Reward Credit Cards

John Ganotis

John Ganotis

Updated Aug 31, 2016

Credit card rewards come in many forms, and they all exist to provide incentives to use credit rather than using cash or a debit card.

Many cards also offer at least one sign-up bonus as well, such as extra cash back or bonus points for spending a certain amount of money with the card.

When used responsibly, rewards cards are a great way to receive discounts and other benefits just for making the purchases you would normally make.

Credit Card Insider’s Picks for the Best Rewards Credit Cards

The cards on this page have been chosen from the widest possible selection of cards that we could find when the page was last updated on July 13, 2016. Although Credit Card Insider does receive compensation from some card issuers as advertisers, this does not in any way influence our choice of cards or the order that cards appear on the page. We have attempted to determine the best cards in this category, regardless of our advertising relationship with the issuers.

Learn more about how we rate credit and charge cards.

The cards in this section were taken from our recent post, where you can learn more about them: Best Cash Back Rewards Credit Cards – 2016.

What Makes a Great Rewards Card?

Here are the most important things to consider:

  • Opportunities for use – You want to make sure that you’ll be using the card enough to justify owning it, as well as paying for any fees or interest. Take your spending habits into consideration – how often will you make purchases eligible for rewards?
  • A reasonable annual fee – Some rewards cards have annual fees, while others don’t. There’s no reason to avoid a card just because it has an annual fee; in fact, many of the better rewards cards, especially the travel credit cards, have a fee. If you get a card with an annual fee, just make sure that you’ll be profiting every year.
  • High cash-back levels – Some great cards will give a lot of cash back on specific rotating categories, up to 5%.  Others will give a smaller amount, like 1.5, for more frequent purchases.
  • A strong sign-up bonus – It’s not the most important feature, but getting $100 just for buying things is icing on the cake.  Usually you have to reach several hundred dollars in a few months, which is easy if you use the card fairly frequently.
  • A low introductory APR – Having a year or so to make interest-free purchases lets you quickly rack up rewards points, but don’t think that points will help you spend beyond your means.  A low APR will also enable you to get to the sign-up bonus without having to pay interest on your purchases.

Credit Card Insider’s Picks for the Best Store Credit Cards

The cards on this page have been chosen from the widest possible selection of cards that we could find when the page was last updated on August 31, 2016. Although Credit Card Insider does receive compensation from some card issuers as advertisers, this does not in any way influence our choice of cards or the order that cards appear on the page. We have attempted to determine the best cards in this category, regardless of our advertising relationship with the issuers.

Learn more about how we rate credit and charge cards.

The cards in this section were chosen based on our blog post from Winter 2015, where you can learn more about them.

What Makes a Great Store Credit Card?

Here are the most important things to consider, many of them similar to general-use rewards cards:

  • The right rewards-to-fees ratio – Even more so than with general rewards cards, you’ll need to make sure that you shop at the store enough the make the card worth it. How often will you make purchases eligible for rewards, and will you use the card often enough to offset any fees?
  • Would a general rewards card work just as well? – Many regular rewards credit cards offer points and cash back at the stores you shop at. Check out your other options before applying for a store credit card, and take a look at our video – Store Credit Cards: 3 Things You Should Know Before Applying.
  • A reasonable annual fee – Many great store cards don’t carry an annual fee, but if a store you love has a card with an annual fee you will have no choice here.  Just be sure that you will use the card enough to pay for the fee, and also get a profit for yourself.
  • Additional sign-up bonuses and benefits – Many store cards offer extra benefits like discounts and features like free shipping or extended return policies.
  • A lower-than-average APR – Many store cards have high APR’s, in the low 20’s. Some cards might offer a lower rate, but these are rare finds. Most do not have 0% intro APR’s. Watch out for these interest rates if you’re planning to save money with store cards.

