The Chase Freedom Unlimited® is one of the best no annual fee cards. They offer a straightforward rewards program.
You’ll get 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% on dining and drugstores, and 1.5% on all other purchases. In addition, the Intro Offer will earn an additional 1.5% cash back on purchases (on up to $20,000 spent in the first year) – worth up to $300 cash back!
If the rewards and no annual fee aren’t enough to win you over, know that they also offer 0% APR on both purchases and balance transfers for the first 15 months you have your card.
- 5% cash back on travel purchased through Chase Ultimate Rewards®.
- 3% cash back on dining, including takeout and some delivery.
- 3% cash back on drugstore purchases.
- 1.5% cash back on all other purchases.
- Cash back points can be redeemed through Chase Ultimate Rewards® with no minimum. And rewards never expire as long as your account is open.
Summary of the best rewards credit cards
|Card Name||Sign-Up Bonus||Rewards Program|
|Chase Sapphire Preferred® Card||60,000 points when you spend $4,000 in the first 3 months (worth $750 in travel when you redeem through Chase Ultimate Rewards®)||5X points on travel purchased through Chase Ultimate Rewards, 3X points on dining, 2X points on all other travel purchases|
|Discover it® Cash Back||Discover will match all the cash back you’ve earned at the end of your 1st year||5% on quarterly categories*, 1% on everything else|
|Capital One Venture Rewards Credit Card||75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening||2X miles per dollar spent on every purchase|
|Capital One® Savor® Cash Rewards Credit Card||$300 cash bonus when you spend $3,000 in the first 3 months||4% on dining and entertainment, 2% at grocery stores, 1% on everything else|
|Chase Freedom® Student credit card||$50 with a purchase made within first three months||1% cash back on all purchases|
|Ink Business Cash® Credit Card||$750 cash back when you spend $7,500 in the first three months||5% cash back (on the first $25,000 spent in combined purchases) for office supplies and internet, 2% (on the first $25,000 spent in combined purchases) on restaurants and gas, and 1% on all other purchases|
|Ink Business Unlimited® Credit Card||$750 cash back when you spend $7,500 in the first three months||1.5% unlimited cash back on all purchases|
|Citi Custom Cash℠ Card||$200 (20,000 bonus ThankYou® Points) when you spend $750 on purchases in the first three months from account opening||5% on your top spending category each billing cycle, 1% on everything else|
|Discover it® Chrome||Discover will match all the cash back you’ve earned at the end of your 1st year||2% cash back at gas stations and restaurants**; 1% on everything else|
|Chase Freedom Unlimited®||Intro Offer: Earn an additional 1.5% cash back on purchases (on up to $20,000 spent in the first year) – worth up to $300 cash back!||Unlimited 1.5% cash back on all other purchases.|
*5% cash back categories have a $1,500 max spend and require quarterly activation
**Up to $1,000 spent each quarter in combined purchases
Methodology: How we came up with the list
To come up with our list of the best rewards cards in each of the 10 categories above, we used the following methodology in our selections:
- Total upfront bonus rewards.
- Ongoing rewards.
- Other noteworthy bonus enhancements, like a cash back match.
- The rewards specializations of each card.
And naturally, we also look beyond the rewards themselves. After all, it will do you little good to get generous rewards if the cost of having the card exceeds those rewards.
In that regard, we also considered the following factors:
- Introductory APR offers, as well as the term of the offer.
- The presence or absence of an annual fee.
- Other card benefits provided.
- The frequency of each of the above credit cards appearing on the many “Best for” lists, both on Money Under 30 and on other popular credit card review sites.
The different types of reward credit cards
As you’ll see in this list, there are many different reward types to choose from. Which one you choose depends on personal preference, but here’s some info about each to help you decide which works best for you.
General cash back
Cash back is exactly what it sounds like. You get cash back on every purchase. Some cards offer one cash back rate on all purchases, which are best for those looking for an easy-to-use, straightforward cash back program. These cards, however, offer lower cash back percentages than those who focus on certain categories.
Cash back cards that offer higher cash back in certain categories (many times it’s 5%) are for those who spend in one area. Many 5% cash back cards offer the following categories (I’m basing these on the Discover it® Cash Back):
- Gas stations.
- Grocery stores.
- Wholesale clubs.
When you earn travel rewards from your credit cards you can typically redeem those rewards (often in points or miles) for travel expenses like flights and hotel stays.
Travel rewards are broken down further into three categories: general travel, airline, and hotel credit cards.
General travel rewards programs are the more flexible of the three and offer points or miles on just about any type of travel. Airline credit cards are co-branded with a specific airline, giving you points or miles with that airline. Hotel cards are a lot like airline cards, except they focus on hotels rather than airline miles.
Cards that offer gas rewards are cash back cards that often offer 3-5% back or up to 6 cents off on gas station purchases. Gas cards also tend to offer other reward categories with lower cash back.
