people choose a hotel card. 

Since reward credit cards are best suited to people who avoid interest charges by paying their balance in full, the card’s interest rates weren’t a consideration for these cards. Naturally, credit card terms may change from time to time, but the following rankings reflect information that was accurate in August 2021.

Top No-Fee Rewards Credit Cards

There are many people who don’t want to pay an annual fee for a credit card but still want a card that gives them great rewards. Thankfully, despite the growing popularity of premium cards that charge annual fees, there are still many no-fee credit cards on the market. To choose the top no-fee cards, we looked at those that still provide exceptional value in travel rewards or cash back for spending. Then, we also looked for cards that have strong new account bonuses. Thirdly, we considered cardholder benefits such as purchase protection and travel insurance. 

If You Want Travel Reward Points in a No-Fee Card: Amex Everyday

American Express Everyday card is one of the few travel cards that allow you to transfer your rewards to airline miles or hotel points, but doesn’t charge an annual fee. New applicants can earn 10,000 bonus Membership Rewards points by spending $1,000 on purchases in the first three months after account opening. The card earns 2x on purchases made at U.S. supermarkets up to $6,000 per year, 2x on purchases from Amextravel.com, and 1x on other purchases. However, if you use your card 20 or more times in one billing period, you will earn 20% more points per dollar spent. This card also features benefits like car rental loss and damage insurance, which can be vital in a travel rewards card. 

If You Want to Earn Cash Back with a No-Fee Card: Chase Freedom Unlimited

This no-fee card offers several opportunities to earn bonus cash back while still featuring a high level of cash back on all other purchases. With the Chase Freedom Unlimited, new applicants receive a $200 bonus after spending $500 on purchases in the first three months from opening the account. The Chase Freedom Unlimited earns 5% cash back on travel purchased through Chase, 3% on dining (including takeout), 3% on drugstores and 1.5% on all other purchases. In addition, for the first year, you also get 5% cash back on grocery store purchases up to $12,000 spent. This card comes with purchase protection, extended warranty protection, trip cancellation/interruption insurance and an auto rental collision damage waiver benefit. 

Top Cash-Back Rewards Credit Cards

For the consumer who doesn’t travel much, cash-back reward credit cards can provide great value. Further, many of the cash-back rewards credit cards have no or a low annual fee, making them even more enticing. For cash-back reward credit cards, we looked at options that offer straightforward earning structures and/or large bonus category earning potential. We also considered the card’s annual fee and benefits. 

If You Want a Cash-Back Credit Card with a Flat Rate of Cash Back on All Purchases: Wells Fargo Active Cash

The Wells Fargo Active Cash card offers a strong rate of cash back on all purchases and a valuable new account bonus. New applicants can earn a $200 cash rewards bonus when they spend $1,000 on purchases in the first three months after account opening. This card has a simple cash-back rewards structure, earning 2% cash back on purchases with no rewards category limitations or quarterly activations to worry about. As an added bonus, you get up to $600 of cell phone protection against damage or theft, subject to a $25 deductible, when you pay your monthly cell phone bill with your Wells Fargo Active Cash card. This card doesn’t have an annual fee.

If You Want a Cash-Back Credit Card that Offers Large Amounts of Cash Back on Purchases from Bonus Categories: American Express Blue Cash Preferred Card

The American Express Blue Cash Preferred card offers exceptional rates of cash back for purchases from bonus categories. New applicants can earn $150 back after they spend $3,000 on purchases within the first six months of opening the account. Within the first six months, you can also earn 20% back on Amazon.com purchases, up to $200 back. This brings the total welcome offer to a maximum of $350 back in the first six months.

The American Express Blue Cash Preferred card also features 6% back on purchases from U.S. supermarkets (on up to $6,000 per year), 6% back on select U.S. streaming subscriptions (including Netflix, Hulu, HBO Max, Spotify and many others), 3% back at U.S. gas stations, 3% back on transit (such as taxis, rideshares, parking, tolls, trains and buses), and 1% on all other purchases. This card has a $95 annual fee which is waived in the first year. 

Top Premium Rewards Credit Cards

Premium rewards credit cards are often the ones making splashy headlines due to their large signup bonuses or fancy perks that come with them. But premium rewards credit cards can offer great value to those who know how to utilize them. Premium rewards credit card users often use these cards for travel, so the most important factor in our evaluation was cards that earned flexible travel rewards and luxury benefits that are most valuable to travelers. By definition, premium cards have expensive annual fees, but we looked for cards that offer benefits valuable enough to justify those fees. 

