How to Choose a Rewards Credit Card
When it comes to rewards credit cards, your first choice is the most important: deciding which card is right for you. There are different types of rewards credit cards, with different costs and different benefits. Some offer points you can collect and redeem for just about anything; others offer cash back on your purchases.
To make sure you're not leaving money on the table, here's what to look for (and what to avoid) in credit card rewards.
Review Fees and Benefits
Credit card fees include things like annual fees, regular annual percentage rate (APR), the cost for cash advances and balance transfers, overdraft protection, penalty interest, and late and returned payment fees. Look for cards with terms that align with your known spending habits.
For example, some premium travel rewards credit cards have annual fees that can be pricey. But a $450 annual fee on an ultra-premium card for frequent travelers might be justified if it includes an airport lounge club membership worth $500.
Many premium cards waive fees during the first year, a potentially valuable perk for new cardholders. If you don't expect to use certain card benefits, opt for a low- or no-annual-fee card. Likewise, if earning rewards is a priority, look for no-annual-fee cards with above-average rewards programs.
Additional reward credit card benefits can include:
- Complimentary rental car protection
- Purchase protection
- Travel accident and cellphone insurance
- Enhanced identity theft protection
Know How to Redeem Points
Pay attention to how you can redeem the rewards points you’ve earned, like cashback, gift cards, airline miles, travel packages and experiences, and even merchandise. When deciding what to use your points on, pay attention to the values, minimum redemption requirements, and processing times for each.
Additionally, know how much your points will be worth at redemption. Some cashback redemptions value points at $0.01 a piece, while others, like a designated cashback card, may give you a set rate. For example, the Key Cashback® credit card offers up to 2%1 cashback for every purchase you make.
Some rewards credit cards do promotions by month or quarter, like offering up to 5% cashback on gas or at restaurants. You can learn about these promotions by enrolling in your credit card issuer’s emails or staying up to date on their website or mobile app.
Watch for Expiration Dates on Rewards
Last but not least, don't let your credit card rewards expire. Pay attention to expiration dates and know what you need to do to ensure you don't leave money on the table. Consider adding a recurring appointment to your calendar to make sure all points are redeemed before the expiration date.
Prioritize your focus on rewards credit cards with benefits that suit your needs and spending habits so your rewards points can add up quickly.
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