Rewards credit cards are a success in marketing. I mean, who wouldn’t want rewards? They sound fun, beneficial and as if you are automatically getting more bang for your buck. Thus, simply revolving a credit card genre around the word “reward” raises segmental demand. However, this surface attractiveness also belies the fact that these cards are not for everyone.
Indeed, depending on your primary objective for credit card use, a rewards card may not be the cheapest or simplest option available to you. When you are shopping for a credit card you should have in mind one of three primary objectives—lowering the cost of debt, building credit and accumulating rewards. It is important to identify which is your particular aim because different types of credit cards, when used responsibly, are best suited for accomplishing each. Similarly, in most cases there is not a single credit card that serves two purposes in combination more effectively than do two distinct cards designed specifically for each requisite function.
Therefore, before we get into specific rewards credit cards, you must understand that such cards are recommended for people with excellent credit who pay their balances in full each month. If you do not fit this description, then perhaps a different type of card is right for you.
Best credit cards to improve credit
- Orchard Bank® Secured MasterCard—No matter if you have bad credit or no credit at all, a secured credit card is the best option for you. Secured credit cards allow consumers to build their credit without interference from the fees that usually accompany bad credit credit cards because issuers are protected by a refundable security deposit that a consumer places in opening the card. This particular card has no first-year fee, a $35 annual fee thereafter and a 7.9% APR.
- If you seek to begin rebuilding your credit immediately but do not have enough cash to pay a secure credit card’s security deposit, look into applying for a store-affiliated credit card—like the Best Buy® Credit card. These general credit cards can be used only at a particular store but have lower fee structures than unsecured credit cards for bad credit. Additionally, it does not matter if you frequent the store whose card you get because you relay positive information to your credit report monthly just by having a credit card in good standing and with zero balance.
Best credit card to lower the cost of your credit card debt
- Citi® Platinum Select® MasterCard—If you have debt (i.e. you carry a monthly balance) you want to find a card with the lowest interest rate possible. The Citi Platinum Select has a 0% rate for balance transfers in the first 21 months and 0% for purchases during the first 12 months.
Best rewards credit cards
Rewards credit cards, on the other hand, are divided into two distinct categories–travel rewards cards and cash back rewards cards. If you rack up at least 30,000 miles annually with the same airline or 20 hotel nights per year at the same hotel chain and redeem your rewards frequently, then you should explore travel rewards credit card options. It is important that you practice brand loyalty because if you have a credit card tied to a particular air carrier or hotel, you will not be able to redeem it with another. In turn, regular redemption is essential because it helps mitigate the effects of rewards plateau shifts that serve to devalue points and miles.
If you are not a frequent traveler or the airline or hotel you employ is not standard, then get a cash-back card. This eliminates worry about mile and point diminishment because you are gradually earning actual money, which the credit card company cannot devalue.
Best credit cards for travel rewards
- You should apply for the credit card tied to the particular airline or hotel chain you use most. Most major companies in these industries have their own credit cards.
Best cash back credit cards
- Capital One® Venture Rewards Credit Card—While on the surface a travel rewards card, if used correctly this credit card serves as a 2% cash back card. For each dollar you spend, you earn two miles which you can then redeem for any travel-related expense or purchase on any travel-oriented Web site. For example, if you earn 20,000 miles, you have $200 to spend basically at your own discretion.
- Bank of America® Accelerated Cash Rewards American Express® Credit Card—Offers 1.25% cash back on all purchases
- Chase Freedom® Visa – $100 Bonus Cash Back—Provides a $100 sign-up bonus, 5% quarterly bonus categories and 1% cash back on all other purchases
Whether it be in the rewards, debt management or credit building category, there is a card out there that is right for you. You must simply find out what type of credit adversary you face and pick the right weapon with which to do battle.
Disclosure: Some of the links within this article point to CardHub.com, which is owned by the same parent company as Wallet Blog.