With so many great rewards credit cards available, why are you still using a basic card with no benefits? It's time to find a card that pays you for your business.
But choosing the right one can be an overwhelming process if you're new to the world of rewards cards. You have your choice of points, miles or cash back as well as incentives, sign-on offers and fine print to navigate. Fortunately, we are here to help clear the confusion and help you find a card with the right rewards for you.
So let's answer this question right off the bat: What are the steps to choosing the best rewards credit card? Understand your own financial standing; decide what kind of rewards you're looking for; narrow down the options by looking at signup bonuses, rewards structures, fees and fine print; and, lastly, apply for the right card the first time.
Now let's break that down into a little more detail.
Understand the reward credit card options you have to choose from
To start your search, take a look at the cards the experts cite as being the best of the best. However, remember credit card terms can change at any time so be sure to check the terms right before you decide to apply.
The CardRatings team each year goes through and comes up with our Best Credit Cards for the year ahead list. Then, throughout the year, we update that list as terms change, but it's a great place for you to start if you have no idea what kind of card you're even looking for. If you already have an idea of the type of card you want, take a look at our "best of" lists below that outline several of our favorites from each of these popular categories:
- Best cash back credit cards
- Best airline rewards credit cards
- Best travel rewards credit cards
- Best gas rewards credit cards
How do you pick the best credit card for your needs?
It is one thing to know what others think are the best credit cards, it is another to find a card that's right for you. Here's are some tips to help you narrow down the list.
- Know your financial situation: Before applying for any card, you need to have a clear idea of where you stand financially. What is your credit score? How many cards have you applied for in the past year and from which issuers? Are you employed? Are you anticipating applying for a car loan or mortgage in the immediate future? Knowing the answers to these basic questions will help you apply for a card for which you stand a good chance of being approved. You don't want to apply for a bunch of cards for which your current financial situation will likely disqualify you.
- Pick your rewards: Let's start with the fun part: how do you want to be rewarded? Do want cash -- typically awarded as a statement credit of deposit into a qualifying account -- or do you plan to travel and want to earn miles toward free flights? Other cards may reward you with points that can be redeemed for hotel visits, gift cards or merchandise.
- Determine how the rewards are calculated: Next, figure out how you are going to rack up those points, miles or cash. Do you get a flat amount per $1 spent or are there bonuses for certain types of purchases or merchants. Are those bonuses fixed or do they change every month or quarter? Changing categories and tiered rewards are particularly common among cash-back rewards cards.
>MORE: Cash-Back Credit Cards 101 resource
- Look for signup bonuses or perks: This can be especially important if you are planning to transfer a balance. Some cards have balance transfer offers which can provide an instant boost to your miles or points. Others offer extras such as free checked baggage to all cardholders.
- Consider the fees: If you pay off your balance each month, this probably won't be as big a consideration for you; however, if you carry a balance, you need to know the interest rate so you can anticipate your payments. Furthermore, you'll want to consider whether you'll reap enough rewards to offset an annual fee and whether a card that doesn't charge foreign transaction fees it something you're looking for.
- Read the fine print: Some cards make you jump through hoops, and you don't want these little details to catch you by surprise. Check if your rewards are capped or if there are limitations on redemption. Also find out if you need to spend a certain amount to get promised bonuses.
>MORE: What does the fine print say on a credit card agreement?
A rewards credit card can be a great way to put some extra money in your pocket, but you want to be sure you aren't leaving money or perks on the table by choosing the wrong card. More importantly, you want to be sure you don't do damage to your credit score by applying for, and being turned down by, the wrong card.