5 Credit Cards with the Best Rewards and Perks

Understanding the best credit cards for rewards and perks can make a huge difference in your ability to maximize your points. It's not just about the immediate gratification of cashback or miles; it's about how these benefits fit into your broader financial strategy. In this post, we explore the top credit cards that promise rewards, and how to utilize them safely in order to maintain good financial habits.

Key takeaways

• Earn rewards on everyday spending with the right credit card
• Sign-up bonuses and perks can greatly increase value
• Be mindful of interest rates and fees that can offset rewards

What is the best credit card for rewards, and why does it matter?

Credit cards that excel in rewards and perks are financial tools designed to return a portion of what you spend back to you in the form of cashback, points, or miles. These benefits can be redeemed for travel, merchandise, gift cards, or even statement credits, effectively saving you money on purchases you were already going to make.

For students and recent graduates, finding a credit card that offers the best rewards can be a smart way to manage expenses and even support travel aspirations without breaking the bank.

These credit cards can also play a crucial role in building a credit history, which is essential for future financial efforts like loan approvals or renting an apartment.

Plus, many rewards cards come with consumer protections like fraud protection, purchase warranties, and travel insurance, making them useful tools for both financial management and personal security. Students may find these aspects important as they navigate their way toward financial independence. Here are some of the benefits, summarized:

• Building credit history
• Redeeming rewards for essential and discretionary spending
• Enjoying consumer protection benefits
• Managing finances and budgeting effectively
• Supporting travel and professional development goals

What makes a credit card with rewards stand out?

Before diving into the list, let's get familiar with what sets these credit cards apart. It isn't just about putting cash back in your wallet; it's how these cards fit into your lifestyle and financial strategies that matter most. Whether it's travel, dining, groceries, or online shopping, there's a card that matches every preference and spending pattern.

• Tailored rewards: The best cards offer rewards that align with your spending habits.
• Sign-up bonuses: Generous initial offers can greatly boost your rewards balance.
• Redemption flexibility: Look for cards that let you redeem rewards in various ways to maximize their value.
• Added perks: Extra benefits can enhance the card's overall value beyond just the rewards.

It’s important to remember that rewards are just one part of the credit card equation. When I was taking out my first card, I was so focused on looking at rewards that I almost ended up ignoring crucial details like fees.

Take it from me - the best credit card isn’t necessarily the one that offers the best rewards. You need to consider the overall value provided by the card, including the costs you might have to pay. With these factors in mind, let's explore some of the cards that can deliver exceptional value.

How to choose the right card for you

Choosing among these top contenders boils down to aligning the card's reward structure with your spending habits and goals. Consider where you spend the most money, whether you're willing to pay an annual fee for premium benefits, and how you prefer to redeem your rewards.

TuitionHero Tip

For help with navigating financial decisions beyond credit cards, like managing student loans or exploring scholarship opportunities, turn to TuitionHero's comprehensive guides.

Which credit cards offer the best rewards and perks?

Understanding credit card rewards can be like searching for treasure. Every card offers different perks like cashback or points, which can make your journey to find the right one feel endless.

The key to finding the right card is to understand how the rewards offered align with your existing spending habits and lifestyle needs. It's not just about the headline numbers, but how much value you can get from them in your daily life.

A majority of Americans (56%) prefer cashback over points. Cash is king for many, and they don’t want to rack their brains figuring out the best way to redeem points. However, if you’re willing to take the time, opting for a points card can often get you way better cash value - especially if you like to travel.

For example, each credit card point is often worth around 1 cent. So, a card that offer 1% cashback per dollar (1 cent) is typically thought of as equivalent to a card that offers 1x points.

However, sometimes things you can buy with points (like flights, hotels, and rentals), are offered for fewer points than the equivalent cash value. However, it takes some extra work to do the research, and this strategy is limited to just a few spending categories. Explore the following options to decide which card might be your key to unlocking rewards.

1. Chase Sapphire Preferred® Card

The Chase Sapphire Preferred® Card tops many lists for a good reason. It’s the gateway to the Chase Ultimate Rewards program, offering lucrative points for travel, dining, and online groceries (3x points on dining, 2x on travel, 3x on online groceries).

If you're someone who loves to explore new destinations or enjoys dining out, this card will help you accumulate points rapidly, which you can redeem for travel, transfer to airline and hotel partners, or even cash back. While the card’s sign-up bonus can vary over time, it’s typically quite generous, paving the way for early reward redemption.

TuitionHero Tip

For an in-depth understanding of maximizing travel rewards, consider exploring the ultimate guide to travel credit cards.

The card's benefits extend beyond earning points. Travel protections, like trip cancellation/interruption insurance and the auto rental collision damage waiver, offer peace of mind. It also comes with an annual $50 statement credit towards hotels booked through Chase Travel, as well as one year of a DoorDash Dashpass subscription, (expires December 31, 2024).

The moderate annual fee ($95/year) can easily be offset by the value of the rewards and benefits for most active users, making it a standout choice for people looking to dive into the world of rewards credit cards without being overwhelmed.

2. American Express® Gold Card

For gourmands and grocery getters, the American Express® Gold Card presents an almost unbeatable value proposition. This card earns high rewards on dining and supermarkets in the U.S. (4x on dining, 4x on supermarkets), placing it at the pinnacle of food-related spending.

This card caters to people who prioritize meals, whether they're home-cooked or enjoyed out, with points that accumulate quickly and can be used in a variety of ways, including travel and gift cards. Apart from its rewards structure, the card offers $120 annual dining credits at select restaurants, $120 in Uber Cash, and statement credits when booking at certain hotels, adding tangible benefits to its use.

