Our credit card with the best rewards (2023)

FAQs

Our credit card with the best rewards? ›

Are rewards credit cards worth it? In most cases, yes, as long as you're not carrying a balance and the annual fee (if the card charges one) is less than the value of the rewards you earn each year.

Are rewards credit cards worth it? In most cases, yes, as long as you're not carrying a balance and the annual fee (if the card charges one) is less than the value of the rewards you earn each year.

The most important principle for using credit cards is to always pay your bill on time and in full. Following this simple rule can help you avoid interest charges, late fees and poor credit scores. By paying your bill in full, you'll avoid interest and build toward a high credit score.

But ideally you should never spend more than 10% of your take-home pay towards credit card debt. So, for example, if you take home $2,500 a month, you should never pay more than $250 a month towards your credit card bills.

Another great perk of having a rewards card is being able to get cashback when you spend on your credit card. Some cards offer cashback as an introductory offer, others offer it as one of the options you can redeem points for.

Using a rewards card responsibly can be part of building credit and improving your credit score. And that's true of any credit card, whether it offers rewards or not.

2/3/4 Rule

Here's how the rule works: You can be approved for up to two new credit cards every rolling two-month period. You can be approved for up to three new credit cards every rolling 12-month period. You can be approved for up to four new credit cards every rolling 24-month period.

Individuals with a classic FICO score above 795 use an average 7% of their available credit. As your revolving debt climbs, your credit score will begin dropping — long before it reaches the recommended utilization limit of 30% of your available credit.

Unfortunately, people who regularly utilize their full credit limit are less likely to repay their debts than those who use a smaller percentage of their limit. For this reason, maxing out your credit card is considered a risky move -- and risky moves generally result in a lower credit score.

What are the 3 rules for rewards? ›

Rewards credit cards come in two main varieties: cash-back cards and travel cards. Cash-back cards pay you back a percentage of the amount of each transaction. Travel rewards credit cards give you points or miles for each dollar you spend; you redeem those rewards for free flights, hotel stays and more.

It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

Your credit utilization rate — the amount of revolving credit you're currently using divided by the total amount of revolving credit you have available — is one of the most important factors that influence your credit scores. So it's a good idea to try to keep it under 30%, which is what's generally recommended.

Key Takeaways

Rewards credit cards typically offer cash back, points, or travel miles for every dollar you spend. Rewards cards make the most sense for consumers who pay their balance in full each month. Otherwise, the interest charges could easily exceed your rewards.

Rewards build relationships

They work because they offer something that discounting doesn't – a direct link between a reward and an experience or purchase. Imagine that a business offers an own-brand gift card as a reward that can be used at a variety of restaurants.

Rewards are funded by interest and fees paid by customers and from merchant fees that are baked into prices.

What credit cards have 50 000 bonus points? ›

At 50,000 points the Chase Sapphire Preferred card has the biggest bonus, but the Amex Platinum card and Citi ThankYou Prestige are worthy runners-up at 40,000 points each. You'll have to spend $4,000 in the first three months to get Sapphire's bonus, and $3,000 for ThankYou Prestige and the Platinum card.

Having a lot of credit cards can hurt your credit score under any of the following conditions: You are unable to keep up with your current debt. Your outstanding debt is more than 30% of your total available credit. You added too many cards in too short a time.

Having too many credit cards to comfortably manage may result in missed payments and drag your credit scores down. How many credit cards you have will impact your average credit age and utilization, factors that also affect your credit scores.

The 20/10 rule of thumb is a budgeting technique that can be an effective way to keep your debt under control. It says your total debt shouldn't equal more than 20% of your annual income, and that your monthly debt payments shouldn't be more than 10% of your monthly income.

A 700 FICO^® Score is Good, but by raising your score into the Very Good range, you could qualify for lower interest rates and better borrowing terms. A great way to get started is to get your free credit report from Experian and check your credit score to find out the specific factors that impact your score the most.

What is a good credit utilization ratio? According to the Consumer Financial Protection Bureau, experts recommend keeping your credit utilization below 30% of your available credit. So if your only line of credit is a credit card with a $2,000 limit, that would mean keeping your balance below $600.

There's no such thing as a bad number of credit cards to have, but having more cards than you can successfully manage may do more harm than good. On the positive side, having different cards can prevent you from overspending on a single card—and help you save money, earn rewards, and lower your credit utilization.

A $1,500 credit limit is good if you have fair to good credit, as it is well above the lowest limits on the market but still far below the highest. The average credit card limit overall is around $13,000. You typically need good or excellent credit, a high income and little to no existing debt to get a limit that high.

