Reward Credit Cards: How to Choose the Best Credit Card
Whether it’s a free trip or a discounted meal, everyone likes a reward. One way Americans love to earn them is by using credit cards. Recent studies show about 60 percent of consumers own at least one rewards credit card, and reveals reward cards are used for 80 percent of credit card purchases. From airline miles to gas discounts and cash back, there are a variety of ways consumers can be rewarded for using a credit card.
What Are Rewards Credit Cards?
Rewardscredit cards give consumers a chance to profit from their spending by combining the convenience of a credit card with the chance to capitalize on free flights, hotels, meals and numerous other perks. While accruing airline miles for free trips is one of the most popular types of reward credit card options, there are cards for those who aren't travelers. Some credit card reward programs let consumers acquire points that can be redeemed for gift cards and merchandise at area retailers.
Many reward programs offer cash-back options that typically refund 1 percent of all purchases made with the card. The cardholder can have the cash back applied directly to their account or receive a regular check for their earnings.
"People are embracing ways of earning rewards to make savings from their everyday spending," Julie Hay, head of credit cards at American Express, said in a recent article in Colloquy magazine. "Rewards cards are not only growing in popularity, they are also influencing where consumers are choosing to shop."
Hay points to recent research from American Express Credit Cards that revealed rewards are being used to boost everyday spending power (29 percent) and help with everyday living costs, compared to previously when they were most likely used for an occasional treat.
"Whether you prefer to receive cash back, earn points towards flights, or receive travel, shopping or entertainment rewards, there has never been a better time to say goodbye to 'Passive Plastic' and use a credit card that actively rewards you for your spending," Hay said.
Choosing the Best Reward Credit Card
With dozens of reward credit cards offered, it is critical consumers examine the associated features, security, support and costs before choosing one.
While reward programs usually operate on a system in which one dollar spent earns you one reward point or a certain number of free flight miles, consumers should look for cards that offer bonuses, such as double points at selected retailers or on certain types of purchases.
Consumers should also be sure to search for cards that have reasonable interest rates and little or no annual fees. In addition, international transaction fees should be a consideration when choosing a rewards credit card.
Other features to take into account are whether or not the cards provide cardholders with zero liability coverage in the event of unauthorized transactions, as well as online banking options, free account alerts and travel insurance benefits.
In the event a card is lost or stolen, it is also important that the rewards credit card provides timely telephone support and emergency card replacements.
Top Reward Credit Cards
The Chase Sapphire Preferred is one of the most popular reward credit cards. The card has superior rewards and the most flexible options. The card uses a system in which each dollarspent yields one Ultimate Rewards point. In addition to typical travel rewards like hotel rooms or cruises, cardholders can redeem Chase Ultimate Rewards points for gift cards or special events or to purchase select merchandise online. Cardholders also have the option of shopping online in the Chase Ultimate Rewards Mall, where they can get up to 10 points per dollar spent at one of the more than 300 affiliated retailers.
Other features of the Chase Sapphire Preferred card include travel accident insurance, rental car insurance and reimbursement for lost luggage. There is also zero liability in the event of unauthorized transactions and fraud protection.
The card does not require any annual fees or membership fees for the first year of the membership, and rewards users with 40,000 bonus miles if they spend $3,000 in the first three months of the membership.
Another highly rated option is the Miles by Discover Card. This rewards credit card not only offers free flight miles in the first year, but also bonus points for dining expenses, hotels and other travel expenses. With this card, shoppers earn one point for each dollar spent. They can also get double miles for the first $3,000 in travel and restaurant purchases made each year, as well as the option to earn 10,000 bonus miles with every $2,000 in purchases.
For cardholders, Discover provides a suite of information to teach them how to use their credit cards in a safe and responsible way. Among the offered tools are a Savings Solutions center, a Credit Management tool, an identity theft prevention guide and articles and videos regarding personal financial responsibility.
The Miles by Discover Card also provides auto rental and travel accident insurance and 24/7 anti-fraud protection.
The American Express Gold Card is another well-regarded option. Like the other cards, the American Express Gold Card rewards shoppers with one point for each dollar spent. The points can be redeemed on flights with more than 21 airlines; cruises, spa retreats and hotel rooms; and concerts and sporting events.
Shoppers can earn bonus points a number of ways, including through the purchases of gas, groceries and merchandise ordered through the AmEx bonus points online mall. There is a $125 annual fee for the American Express Gold Card.
Other popular rewards credit cards include the Gold Delta SkyMiles American Express card, an ideal card for frequent flyers, the Venture Rewards by Capital One card, which offers double miles on every purchase, and the BankAmericard Power Rewards Visa Signature card, which offers its members options to redeem rewards points for travel, merchandise, gift cards or cash back.