If You Want to Earn Flexible Travel Rewards Points: Chase Sapphire Reserve

The Chase Sapphire Reserve offers Ultimate Rewards points as well as luxury travel benefits. It offers new cardholders 60,000 signup bonus points (worth at least $900) in travel after they spend $4,000 on purchases in the first three months after opening the account. The card earns 5x on flights purchased through Chase Ultimate Rewards, 10x on hotels and car rentals purchased through Chase Ultimate Rewards, 10x on Chase Dining, 3x on restaurants and delivery services, 3x on travel, 10x on Lyft rides through March 2022, and 1x on everything else. 

Points are earned in Chase’s Ultimate Rewards program and can be redeemed for travel reservations booked through Chase or transferred to airline or hotel partners such as United MileagePlus, British Airways, Marriott, Hyatt and others. When you redeem points for travel through Chase, your points are worth 50% more, making the 60,000 sign-up bonus worth at least $900 in travel.

When it comes to benefits, the Sapphire Reserve comes with a $300 automatic annual travel credit that can be used for travel, as well as gas stations or grocery store purchases through 2021. You also receive a $60 DoorDash credit in 2021. The Chase Sapphire Reserve also comes with a Priority Pass Select membership at participating airport lounges and a $100 statement credit for Global Entry or TSA PreCheck every four years. Additionally, this card offers a range of valuable travel insurance and purchase protection policies and has a $550 annual fee.

If You Want Airline Benefits: United Club Infinite Card from Chase

If you’d like to enjoy both rewards and travel benefits every time you fly, it’s difficult to do better than the United Club Infinite Card from Chase. New applicants can earn 75,000 bonus miles after spending $3,000 in the first three months after opening the account. The card earns 4x on United purchases, 2x on all other travel purchases, 2x on dining (including delivery services), and 1x on everything else. 

The United Club Infinite Card also comes with a United Club membership for you and your eligible travel companions, two free checked bags for you and one companion traveling on the same reservation, and a $100 statement credit for Global Entry or TSA PreCheck every four years. You can also earn 25% back on food, beverage or Wi-Fi purchases onboard a United-operated flight. The card has a $525 annual fee.  

Top Travel Rewards Credit Cards

If you travel frequently, you could receive plenty of value from a top travel rewards credit card. The most important factor in choosing a top travel rewards card is the value of the rewards you can earn along with the flexibility you have when redeeming them. After that, we looked at benefits such as travel insurance. And while the top travel rewards cards will have an annual fee, it’s important that it be moderate.

If You Want to Earn Flexible Travel Rewards Points: Chase Sapphire Preferred

The Chase Sapphire Preferred card offers flexible rewards that can be transferred to multiple different airlines or hotels. The card currently has a historically high sign-up offer: New applicants can earn 100,000 points after spending $4,000 on new purchases within three months of opening an account. The Chase Sapphire Preferred also earns 5x points on all travel purchased through Chase and 2x on other travel purchases. You also earn 3x points on dining including delivery services, 3x on select streaming services, 3x on online grocery purchases, and 5x on Lyft rides through March 2022. For all other spending, you earn one point per dollar.

Other benefits include an anniversary bonus of 10% of the points earned each year through spending and an annual $50 credit that can be used towards hotels booked through Chase. Points can be transferred to several airline and hotel partners, such as United MileagePlus, British Airways, Marriott, Hyatt and others. Points can also be redeemed for a 25% bonus value when booking travel reservations through Chase. This card even offers a range of valuable travel insurance and purchase protection policies. There is a $95 annual fee for this card. 

If You Want to Earn Rewards Toward Travel Statement Credits: Capital One Venture

The Capital One Venture card offers 60,000 bonus miles after you spend $3,000 on purchases in the first three months after opening an account. The card has a more simple earning and redeeming structure than comparable cards. It earns an unlimited 2x miles per dollar on all purchases with no limits. Capital One Venture miles are worth one cent each as statement credits toward recent travel purchases. Additionally, you can transfer Capital One Venture Rewards to hotel and airline partners such as British Airways or JetBlue. The card also comes with a $100 credit for Global Entry or TSA PreCheck and it has a $95 annual fee. 

Top Airline Rewards Credit Cards

Airline tickets can be one of the more expensive parts of travel, so we looked at top airline rewards credit cards that help offset the cost of travel. We also considered whether cards offered airline-specific benefits such as free checked bags and other perks. And of course, a card’s annual fee is an important consideration. 