A good guideline is the 30% rule: Use no more than 30% of your credit limit to keep your debt-to-credit ratio strong. Staying under 10% is even better. In a real-life budget, the 30% rule works like this: If you have a card with a $1,000 credit limit, it's best not to have more than a $300 balance at any time.

Using over 90% of your available credit card limit can knock around 50 points off your credit score. Whereas keeping your credit card balance under 30% of your limit could boost it by around 90 points.

What are the two main types of rewards? ›

There are two types of rewards—tangible and intangible. Tangible rewards are money, vacations, and material objects. The best way to use money as a reward is to give a specific amount as a bonus directly related to the performance of a task or the achievement of a goal.

A 2% cash-back card means a $100 purchase effectively earns $2 back. However a $100 purchase with a 2X points or miles card isn't always equal to $2 back. It can be less or more, depending on the card and how you redeem them.

The monetary reward, fixed or variable, that a company pays to an employee in exchange for their “time, effort, and talent” is classified as compensation. This model says that the overall rewards for an employee are made up of five parts: compensation, well-being, benefits, development, and recognition.

Still, you might be able to live off of them for a while. If you save up enough points, you could theoretically use them to cover all your expenses until you run out. How long that time is will depend upon how many points you have. There are still some things to keep in mind, though.

For some cards, accumulated reward points can be used towards your next credit card payment. In some cases, redemption options include requesting your reward points as cash payment through a check or direct deposit, which you can then use to pay for your next credit card payment.

The rule of thumb is to redeem your points for 1 cent per point or more to be sure you're getting a good deal. Airline flights and cash back for travel are usually the most valuable ways to redeem your points. Gift cards and merchandise are usually the lowest-value ways to redeem your points.

The cons of credit cards include the potential to overspend easily, which leads to expensive debt if you don't pay in full, as well as credit score damage if you miss payments.

Airline miles, hotel or timeshare credits, and rental car discounts are all common incentives. Other cards may offer very specialized rewards programs, like cryptocurrency rewards, gift cards, or discounts at specific retail chains.

In most cases, 50,000 Chase points are worth $500 for travel, cash back, or gift cards. The same 50,000 points can be worth $625 with the Chase Sapphire Preferred® Card or Ink Business Preferred and $750 with the premium Chase Sapphire Reserve®.

Is cash back or rewards better? ›

Both have advantages. Cash back is flexible and easy to redeem. Points or miles dangle the possibility of a paid-for vacation and, sometimes, a higher reward value per dollar spent. Nowadays, some cards let you redeem rewards for cash or travel at the same value.

The best way to put this into practice is to redeem your cash back every month as a statement credit towards your credit card bill. Or, if your credit card has a minimum redemption amount, redeem every time you reach that minimum.

Cash-back credit cards typically offer better value when the redemption options on a points card don't appeal to you. If a points card offers cash-back options at all, it may offer cash back at a lower value than other redemption options.

While 200K Amex points will typically only give you about $2,000 in value when you shop for flights in the Amex travel portal, you can sometimes find Business or First Class flights — that can normally cost over $10,000 — for only 200K points, when transferred to a frequent flyer program.

Figure out where you spend the most money and lean into those categories (groceries, dining, travel, gas or something else). Whatever it is, maximize it. But since most cards with lucrative bonus categories only give 1 percent cash back on “everything else,” your 2 percent cash back card is an excellent supplement.

It's most common for cash back credit card rewards to expire after the cardholder or issuer closes the account, or after a certain period of account inactivity. In general, you can avoid losing cash back rewards by redeeming often, using your card regularly, and keeping your account open and in good standing.

Credit card points and miles won't expire as long as your account remains open. However, points and miles earned with airline and hotel loyalty programs do typically expire following a lack of activity.

In general, it's better to leave your credit cards open with a zero balance instead of canceling them. This is true even if they aren't being used as open credit cards allow you to maintain a lower overall credit utilization ratio and will allow your credit history to stay on your report for longer.

Is it good to pay your credit card every week? ›

You should pay off your credit card every week if your statement balance at the end of the month would otherwise be close to your spending limit. Ideally, your balance at the end of a billing period should be less than 30 percent of your credit limit. Anything above that is bad for your credit score.

It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

There are a few drawbacks to a cash-back rewards card, including a higher-than-usual APR, having to wait to access your cash-back funds, and a cap on how much you can earn each year. Also, when it comes to travel rewards such as airline miles, sometimes the miles are worth more than the cash.

Rewards credit cards offer you some type of "reward"—typically cash back, points, or travel miles—for every dollar you spend, sometimes up to certain limits. Depending on the card, you can then use your rewards in a variety of ways.