Credit cards with rewards aren’t one-size-fits-all. Neither are credit card rewards programs. But these tips will help you find the plastic (or metal) that’s tailor-made for your wallet.
- Read Reviews – Your assumptions and preconceived notions about a credit card rewards program may be well-founded or way off base. You need to do some research to find out the real story, especially the latest news and info because rewards program policies change often. Reading customer reviews will give you a good sense of whether there are any hidden tricks or restrictions, how helpful customer service is, etc.
- Check Your Credit Score – Most credit card rewards programs require good credit or better to qualify for a participating card. Some even require excellent credit outright. You can check your latest credit score for free on WalletHub.
- Determine How You’ll Use It – Do you want a rewards card for all everyday expenses? Or do you want a card just for certain types of spending, such as travel purchases? It’s important to answer these questions early on because it will tell you what terms and types of cards to focus on. For example, some rewards cards offer a consistent earning rate across all spending categories. Others give you more value when you buy certain things or redeem a certain way.\So figure out what exactly you’re looking for. Once you know that, it will be easy to decide whether a given credit card has what you need.
- Consider Both Earning & Redemption Value – It’s impossible to evaluate a rewards credit card if you don’t know how much its rewards are worth. This is obvious with cash back credit cards, but it can be tough to tell with points and miles cards. The easiest way to see how much a credit card’s points or miles are worth is to compare the number needed for a particular item (e.g., a flight) to the cost of that item if purchased independently. For example, if you need 40,000 miles for a $400 flight, the miles would be worth a penny apiece.
- Avoid Unnecessary Hassle – If you’re the forgetful type, stay away from cards with rotating bonus rewards categories. Such cards require you to sign-up for new bonus categories each quarter. And if you don’t, you’re unlikely to earn more than the market average that quarter.
- When In Doubt, Think Cash Back – You’ll never have to wonder about the rate at which you’re earning rewards with a cash back credit card. You’ll never have to worry about rewards devaluation, either. After all, you’ll be earning rewards in terms of dollars and cents.It’s a different story with points and miles cards, however. It’s hard to tell how much they’re worth. And that’s partly because credit card execs can jack up the number needed for a free flight, hotel room, statement credit, etc., whenever they please.
- Don’t Rule Out Annual Fees – Often times, cards with annual fees offer better initial bonuses and higher earning rates than free cards. So don’t discount a card simply because it charges a fee, especially if it’s low. Just make sure the extra rewards you’ll earn are worth more than the fixed costs you have to pay.
If you’re still not sure, you can also try WalletHub’s free CardAdvisor tool to get personalized recommendations.