If You Want to Fly a Legacy Carrier: United Quest Card

The United Quest card offers a broad array of opportunities to earn miles and enjoy travel benefits. First, new applicants can earn up to 100,000 bonus miles after qualifying purchases for new applicants. These 100,000 miles are broken into two levels of earning: 80,000 bonus miles can be earned by spending $5,000 on purchases in the first three months after account opening, and an additional 20,000 bonus miles can be earned after spending $10,000 total on purchases in the first six months after account opening. 

When used for spending, the United Quest card earns 3x miles on United purchases, 2x miles on all other travel (including airfare, trains, hotels, car rentals, rideshare services, etc.), 2x miles on dining (including eligible delivery services), 2x miles on select streaming services, and 1x miles on all other purchases. The card comes with a $125 annual United purchase reimbursement credit and a $100 credit for Global Entry or TSA PreCheck. 

Additionally, it offers two 5,000-mile anniversary award flight credits, two free checked bags for you and a companion, priority United booking, and 25% back on United inflight purchases. For those interested in United status, the card earns 500 Premier Qualifying Points (PQP) for every $12,000 you spend on purchases with your Quest Card (up to 3,000 PQP in a calendar year) that can be applied toward Premier status qualification. For a traveler who will use them, all of these rewards and benefits can easily make this card worth its $250 annual fee.

If You Want to Fly a Discount Carrier: Frontier Airlines Mastercard from Barclays

The Frontier Airlines Mastercard from Barclays is the rare airline credit card that offers you a way to earn elite status through spending alone. New applicants can earn 50,000 bonus miles after spending just $500 on purchases within 90 days of account opening. It also offers 5x miles on Frontier Airlines purchases and 3x miles at restaurants. 

Furthermore, you can earn one qualifying mile toward elite status for every dollar spent on all purchases. Frontier has three levels of elite status, and they come with perks like free seat assignments and free bag carry-ons, both of which usually cost extra on Frontier. You are also eligible to earn a $100 flight voucher each cardmember year after you spend $2,500 on any purchases. The card has a $79 annual fee that is waived the first year.

Top Hotel Reward Credit Cards

Besides airline tickets, hotels are the next largest item on most people’s travel budget. If you are loyal to one hotel brand, it may make sense to pick up a co-branded credit card for that hotel. To find the top hotel rewards credit card, we looked first at the ability to earn points from spending. But nearly as important in a hotel card is the benefits it offers when you’re actually staying as a guest. And finally, we looked at the annual fee as well as other non-hotel benefits. 

If You Want to Enjoy Hotel Points and Perks: World of Hyatt Card from Chase

The World of Hyatt card from Chase currently offers new applicants the chance to earn up to 60,000 bonus points, in two tiers. You can earn 30,000 bonus points after spending $3,000 in the first three months after opening the account. Plus, you can earn up to 30,000 additional bonus points with two bonus points per dollar spent in the first six months up to $15,000 spent. This means that you would earn 60,000 bonus points after spending $15,000 in six months. The card also offers 4x bonus points per dollar spent at Hyatt hotels. On top of this, you earn 5x points at these Hyatt locations just for being a World of Hyatt member. Therefore, you would earn nine points per dollar spent on Hyatt stays.

The card also has some valuable bonus earning categories, including 2x on fitness clubs, gym memberships, restaurants, airline tickets, and local transit. With the card, you also receive an annual free night certificate for any Category 1-4 Hyatt hotel, plus an extra free night Category 1-4 certificate after spending $15,000 in a calendar year. The card also includes purchase protection and numerous travel insurance policies, and it has a $95 annual fee.

If You Want a Small Business Card for Hotels: Hilton Honors American Express Business Card

If you’re a small business owner, then you can earn valuable perks and rewards when you put charges on a hotel credit card. With this card, new applicants can currently earn 130,000 Hilton Honors bonus points after account opening. At the same time, you can receive up to $100 in statement credits on eligible purchases at any Hilton family hotel in the first 12 months. The card earns 12x Hilton Honors points per dollar spent at a Hilton hotel or resort, 6x points on U.S. gas stations, U.S. restaurants, U.S. shipping purchases, wireless U.S. telephone services, flights booked directly with airlines or with Amex travel, and car rentals, and 3x points on all other purchases. The card has a $95 annual fee. 

Top Store Reward Credit Cards

Just as loyal airline or hotel customers may want to get specific co-branded cards, customers who are frequent shoppers at certain stores may be interested in those stores’ reward credit cards. Warehouse stores and discount stores are popular options for store rewards credit cards because they can be venues that take up a large share of people’s shopping budgets. To choose the top store rewards cards, we looked at the rewards for spending both at the store and elsewhere. We also considered the card’s annual fee. 