When you have a credit card that offers great dining rewards, you’ll receive up to 4% cash back on dining and entertainment purchases (depending on the card, of course). Gas and dining credit cards often go hand in hand, but not always.
Student rewards credit cards are geared towards students who have a limited credit history. They offer many of the same rewards that other cash back credit cards offer.
Plus, student credit cards usually offer rewards for good grades or other such perks.
How to choose a rewards program
Simply choosing a credit card because it has great rewards won’t necessarily work in your favor. You must be certain rewards offered are consistent with your own lifestyle, spending patterns, and personal preferences.
For example, if you don’t travel frequently, a card that offers generous travel rewards won’t work for you. Similarly, if a credit card specializes in rewards for gas and restaurants, you probably won’t want that card if you work from home, and don’t dine out frequently.
You must also consider your primary purpose in getting a credit card at all. For example, cashback rewards may be attractive, but if your main purpose is to get a 0% balance transfer card to consolidate high interest cards, then you’ll need to look primarily at the balance transfer part of the offer. Rewards, if offered, are only a secondary consideration.
And finally, there’s qualification. While there are rewards credit cards for people with less than perfect credit, the most generous offers are for those in the good-to-excellent credit range.
Who rewards are for
An even more basic factor is your credit card use. Rewards cards are only effective for people who make frequent use of credit cards. If you’re not a credit card user, you won’t reap the benefits the rewards provide.
You should also be able to take full advantage of upfront rewards bonuses
Big welcome offers require spending a certain amount of money in the first three months in order to unlock a card’s whopping sign-up bonus.To assure you meet this minimum spend requirement, you should concentrate on putting all your spend on this one card, until you’ve met the spend requirements for the bonus.
Rewards credit cards are an excellent tool for anyone looking to save money
If the rewards apply to spending you would do otherwise, and you don’t carry balances, rewards cards can help lower your expenses. A card that offers 2% cash back on all purchases will lower your expenses by 2% across the board.
And as just noted, rewards credit cards work best for people with good or excellent credit
Card issuers reserve the most generous rewards programs for stronger credit profiles. While it’s still possible to get rewards cards for less-than-perfect credit, they may be more of a bonus benefit than a primary reason for taking the card.
If you have poor credit, the primary purpose of any credit card is to rebuild your credit. Rewards should fall under the “everything else being equal” doctrine—if two cards provide the ability to rebuild your credit, and one provides rewards, that’s usually the card you should select.
How rewards work
Credit card issuers don’t provide rewards just to be kind. They’re an inducement to get your credit card business. In effect, rewards act as a rebate on your spending. Since a credit card company makes money every time you use their card, they can pay you a reward out of their revenue. How much of a reward they pay depends on how much they want your business.
Purchases eligible for rewards can either be specific or general. For example, revolving quarterly categories are product specific. General rewards apply to all purchases.
A credit card issuer can pay rewards in either cash (or cash equivalents, like statement credits) or points. Points are sometimes convertible into cash, but are generally redeemable in certain spending categories, typically travel.
Apart from knowing how much your rewards will be, you should also know what your options are for redemption.
They can include any one or a combination of the following:
- Statement credits
- Gift cards
- Specific spending categories, like travel
- Credits to other accounts with the same institution
- ATM withdrawals, though this is not common
Be sure you understand exactly how a credit card issuer will redeem your rewards. It should match your preference. For example, if you want to use rewards to pay down your credit card balance, you’ll want to be sure they’re available through statement credits.
Why you should use a rewards credit card
The most beneficial way to use a rewards credit card is when those rewards apply specifically to purchases you ordinarily make. You can use the card to reduce your expenses.
For example, if a card offers a $500 cash bonus on $5,000 spent within three months, it should be consistent with how much you would or could pay by credit card. This kind of rewards bonus works best for those who use credit cards for general expenses, as well as purchases
You’ll certainly use your card for routine activity, like purchasing gas, groceries, and entertainment. But you may also use it to pay recurring bills, like utilities, insurance premiums and other services.
If you can comfortably fit your normal spending within the $5,000 limit, the $500 bonus means you’ll be reducing those expenses by 10%.
The same is true with ongoing cash rewards. If the card offers 2% cash back as a permanent feature, you’ll reduce your spending by 2%. For example, if you normally use your credit cards for spending of $20,000 per year, 2% cash back saves you $400 per year.
And once again, the real benefit of a rewards credit card depends on your willingness and ability to not carry interest-bearing balances.
What you should know & what to look for
When shopping for a rewards credit card, consider each offer within the context of the bigger picture of your life.
Avoid applying for credit cards that have rewards similar to a card you already have
If you already have a card that provides 2% cash back on restaurant purchases up to $1,000 per quarter, and you’re unlikely to exceed that spending level, there’s no point getting a second card with an identical benefit. A better strategy is to get a card that specializes in a different spending category.
