How do I compare different credit card rewards programs?
Looking for the best credit card rewards program for your needs can be like comparing apples to oranges. There are so many different types ofÂ credit card rewardsâ€”cash rewards, miles, airline travel, points, gift cards, discounts on products and services.
So where to begin?
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First, take a close look at where you are spending the most.
Thatâ€™s where your best opportunity is for earning theÂ best rewards. Analyze your spending to see where you might be able to earn sizeable cash back rewards, rebates, discounts, miles or points.
If youâ€™re traveling frequently and staying in certain hotel brands or flying with certain airlines often, you may benefit most from a travel rewards credit card. On the other hand, if youâ€™re looking to score free airline tickets, but your spending habits donâ€™t fit into the earning categories of the travel card you want to apply for, then spending enough to earn those tickets will be difficult.
Likewise, if you find yourself driving often, or you frequently plan a cross-country road trip, you might be interested inÂ a gas credit card.
Or you might be interest in a card that gives you cash back as a percentage of your spending at everyday spots, in which case a typical cash back credit card is your best bet to earn rewards.
There are a lot of different types of credit card rewards programsâ€”once you determine your spending patterns you can narrow your search to find the best rewards program for you.
Ideally you would choose a rewards program where you earn rewards at places where you already spend.
Look for credit card rewards programs that allow you to redeem cash, travel or hotel credit, and for things you could useâ€”including gift cards to your favorite restaurants, clothing stores, entertainment, and more.
Understand the different types of rewards
Travel miles. With airline or miles credit cards you can redeem for free or discounted travel, and may be able to redeem for other options. Branded airline and hotel credit cards often provide free or discounted rewards only at their specific airline or hotel. Check to see if there are restrictions on travel, blackout dates or seat restrictions. Many travel miles cards include an expiration date on the credit card rewards.
Points. When you choose to earn points for your purchases, for example, you may earn 1 point for every $1 you spend, with more points awarded for purchases in specific categories or with specific merchants. You can usually redeem your rewards later for brand name gift cards and merchandise. With some credit card programs you can accumulate points and use them towards a rebate or cash off your next car purchase or hotel stay. Be sure to check to see if there is an expiration date for when your points must be redeemed and how often you have to use your credit card.
Cash Rewards. With this type of rewards program, you can earn cash back on your purchases, and then redeem the cash back youâ€™ve earned for things such as statement credits, direct deposits to a bank account, and gift cards, to name a few. Similar to points, you may also be able to earn additional cash back in certain rotating spending categories.
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Next, crunch the numbers.
Youâ€™ve figured out your top spending categories and decided what type of rewards program you wantâ€”but if you donâ€™t have a great credit card offer with a low interest rate, or a no annual fee card, you may not actually be coming out ahead.
Compare the various credit card offers. Is there a low APR offer? Is there an intro balance transfer offer? Will you have a low interest rate after the intro APR expires? Does the card charge an annual fee or is it a no annual fee card? What other fees are involved?
Consider the many ways in which you can earn rewardsâ€”as well as the various costs and fees that may be involved. If youâ€™re charged a fee every time you make a same-day payment, for instance, you may not be getting the best value out of your credit card.
By understanding the different types of credit card rewards programs available you can find the credit card program that gives you rewards your wayâ€”as well as the best terms and interest rate.