Gas & Grocery Rewards Credit Cards

Here are some of the better cards that offer rewards for both groceries and gas:


Types of Rewards Cards

Rewards cards can generally be broken into 2 groups:

  • Cards with stable reward categories, which give points or cash back for the same purchases throughout the entire year
    • Like 2% cash back on gas, or 3% back on groceries
  • Cards with rotating reward categories, offering rewards on different types of purchases every 3 months
    • Like 5% cash back on groceries from January to March, and then 5% cash back at department stores from April to June

Rewards Cards Provide Their Incentives in Several Different Ways:

  • Points that can be redeemed for statement credits, discounts, gift cards, etc.
  • A percentage of cash back on purchases.
  • Store-specific points that can only be earned at the retailer that provides the card.
  • Airline miles that can be redeemed for free flights and discounts.
  • Hotel-specific points that can be redeemed for free stays at hotels and other discounts.

Finding the Best Rewards Card for You

When it comes to finding a rewards card that suits your lifestyle, the first thing you should do is analyze your spending habits.

Where do you shop the most? Do you buy gas and groceries every month? Do you shop at a wide variety of retailers, or do you tend to stick with major sites like Amazon?

If you’re going to use credit cards, you should try to maximize the rewards and benefits you’ll get. Most people will benefit from using a combination of at least two rewards cards: one for very common purchases, like gas and groceries, and another general-use card for less common purchases of other types.

Using Two Rewards Credit Cards

Why is this a good idea?

You’ll be able to use your gas/grocery card every time you buy those things, getting 2%, 3%, or more back. Then, you can use your other card whenever you shop anywhere else.

Let’s look at an example.

The American Express Blue Cash Preferred® Card will be the gas/grocery card, and the Citi® Double Cash Card will be the general-use card.

The Amex Blue Cash Preferred gives 6% cash back at grocery stores, and 3% cash back at gas stations. The Citi Double Cash gives 2% cash back on every purchase you make, no matter where you are.

So, you can use the Blue Cash Preferred every time you buy gas and groceries, getting quite a bit of cash back. For every other purchase you make, the Double Cash card will give you 2% cash back.

This is actually a pretty good setup to use if you want to get the most rewards for every purchase you make, with the least amount of hassle.

Cards with Rotating Categories

Some cards have reward categories that rotate throughout the year, usually every 3 months.

The Discover it is a card like this: from January to March it offers 5% cash back on purchases of gas and ground transportation, and the next 3 months will be a new category. Last year, categories included restaurants and movies, as well as and department stores.

A good strategy is to use a card like this, with 5% cash back rotating categories, along with one or both of the cards described above. Just use the Discover card to get 5% cash back whenever possible, and the other cards when they are your best option.

Insider Tip: Does the thought of having multiple credit cards make you nervous? Don’t worry: as long as you use your cards responsibly, having more than one can actually help you out in a few different ways. Check out our Q&A video to learn more: Is There A Reason To Carry Multiple Credit Cards?

How Often Do You Travel?

For most people, two or three credit cards will be enough. But for anyone who travels fairly often, at least a few times per year, another card or two might be a good idea.

Travel cards offer some of the best rewards and benefits among credit cards, helping cardholders save hundreds of dollars per year while having a better time on the road or in the air. The better ones also tend to have annual fees, sometimes into the hundreds of dollars.

Take the American Express Platinum Card®, for example. It has an annual fee of $450, but for that price you get complimentary access to luxury airline lounges around the world, a $200 airline fee credit every year, enrollment in the Hilton HHonors™ Gold program, and much more. The value of these benefits will far outweigh the annual fee, as long as you use them enough each year.

General travel cards like these offer rewards that you can use to pay for most kinds of travel expenses. Click here to check out our page on Travel Credit Cards, where you can learn much more about them.

Airline Cards and Hotel Cards

Many airlines and hotel brands offer their own credit cards, which provide rewards and benefits specific to their brand.

These can be very useful if you tend to fly with a particular airline, or often stay at a particular hotel chain. If you’re buying services from them several times a year, you can use credit cards to get nice discounts and benefits every time you do.

These benefits include free checked bags and complimentary Wi-Fi when flying, or access to priority boarding. In hotels, the perks include free stays, access to gyms and spas, and express checkout.

Click here to check out the Best Airline Credit Cards for 2016.

Click here to check out the Best Hotel Credit Cards for 2016.

Q&A Video: Will I Earn Rewards Points on This Purchase?