If You Want a Card That Offers Rewards at Warehouse Stores: Costco Anywhere Card from Citi

The Costco Anywhere card from Citi is a surprisingly solid option for those who spend a lot on gas. The card earns 4% on gas for the first $7,000 per year, 3% on restaurants and eligible travel, 2% on Costco and Costco.com purchases, and 1% on all other purchases. This card comes with damage and theft protection as well as extended warranty coverage. There’s no annual fee for this card with your paid Costco membership.

If You Want a Card That Offers Cash Back at Discount Stores: Capital One Walmart Rewards Mastercard

Walmart is America’s largest retailer, and its co-branded credit card offers valuable savings off its prices. For the first year, new cardholders will earn 5% back on Walmart store purchases when you use your card with the Walmart Pay app. After the first year, you’ll earn 2% back on Walmart store purchases. Interestingly, the card has better earning rates for Walmart online purchases, as you can earn 5% cash back on Walmart.com, including grocery pickup and delivery. Additionally, the card earns 2% back on restaurants, 2% on travel and 1% on other purchases. There’s no annual fee for this card. 

Top Business Rewards Credit Cards

Business rewards credit cards provide value to business owners by allowing them to separate their business expenses while earning cash back or travel rewards. When selecting the top business rewards credit cards, we considered the value of the rewards you can earn, followed by the new account bonus potential, and the annual fee. 

If You Want to Earn Flexible Travel Rewards Points: Chase Ink Business Preferred

The Chase Ink Business Preferred card offers small business owners Ultimate Rewards points, which can be transferred to airline and hotel partners. It’s currently offering new applicants a massive 100,000 point bonus after they spend $15,000 within three months of opening an account. You also get 3x points on up to $150,000 spent each year in combined purchases of shipping, online advertising, travel, internet, cable and phone services. Points are earned in Chase’s Ultimate Rewards program and can be redeemed for travel reservations booked through Chase or transferred to airline or hotel partners, such as United MileagePlus, British Airways, Marriott, Hyatt and others. This card has a $95 annual fee.

If You Want to Earn Cash Back: Capital One Spark Cash Plus Card

The Spark Cash Plus offers a very generous new account bonus as well as a flat rate of 2% cash back on all purchases with no limits on earning. With the card, you can earn up to $1,000 in the first six months of account opening, broken into $500 after spending $500 in the first three months and another $500 after spending $50,000 in the first six months. And business owners with greater spending needs can earn a $200 cash bonus every year that they use their card to spend $200,000 or more. There’s a $150 annual fee for this card, but just note that it’s a charge card, not a credit card, meaning that you’re expected to pay your balance in full every month.  

The Takeaway

Reward credit cards can offer incredible value, primarily when you use one of the top products that meets your specific spending and redeeming habits. By choosing a card that’s designed for your individual needs, you can be sure you’re getting the maximum useful rewards and benefits that are available to you. 

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This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.

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4 tips for paying off a large credit card bill

4 tips for paying off a large credit card bill

You know which three little words no one wants to hear? Credit card debt. It can go from zero to thousands with one quick swipe or build at a slow creep — a nice dinner here, a trip to the mall there, a gas fill-up to get you through until payday — and before you know it, you could be staring at a credit card balance that’s a lot higher than you thought it was.

For Alicia Hintz, the debt creep started in 2016 with a large and unexpected loss of income — the day before she and her husband were to leave on their honeymoon (thanks, universe).

Prior to that, they’d been toying with the idea of selling their Minneapolis home and moving closer to family in Wisconsin. The income reduction sealed the deal. But their house needed some work to be market-ready. The total bill was more than their savings, and their income wasn’t enough to pay in cash, so to the plastic they went.

For them the improvements were worth the investment — in that they sold their house for more than they paid for it, but almost every penny of it went toward fees, commissions, closing costs and other expenses.

Alicia’s financial journey is likely to resonate with the 41.2% of American households that carry an average of about $9,300 in credit card debt, according to data reported by the Federal Reserve for Outstanding Revolving Debt. The statistics are sobering to be sure, but here’s a spoiler alert — thanks to some smart planning and a lot of stick-to-it-iveness, Alicia’s story ends on a high note.

Related: Are you bad with money? How to know & what to do

Damir Khabirov / istockphoto

Fast forward a few months and Alicia and her husband live in Wisconsin but on a much-reduced budget. In fact, it would be six more months before they were able to get their finances back up and running — that’s a lot of time for savings to shrink and debt to grow.

