How to decide which rewards credit card is best for you

Key takeaways

  • When choosing the best rewards card for you, consider what type of rewards you want to earn and take a close look at your spending patterns.

  • It’s important to consider your overall goal for the card — like whether it’s to pay off an existing credit card balance, earn cash back or enjoy points on travel.

  • Compare different card features and consider getting prequalified before you apply for a card.

  • If possible, avoid carrying a balance on the card, as the interest you accrue will likely eat up the rewards you earn.

The process of comparing card rewards, benefits and terms may leave you wondering whether a rewards card is worth it. But you’ll get the most from your rewards credit card by selecting a card that caters to your style of spending.

When you break it down, there are only a handful of things you need to consider: the type of rewards you want to earn, your spending habits, card features and whether you’re qualified for the card.

Dave Grossman, founder and CEO of Your Best Credit Cards, owns around 45 personal and small business credit cards. He chimes in on these four steps of choosing a rewards card.

1. Decide what types of rewards you want to earn

To find the best rewards card for you, the first step is to narrow down the type of rewards you want to earn. Various cards earn different types of rewards.

“I personally collect rewards points for luxury travel,” Grossman says. “For me, it’s all about having experiences I would never spring for in cash.” He pays for first class and business class international flights and five-star hotels with his rewards.

If you mostly pay for everyday expenses or want to keep it simple, a cash back card may be the best fit. If you want to earn points or miles to redeem for travel, a travel card or airline card could be a better choice.

Bankrate's Spender Type tool

Not sure what kinds of rewards would work best for your budget? Get a more complete picture of your spending profile with Bankrate’s Spender Type tool.

2. Categorize your biggest expenses

The main long-term value of a rewards card is its earnings rate on purchases. So, you want to choose the card that offers the highest possible earning potential in the purchase categories on which you spend the most.

If you spend most of your money on travel, it makes sense to choose from one of the best travel credit cards to access top rewards rates. For folks who love to eat out, a credit card for restaurants could earn you cash back. If you’re an at-home cook, one of the best grocery rewards credit cards might suit you instead.

Tip

Try using a budgeting app to figure out how much you spend each month on major categories like dining out, groceries, gas and travel. Then, compare cards with the best return on your top expenses.

Everyone should have a card that maximizes each of their largest spending categories, and those should become staple cards in your wallet.

— Dave GrossmanFounder and CEO of Your Best Credit Cards

3. Compare card features and benefits

Now that you know the type of rewards you want to earn and where you do most of your spending, make a list of cards and compare their features. Here are some perks to consider:

Welcome bonus

A welcome bonus is a sign-up offer that encourages new cardholders to apply for a credit card. It may come in the form of extra cash back, points or miles — after meeting a minimum spending requirement during the first few months — or an accelerated earning rate on one or more purchase categories for a limited time.

“A large welcome bonus offer will stick out to me, especially if it’s a new card offering,” Grossman says.

The best credit card sign-up bonus for you will be one that’s easy to achieve with your current budget. You can plan to use your card for a large upcoming purchase and earn your welcome bonus that way, or you can simply charge your everyday expenses to your card and aim to hit your spending threshold that way.

0% intro APR

Some rewards cards offer an introductory 0 percent annual percentage rate (APR) on purchases, balance transfers or both. These promotions often last between 12 and 21 months, allowing you to pay for large purchases or consolidate credit card debt without paying interest for a period of time.

If a long intro APR offer is at the top of your list when thinking about new credit cards, check out our picks for today’s best 0 percent interest credit cards.

Additional perks and benefits

Credit card benefits can offer a lot of value if you make the most of them. Some cards offer travel benefits like lounge access, a free first checked bag, companion flight tickets or travel insurance. Others offer under-the-radar perks like rideshare credits, access to special events, cell phone protection, extended warranties and more.

“Things that always get my attention are bonus multipliers for a category I spend a lot on (and if there are any limitations to them — like having to book via an issuer’s travel portal), how easy it is to use the points, and if the card comes with any perks I’m not getting elsewhere,” Grossman says.

Grossman also suggests that “everyone needs at least one card for travel with solid trip protections like trip delay insurance and a card with primary car rental [collision damage waiver] coverage.”

Tip

In addition to a card’s benefits, you should compare the fine print, too. It’s important to know what your credit card’s ongoing APR might be, as well as any fees the card charges, such as annual fees, foreign transaction fees or late payment fees. This information can help you decide whether you can afford to carry the card, even if you don’t plan on carrying a balance.

4. Make sure you qualify for the card you want

Not all credit cards are available to everyone. Card issuers typically offer cards with the best benefits to customers with good or excellent credit scores.

When you apply for a card, the issuer will assess your creditworthiness with a hard inquiry on your credit. These inquiries can cause your credit score to temporarily drop by a few points. That’s why you shouldn’t apply for a card you’re not qualified for.

Check your credit score to ensure you meet the card’s minimum qualification requirements. It’s also a good idea to get preapproved or prequalified for the card you want, which won’t impact your credit score. While it doesn’t guarantee you’ll get the card, you can know your chances of approval.

You can see if you prequalify or are preapproved for your chosen card by going to the issuer’s website or by using a third-party tool like Bankrate’s CardMatch™. This tool can show you whether you’re preapproved for the card you’re eyeing, as well as for similar cards from other issuers.

The bottom line

Choosing the right rewards credit card can help you earn on everyday purchases and put your rewards toward things that matter to you.

“I think it’s pretty hard to regret getting a rewards card as long as you pay in full each month,” Grossman says. “The worst case scenario is that you realize it’s not for you and don’t renew it for a second year. But as you can tell from my collection, I tend to hold onto cards long term, maximizing the benefits of each one.”

Once you’ve compared cards based on their earning potential, rates, welcome bonuses, fees and other features, check your approval odds by getting preapproved or prequalified. It’s only a matter of time before your next trip, concert or grocery run could be covered by rewards from your new card.

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