Compare the Best Rewards Credit Cards of 2020

Why just shop when you can also earn rewards on purchases you make as part of your everyday routine? Credit card reward programs let you earn incentives just for using your credit card—like points, miles or cash back. Rewards credit cards give you rewards either for making purchases with the card or as a bonus for meeting a spending threshold in a certain time period. You can earn reward points for using your card on bills and groceries, and later put the points towards incentives like hotels, flights and gift cards.

Used carefully and responsibly, these cards can offer a wide range of benefits depending on how often you use your card, how quickly you pay it back and the type of rewards your card offers. Rewards credit cards are not all created equal. Most have different point values, so some points will be worth less than others.

Find the Right Rewards Credit Card for You

Rewards credit cards come in all sizes and shapes, so it’s essential that you take time to find the right card for your needs. You may be easily overwhelmed by the number of options available to choose from. There are gas rewards credit cards, cash back credit cards, and cards that give you free movie tickets and merchandise. Here are the main types of rewards cards.

• Travel rewards credit cards. Travel rewards credit cards let you earn travel points or miles on the purchases you make. The rewards earned can later help you pay some portion of a trip or a travel-related expense.
• Cash back rewards credit cards. These are rewards credit cards that give a cash rebate for services and goods purchased. The actual cash may take the form of either a lump sum payment via check after meeting a certain threshold or a monthly credit on your statement.
• Gas rewards credit cards. Gas rewards credit cards take two forms: those that offer a cash back on gas purchases at any filling station and those that give gas discounts and rewards for filling up at specific gas retailers.
• Retail rewards credit cards. These rewards cards are issued by a specific retailer, like Amazon or Best Buy. The cards come in two types: those that can only be used at one retailer and those tied to a specific retailer but can be used anywhere. Some retailers issue both cards, so be careful when considering the card that would work best for you.

Benefits of Rewards Credit Cards

If you’re torn between a regular piece of plastic and a rewards credit card, you might be wondering why it pays to have points earning power in your wallet. Here are some of the benefits rewards credit cards have to offer.

Rewards Program

The main benefit of using a rewards credit card is that you’ll earn something back as you spend, usually in the form of points. The points you receive through the rewards programs can help you reduce your grocery store bill or save on your next vacation.

Welcome Bonus

When you apply for a new card, you may discover that you can earn a bonus if you attain a certain amount of spending within the first few months of acquiring your card.

Protecting Your Spend

Many rewards cards also come with insurance coverage to protect your spend, including purchase security, price protection and extended warranties.

Rewards Credit Cards FAQs

What is a rewards credit card?

A rewards credit card lets you earn incentives for frequently using your credit card—like points, miles or cash back. This card will either give you the same amount of rewards on each purchase (flat-rate rewards) or bonus rewards on specific categories, like increased earning rates on groceries. You’ll earn rewards only on new purchases, not cash advances or balance transfers.

How do rewards credit cards work?

Used properly, rewards credit cards can be a win-win for both you and your card issuer. The issuer wants to earn your loyalty by incentivizing  you with points, cash back or miles that enhance the value of paying with their credit card over debit cards or cash.  

What rate can I get with rewards credit cards?

One drawback of rewards credit cards is the high interest rates they charge. Interest rates usually average 23% APR but can be as high as 56% APR. Besides, rewards cards come with an annual fee in the region of $95. Credit card issuers often waive this fee on your first year—but don’t overlook it when calculating your costs

For instance, at a cashback rate of 1%, you’ll need to make $9,500 worth of purchases to cover the $95 annual fee. Be sure not to spend more cash than you can get back.

Can anyone get a rewards credit card?

Although open to everyone, a rewards credit card will particularly suit those who frequently use their cards to make everyday purchases. However, since interest rates are high, these cards are an option if you can afford to pay off their balance in full on the due date. The interest you’ll pay for not clearing your monthly balance will outweigh the rewards you receive.

How do I compare different rewards credit cards?

There isn’t a one-size-fits-all rewards credit card, so your choice should be based on your financial goals and spending habits. Start your comparison by selecting cards that earn rewards in the categories you spend in most often. If you fly the same airline several times in a month, go for a co-branded airline card that earns rewards and perks for your flights.

You also need to identify your goals for the rewards. Are you looking to save on grocery bills, hotel stays or airfare? Are you a frequent traveller? A travel rewards card will earn points and miles. Prefer reducing your costs? A cash back credit card will be a good fit if you’re looking to save money on everyday purchases.

Ultimately, you should strike the right balance between rewards rate, benefits and annual fees to decide which card offers the most value in the long-term.