Points, Miles or Cash-Back?
Review of Credit Card Rewards
If you are new to credit card reward programs, researching all of the various cards and programs out there can be overwhelming at first. Most people don't have the patience or time to spend researching the various reward programs offered and what they are and how they work, so I will try my best to make it easy for you.
Most of us use a credit card everyday for shopping, bills, food, etc, so why not get rewarded for it? All of the credit card companies are competing for our business and sometimes offers great reward programs and big sign-up bonuses when signing up for their cards.
Some people may prefer simple easy to understand programs that offer cash-back and some may want to use their rewards for gift cards, travel benefits or statement credits. There are lots of credit cards out there that earn rewards and I'm not going to try to debate as to which card is best, as there really is no "right way" to use these rewards and it really depends on your particular goals for them.
With that being said, I like to break the credit card reward programs down into the following four main categories:
If you are new to credit card reward programs, researching all of the various cards and programs out there can be overwhelming at first. Most people don't have the patience or time to spend researching the various reward programs offered and what they are and how they work, so I will try my best to make it easy for you.
Most of us use a credit card everyday for shopping, bills, food, etc, so why not get rewarded for it? All of the credit card companies are competing for our business and sometimes offers great reward programs and big sign-up bonuses when signing up for their cards.
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| Example of some of the credit cards discussed below |
With that being said, I like to break the credit card reward programs down into the following four main categories:
- Cash-Back Credit Cards
- General Travel Credit Cards (Fixed Value - Earn Statement Credits)
- Travel Credit Cards (Co-Branded Hotel/Airline Credit Cards)
- Rewards Program Credit Cards (Travel Related Benefits)
Cash-Back Credit Cards
Cards in this category earn a flat fixed value as cash-back for spending. Some cards offer 1% cash-back with rotating 5% categories and other cards offer anywhere between 1-2% as cash-back. An example of a great cash-back card is the Citi Double Cash Back credit card that offers 2% cash-back for all purchases (1% up-front when purchasing and 1% when paying the bill)
Some examples of purely cash-back credit card rewards include:
The three main players in this category are Chase Bank, American Express and Citi Bank. Credit cards earn reward points in each respective program, Chase Ultimate Rewards, American Express Membership Rewards and Citi Thank You Rewards.
A few examples of cards in this category include:
The beauty of these cards is that there are multiple ways to redeem reward points. Redemption examples include:
Transferring rewards points to travel partners is where you can get the best redemption values per point. I have redeemed Chase Ultimate Rewards points with their travel partners for 2 to 4 cents per point in value. Depending on how you redeem the points, it could be lower or even higher.
I plan on detailing the three main reward programs in an upcoming post and what I have found to be the best ways to redeem points when transferring to their respective travel partners.
Summary
Having a certain credit card comes down to your personal preference as to what you plan on using it for, but in my opinion, the most valuable reward programs and the ones that give you the best return are the last category of credit cards I mentioned above, the Rewards Program Credit Cards.
Qualifying for the credit cards mentioned above comes down to your individual creditworthiness and most credit cards typically require good to excellent credit to qualify. Also note that some credit cards come with annual fees, higher interest rates or other items and I always recommend reading through the terms & conditions before applying for any card.
The value of travel credit cards can be great and I always recommend paying them off monthly, as carrying any balance on them would greatly negate any benefit you could receive from the reward program. If you feel you don't have the time, patience or savviness to maximize reward points or miles for travel, a cash-back credit card may be your best option. Determine what you would like to get out of a credit card reward program and see what fits with your goals and lifestyle, and what types of rewards would be of most benefit to you. Once you get a feel for one type of rewards program you could always branch out and open another card to unlock a different set of rewards.
I have some of the credit cards mentioned above and plan on sharing how I try to get the most benefit from each card and how I redeem points in the different reward programs available.