While the annual fee ($325/year) is higher than some other options, the benefits and reward rate can justify the cost for people who dine out frequently or spend a lot at supermarkets. For people new to credit, this guide on getting your first credit card can give you more insights.

3. The Platinum Card® from American Express

The Platinum Card® from American Express is synonymous with luxury travel. With unbeatable lounge access, including Centurion Lounges via Priority Pass, this card makes airport experiences more enjoyable.

The high reward rates on flights and prepaid hotels booked through Amex (5x on flights and hotels), plus credits for travel, dining, and entertainment, set this card up as an essential tool for frequent and luxurious travelers. The card offers $200 Uber Cash, a $200 airline fee credit, $240 streaming credit with select streaming platforms, $100 statement credits at Saks, and a $200 hotel credit when booking through Amex.

Despite its steep annual fee ($695), the wealth of benefits — including annual travel credits, hotel status upgrades, and a hefty welcome bonus — can outweigh the costs for people who travel regularly and enjoy living a premium lifestyle. The Platinum Card is more than a credit card; it’s a status symbol offering benefits tailored to improve your travel experiences.

Interested in understanding how luxury cards compare? Our evaluation of credit card offers may help.

4. Citi Custom Cash® Card

The Citi Custom Cash® Card offers flexibility without the complexity. This card automatically adjusts to your spending, giving maximum cashback (5%) in your highest eligible spend category each statement period.

It's perfect for people who prefer to avoid juggling specific bonus categories or manually activating rewards. The card shines for its simplicity and adaptability to changing spending patterns, offering a considerable cashback rate in the areas you spend most without needing to track or activate categories. With no annual fee, it’s an excellent choice for anyone looking to maximize rewards on everyday spending without more costs.

5. Discover it® Cash Back

The Discover it® Cash Back card appeals to smart spenders who can take advantage of its rotating quarterly categories. From gas stations and groceries to restaurants and Amazon.com, you can earn lots of cashback rewards on everyday purchases.

The unique cashback match at the end of your first year effectively doubles the rewards you've earned, making it an attractive option for new cardholders. In addition to its cashback program, this card offers a rare mix of valuable perks like zero annual fees and a generous intro APR on purchases and balance transfers. For holders willing to track and activate the bonus categories each quarter, the reward potential is impressive.

Dos and don'ts of choosing and using a rewards credit card

It’s crucial to balance the pursuit of perks with practical financial habits. The appeal of rewards can sometimes lead to overspending or mismanagement, which can negate the benefits of the rewards earned. Here's a concise guide on the do’s and don'ts to keep in mind when choosing and using your rewards credit card:

Advantages and disadvantages of using credit cards for rewards

Choosing a credit card that offers rewards can seem like an easy decision, but it's essential to weigh both the benefits and potential drawbacks. This financial tool, when used wisely, can provide many perks, including financial savings and convenience. However, risks are also involved, particularly concerning debt accumulation and its effect on your credit score. Let’s dive into the specifics of what makes these cards both appealing and cautionary.

Advantages of using credit cards for rewards

• Earn rewards on everyday purchases: Accumulate points, miles, or cash back on regular spending.
• Sign-up bonuses: Many cards offer introductory bonuses that can be highly lucrative.
• Flexible redemption options: Redeem rewards for travel, merchandise, gift cards, or even cash back.
• More perks: Usually come with benefits like travel insurance, purchase protection, and extended warranties.
• Helps build credit: Responsible use can improve your credit score over time.

Disadvantages of using credit cards for rewards

• Potential for high interest and fees: Rewards cards usually have higher interest rates and annual fees.
• Temptation to overspend: The lure of earning rewards can lead to unnecessary purchases.
• Complexity of reward systems: Points and miles can be complicated to understand and redeem effectively.
• Effect on credit score: Applying for multiple cards or carrying high balances can hurt your credit.

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Frequently asked questions (FAQ)

How do rewards credit cards affect my credit score?

Rewards credit cards can positively affect your credit score if used responsibly. Consistently paying off your balance on time, keeping your credit utilization low, and not applying for too many cards at once are key factors in maintaining a healthy credit score. However, overspending to earn rewards can lead to high balances, which may harm your credit score.

Are there any hidden costs associated with rewards credit cards?

While many rewards credit cards offer valuable perks, they can also come with hidden costs, like high interest rates, annual fees, foreign transaction fees, and penalties for late payments. It's essential to read the card's terms and conditions carefully to understand all potential costs before applying.

Can I use multiple rewards credit cards to maximize benefits?

Yes, using multiple rewards credit cards can help you maximize benefits by taking advantage of different reward categories and promotions. However, it's crucial to manage them wisely by tracking expenses, paying off balances in full, and being mindful of the effect on your credit score.

What should I consider before choosing a card with a high annual fee?

Before choosing a card with a high annual fee, consider whether the benefits and rewards offered outweigh the cost. Evaluate factors like sign-up bonuses, reward rates, additional perks (like travel credits or lounge access), and how these align with your spending habits. If the value you gain from the card exceeds the fee, it may be worth it.

Final thoughts

Using the right rewards credit card can help you get the most out of your money. Make sure to pick one that fits your spending habits and financial goals.

Whether you want travel rewards, cash back, or to build your credit, there's a card for you. Stay responsible by making informed decisions about your spending. Let's make every swipe count!

Source

• Chase Sapphire Preferred Credit Card | Chase.com
• The American Express® Gold Card - Earn Rewards for Dining
• The Platinum Card® by American Express - Explore Elevated Benefits
• Citi Custom Cash Credit Card - Earn 5% Cash Back | Citi.com
• Discover it® Cash Back Credit Card | Apply in Minutes
• 56% of Credit Card Users Prefer Cash Back Rewards. Are They Right?