Don’t focused solely on an attractive bonus offer
You may be better served by a card providing ongoing 2% cash back on all purchases, than one that offers a $300 bonus in the first three months, then reverts to 1% on subsequent purchases.
Don’t ignore secondary features
If car rentals are a significant part of your normal credit card spending pattern, you’ll want a card that offers auto rental collision damage waiver (fortunately, most do—but never assume it).
No matter how good the rewards offer is, you’ll be leaving money on the table if you must use another card for car rentals.
The small print – an important read!
Before signing up for a rewards credit card, first read the card card agreement line by line. Look for any “gotcha” restrictions in the document. No matter how attractive the advertising on the card may look, the real truth is always in the legal disclosures.
Some provisions to be aware of:
Look for any potential limits on rewards
These are common on quarterly rewards categories. For example, the card may pay 5%, but purchases for the quarter are limited to $1,500.
Be aware of exclusions
A card offering rewards for gas purchases may exclude gas purchased at wholesale clubs, like Sam’s Club and Costco.
Limited merchant participation
A card may provide generous cash back on purchases through a limited number of hotels. If you don’t normally use the hotels included, you probably won’t use the rewards.
Rewards that require extra action on your part
A credit card may require you to claim certain rewards. Be aware of which rewards those are, and set a tickler to alert you to make the claim.
Somewhere buried in the fine print may be a provision specifying rewards expire if not used within one year of being earned, or some other timeframe. If you’re in the habit of allowing rewards to accumulate, this can be a deal breaker.
On a more general level, be aware that rewards programs can change. Credit card agreements typically have language that permits the issuer to modify or even cancel rewards with little notice. Pay close attention to any official looking documents you receive from the issuer that you might otherwise ignore. You could continue happily spending in anticipation of rewards that were canceled months ago.
How to save money maximizing your rewards
There are two major considerations to maximizing your rewards:
The rewards should match your regular spending habits
A rewards credit card should never encourage you to spend more than you ordinarily would.
For example, if a card offers $300 cash back for spending $3,000 within the first three months, that shouldn’t send you on a spending spree to buy things you normally wouldn’t. You may get the $300 reward, but you’ll spend $3,000 you didn’t need to spend. You’ll end up spending more than your getting in rewards.
The cost of the card shouldn’t exceed the benefit of the rewards
Credit card rewards are best for people who don’t carry balances. If you’re spending on the card to get rewards, and you’re carrying a balance at 20% interest, you’ll payout 10 times more in interest than you get with 2% cash back.
Also, always remember that while rewards are paid when earned, interest is charged until your balance is paid. That means you’ll be paying 20% on the outstanding balance in each year it’s owed.
The best use for a rewards credit card is for spending you would do even without the card, then not carrying a balance. In that case, a 2% cash back reward will be a 100% benefit. There’ll be no interest expense offsetting the reward.
FAQs on rewards credit cards
Don’t annual fees reduce the rewards?
Yes, but it’s not necessarily a deal-breaker. For example, if you normally spend $20,000 per year on your credit card, a 1% cash back card with no annual fee will save you $200 per year. But a 2% cash back card with a $95 annual fee will save you $305 ($400 less the annual fee). In that case, you’ll be better off taking the card with the annual fee.
Which is better, cash or points?
Generally, cash. You can use it for any purpose. Points are sometimes redeemable for cash, but they’re more typically tied to specific purchases, like air travel. If you’re not a frequent traveler, the points won’t help you much.
How many rewards credit cards should I have?
Other than closing out my account, is there any way I could forfeit my rewards?
Yes, several. The card issuer could terminate the program. They would have to give you advance notice. However, there may also be language in the credit card agreement that results in forfeiture of your rewards if you make one or more late payments.
Credit card rewards seem like found money – is there any downside?
- If you normally carry credit card balances, the interest expense on the card could exceed the rewards you’re getting.
- Rewards could encourage you to spend money you otherwise wouldn’t.
- Rewards could cause you to run up your credit card balances, under the mistaken notion that you’re saving money.
- Opening too many cards to gain the benefit of upfront rewards could cost you money if those cards have annual fees. 10 inactive credit cards, each with an annual fee of $95, will cost you $950 per year. That’s a lot of upfront benefits to recover in any one year.
What’s more important, rewards or the regular interest rate?
It really comes down to whether or not you carry a balance on your card. If you don’t, the interest rate doesn’t matter—only the rewards do. But if you normally carry a balance, the interest rate will almost always outweigh the rewards.
There are scores of credit issuers offering generous welcome offers from their rewards credit cards. If you’re in the market for a rewards credit card, pick one from this list that best matches your own spending patterns, preferences and credit profile. Most offer not only generous rewards but also other money-saving benefits, like 0% introductory APRs.
Whatever card you decide on, make sure to take our advice and choose a card that earns bonus points (or cash) on your most common everyday expenses. And always remember pay off your balance in full each month, otherwise any interest accrued will offset any rewards you earn.