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Choosing the Best Rewards on Your Card

It is estimated that there are close to 600 million credit cards in operation in the United States alone, and that credit card holders on average own over 3 credit cards. And yet, with such massive market penetration, many credit card owners are completely oblivious to the various credit card reward programs that they could be availing of. Credit card rewards, when used correctly, have the potential to save users hundreds of dollars every year. In spite of this, the vast majority of credit card owners either don’t avail of, or are completely unaware of the reward benefits that they could, and should, be making the most of. Although interest rates, penalties and security issues should all play a part in choosing a credit card, there is also a strong case for shopping around for the best credit card reward scheme. Depending on your lifestyle and credit card usage, these reward schemes could prove quite beneficial.

What are Credit Card Reward Schemes?

Credit card rewards or reward schemes are incentives used by credit card companies to entice potential customers and to encourage use of their card. These rewards come in many different ways, and while some are nothing more than marketing tactics that offer little monetary compensation, there are many that can be used very effectively by customers. Rewards can come in the form of discounted interest rates on balance transfers, frequent flyer points with certain airlines, gift certificates for retail stores or even cash compensation. Most reward schemes are dependent on card usage whereby users accumulate points for every dollar they spend on their card. These points can then be exchanged or traded for the specified benefits.

Which Credit Cards Offer The Best Rewards?

Credit card owners that tend to carry over a large balance from month to month should generally be more focused on finding the lowest interest rate, as the benefits that can be obtained from a credit card reward program will not compensate for a high interest rate on a high balance. However, those with managed balances or those that pay off their card from month to month can really shop around for the best credit card reward scheme that matches their particular lifestyle.

The Fidelity Investments Rewards American Express Card offers 2% cash back on all purchases. Most cash back cards offer 1%, so the Fidelity Investments Rewards Card is one of the best on the market. With no annual fee and an interest rate 13.99%, this card is great for people looking to build up cash back on frequent small spending. The American Express Blue Cash card offers a whopping 5% cash back on spending for groceries, gas stations and drugstores. Cash back on all other spending is a reasonable 1.25%. While this is a fantastic rate, the cash back only kicks in after you spend $6500, and as such is more suited to people who use their cards frequently for large transactions. Again, there is no annual fee but the interest is higher, ranging from 17.2% – 21.2%.

The Capital One Venture Rewards Card has an annual fee of $59 and an interest rate ranging from 11.9% – 19.9%, and it is more suited to frequent flyers. This card offers 2 miles for every dollar spent, and there is no minimum spend for the rewards to kick in. What makes the Capital One Venture Rewards Card so appealing is that it is not restricted to any one airline. Many airlines offer their own great frequent flyer cards, but you are restricted to that particular airline, and this does not suit many travellers. Similarly, the American Express Starwood Preferred Guest card lets users accumulate points for every dollar spent which can be redeemed against thousands of hotels and properties across the globe. With an annual fee of $65 and an interest rate of 15.24%, the Starwood Preferred Guest card is very popular amongst frequent flyers who find that their accommodation is often more costly than their flights.

How do I Find the Best Rewards Cards?

There is no definitive answer to what are the best rewards. A better question would be what is the best credit card rewards card for your situation? Frequent flyers and travellers need to compare and contrast the different options and see which option will save them the most money. Consumers that travel for work may use the same airline and travel the same route on a very frequent basis, and an airline specific card could potentially be more lucrative than a broader frequent flyer’s scheme. Similarly, cash back cards are often broken down in to different categories, so people who spend large amounts of time on the road should look for a card that offers the highest cash back rate on gas. Alternatively, those living in the city that take public transport should be more concerned about their cash back rate on groceries and general spending. This is where the bulk of their expense will come from.

Ultimately, finding the card with excellent rewards is not a simple decision. Before choosing you should ensure that you compare and contrast many different cards that offer similar schemes and identify any potential pitfalls such as minimum spends and time constraints on redemption. These rewards cards can be very rewarding, but consumers need to be smart in their spending. There has never been a better time to be a smart shopper, so why not take a look at how you can make your credit card start working for you and not against you.


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