DepositPhotos.com

To try and combat the loss of income, Alicia opened a 0% interest (also known as a deferred interest) credit card with plans to pay it off within the year. “Before I opened that card, I had always paid off my credit card balance each month in full,” she said in a written interview with SoFi.

But, as is life, things didn’t go as planned. “The first month I didn’t pay off my full balance made me panic,” said Hintz. And on top of day-to-day financial challenges, the couple was invited to a destination wedding in the summer of 2017. In order to get the discounted room rate, they had to pay upfront for the flight and resort close to $5,000.

“That extra money added to our credit card debt was a steep mountain to climb,” Hintz said. “After we had to pay that, I knew it would be years to get everything paid off.”

A 0% interest promotional period on a new credit card can last as long as 18 billing cycles, which could be a long enough time to make a large dent in the card’s principal balance.

But once the promo period expires, the interest rate can climb to as much as 27% (or higher). A credit card interest calculator can give you an idea of how much that rate will affect your total balance, and it’s important to consider whether you can achieve your payoff goal before the rate rises.

Deposit Photos

Tackling a large credit card bill isn’t likely to be easy, so an important part of the process could be a hard look at what putting extra money toward credit card bills means for the rest of your budget.

One way to approach a solid debt-payoff plan is to begin with an organized budget. You can start by taking a look at the big picture, including all of your monthly expenses as they currently stand, all of your income and all of your debt.

Your next step might be to focus on your spending. You may see obvious areas where you can cut back, or see if you can get creative to come up with some extra cash flow each month.

“We definitely tried to eat out less and cut back on shopping for clothes,” Hintz said. “But it seemed like every month there were more unexpected expenses that needed to be put on the credit card.”

From there, you can start to focus on a plan that makes credit card payments as equally important as the electric bill. And while you may not be able to pay more than the minimum on all your cards, it’s important to ensure that you pay at least that much if you want to avoid accumulating additional debt.

That’s because, while paying only the minimum can lead to compounded interest rates and larger overall balance over time, skipping payments can also lead to higher penalty interest rates, late payment fees and can even affect your credit.

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The snowball and avalanche debt repayment strategies take slightly different approaches to pay down debt, and both involve maintaining the minimum payment on all but one card.

The debt snowball method focuses on the debt with the lowest balance first, regardless of interest rate, putting extra toward that payment each month until it’s paid off.

Then, that entire monthly payment is added to the next payment — on top of the minimum you were already paying. Rinse and repeat with the next card, and it’s easy to see how this method can quickly get the (snow)ball rolling.

The debt avalanche is based on the same philosophy but targets the highest-interest payment first. Getting out from under the highest debt can save a lot of money in the long run, and just like the snowball method, applying that entire payment to the next-highest-interest debt can lead to quick results.

The third snow-related strategy, the debt snowflake, emphasizes putting every extra scrap of cash toward debt repayment. This method played an active role in Alicia’s debt-elimination strategy. “If you have extra money to throw at your loans, even $20, that can still make a difference in your overall amount owed,” she said.

SeaHorseTwo / istockphoto

As Hintz’s credit card utilization went up, her credit score went down. She decided to research her options and was ultimately approved for a credit card consolidation loan at a considerably lower interest rate than her credit cards, which along with making extra payments, helped save her money in the long run.

Now facing one personal loan payment vs. multiple credit card bills, Hintz anticipated being able to pay down the debt sooner than the three-year term she selected. And once again, life happened.

Over the course of those years, her husband took a new job, and they both changed cars, bought a house and had a baby. They also went to two more destination weddings. This time, though, the extra expenses didn’t derail the plan.

“The loan was paid off within two years,” she said, thanks in part to a conservative budget and using an annual work bonus as a snowflake to make a dent in the balance.

istockphoto/demaerre

One of the biggest things to remember, Hintz said, is that debt elimination doesn’t happen overnight. “Paying off debt is hard work,” she said. “Take it one month at a time. Some months are easier on your wallet, and others are not — looking at you, December!”

She suggested using the time you’re working to pay off debt to develop good budgeting and spending habits so that your post-debt finances are about saving, not spending.

And another tip from Hintz? Celebrate even the little victories. “When I paid off half my  loan, I celebrated by taking a nice long bath,” she said.

When they reached zero balance, she and her husband went out for ice cream. “You can celebrate by going to the park with your kids, reading an extra chapter in a book, or finding a new series to watch,” she said. “Always celebrate your loan payoffs, no matter how small!”

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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org

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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA/SIPC  . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

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