Cards in this category earn a flat fixed value as cash-back for spending. Some cards offer 1% cash-back with rotating 5% categories and other cards offer anywhere between 1-2% as cash-back. An example of a great cash-back card is the Citi Double Cash Back credit card that offers 2% cash-back for all purchases (1% up-front when purchasing and 1% when paying the bill)
Some examples of purely cash-back credit card rewards include:
- Citi Bank Double Cash Back Credit Card
- Amex Blue Cash Preferred
- Capital One Quicksilver Cash-Back Rewards
- Chase Freedom
General Travel Credit Cards (Fixed Value - Earn Statement Credits)
Cards in this category typically earn points or miles that can be used for travel or as a statement credit when redeemed for travel related charges including flights, hotels, rental cars, etc.
A few examples of general travel credit cards include:
Hotel/Airline Credit Cards (Co-Branded Hotel/Airline Credit Cards)
A few examples of general travel credit cards include:
- Capital One Venture Rewards Credit Card
- Discover It Miles
- BarclayCard Arrival Plus
- Bank of America Travel Rewards Credit Card
Hotel/Airline Credit Cards (Co-Branded Hotel/Airline Credit Cards)
Cards in this category earn points or miles in the respective hotel or airline rewards program that it is a part of. For example, if you had the Southwest credit card from Chase, you would earn Southwest Rapid Rewards Points, which can be used to book Southwest flights.
Credit cards in this category typically come with a nice first-time bonus that can be used for travel and on-going points benefits skewed more towards travel.
Examples of some travel related credit cards I like include:Credit cards in this category typically come with a nice first-time bonus that can be used for travel and on-going points benefits skewed more towards travel.
- The Southwest Rapid Rewards Credit Card from Chase Bank
- The Hyatt Credit Card from Chase Bank
- Alaska Airlines Credit Card from Bank of America
- Starwood Preferred Guest Credit Card from American Express
Rewards Program Credit Cards (Travel Related Benefits)
A few examples of cards in this category include:
- Chase Sapphire Preferred
- The Amex Everyday Credit Card from American Express
- The Amex Premier Rewards Gold Card
- Citi Thank You Premier Card
The beauty of these cards is that there are multiple ways to redeem reward points. Redemption examples include:
- Redeem points for cash-back, gift cards, amazon shopping credit, etc.
- Redeem points for travel (airfare, hotels, rental cars, etc) through the respective rewards program website
- Transfer to travel partners such as Marriott, Hyatt, United, Southwest, etc. (Note that each reward program has different travel partners associated with it)
Transferring rewards points to travel partners is where you can get the best redemption values per point. I have redeemed Chase Ultimate Rewards points with their travel partners for 2 to 4 cents per point in value. Depending on how you redeem the points, it could be lower or even higher.
I plan on detailing the three main reward programs in an upcoming post and what I have found to be the best ways to redeem points when transferring to their respective travel partners.
Summary
Having a certain credit card comes down to your personal preference as to what you plan on using it for, but in my opinion, the most valuable reward programs and the ones that give you the best return are the last category of credit cards I mentioned above, the Rewards Program Credit Cards.
Qualifying for the credit cards mentioned above comes down to your individual creditworthiness and most credit cards typically require good to excellent credit to qualify. Also note that some credit cards come with annual fees, higher interest rates or other items and I always recommend reading through the terms & conditions before applying for any card.
The value of travel credit cards can be great and I always recommend paying them off monthly, as carrying any balance on them would greatly negate any benefit you could receive from the reward program. If you feel you don't have the time, patience or savviness to maximize reward points or miles for travel, a cash-back credit card may be your best option. Determine what you would like to get out of a credit card reward program and see what fits with your goals and lifestyle, and what types of rewards would be of most benefit to you. Once you get a feel for one type of rewards program you could always branch out and open another card to unlock a different set of rewards.
I have some of the credit cards mentioned above and plan on sharing how I try to get the most benefit from each card and how I redeem points in the different reward programs available.