Retail Store Credit Cards

Many retail stores offer discounts if you apply for a card at the check-out counter or use a store credit card for the purchase, but you should approach these deals with a healthy dose of caution.

Depending on the deal that’s offered, you might want to apply for the card, then cancel it afterward if the terms are not attractive enough for long-term use. This is only a smart move for very large purchases where your discount will be substantial, and not for small, everyday purchases.

This may sound like a clever strategy, but you need to know exactly what this will do to your credit score. Store cards can be quite useful when used responsibly, but they can bite you if you don’t know exactly what you’re doing with them.

Before getting a store credit card, learn how to make retail credit cards work for you, instead of the other way around.

Store cards have the potential to both help you and hurt you, and they differ from general-use rewards cards in some important ways.

Video: Store Credit Cards – 3 Things You Should Know Before Applying

Pros of Store Cards

  • They are easy to get and can help you build credit: Store cards are typically very easy to get because of their high interest rates (usually around 25%) and low credit limits (usually not more than $1,000). This means that you can often get one even if you have fair or poor credit, giving you an opportunity to build up your score by using the card responsibly. The low credit limit can help keep your spending down, and the high interest rates provide a good incentive to pay off your bill.
  • They can teach you to manage credit: Since store credit cards are so easy to get, they provide a way for most people to practice responsible credit card usage before moving on to general rewards cards with higher limits.
  • Earn rewards at your favorite stores: If a store you frequently shop at offers a credit card, it’s worth considering how much you might save by using it. Many offer as much as 5% cash back, like the My Best Buy Credit Card, or special financing deals, like the Sears Card.
  • Extra membership benefits: Many store cards also come with additional benefits like periodic discounts in the mail, a birthday gift, access to exclusive deals, advance notice of sales, and discounts on shipping.

Cons of Store Cards

  • Very high interest rates: Most store cards have interest rates around 24-25%, which is about 10 percentage points higher than the industry average (15%). Beware this high APR: while many people open a store credit card to save money, paying interest on a balance as you revolve it from month to month can quickly negate any savings.
  • Very low credit limits: While a low credit limit can help you (and force you) to manage your credit, it also means that you run the risk of going over it. A low credit limit also does not do very much for your overall credit utilization.
  • Limited in use: Many credit cards can only be used at the store they are branded with. Some, however, are co-branded and can be used anywhere the card network is accepted, like the Macy’s American Express credit card.
  • Applying means a hard inquiry on your credit report, and a new credit account: While this is true for every credit card you apply for, not just store cards, it’s easy to forget that quickly signing up for a card at the register will have some negative influences on your credit report. These will come in the form of a hard inquiry on your credit, and, if you’re approved, the addition of a new credit account to your report. Hard inquiries are detrimental, but 1 or 2 inquiries are nothing to worry about. You don’t want to apply for many store cards at once, because, in addition to the hard inquiries, the new cards will reduce the average age of your credit accounts and will be sources of new credit, both of which are negative factors for your credit score.
  • Customer service problems: Store credit cards are not always backed by major credit card issuers and networks, which means that in some cases the quality of the customer service is not what you’d expect from a mainstream bank.

Tips for Using Store Cards Responsibly

  • Don’t spend more than you can pay off immediately: Maintaining a high balance on the card will damage your credit and cost you money in the long run. Pay off the entire balance each month well before the due date to avoid the possibility of a delay making your payment late, interest charges, and a higher credit utilization.
  • Don’t spend more than you normally would: Limit yourself to what you would normally buy if you didn’t own the card; earning points is not a valid reason to go over your budget. Spend responsibly, and focus on choosing a card that will reward you for the shopping you already do.
  • Don’t take out too many cards at once: Each credit card application lowers your credit score, so loading up on credit cards all at once can cause your score to dip. It’s best to add cards slowly and allow your credit to build over time.
  • Don’t open a store card just for a promotional offer for small purchases: Generally speaking, the promotional offers on store credit cards should only be used for very large purchases, where you’ll get a substantial discount for using the card. Opening new credit cards has a fairly significant effect on your credit, so it won’t be worth the tiny discount you’d get on small purchases.

Q&A Video: Should I Use Store Cards or General Rewards Cards?

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