Rewards credit cards can help you make the most of your everyday expenses. If you’re able to spend responsibly and pay your balance in full each month, why not earn rewards on the purchases you’re already making?

When deciding what type of rewards credit card to apply for, you need to ask yourself two questions. First, what are your spending habits? Do you tend to spend a lot in one or two categories or does it vary? Second, what type of rewards would be most valuable to you – cashback, travel points, or airline miles?

With so many options, choosing a rewards credit card can be daunting. Check out the best rewards credit cards below.

• What Credit Cards Give the Best Rewards?
• What Types of Rewards are Offered With Credit Cards?
• What is the Smartest way to use a Credit Card That has Rewards?

What Credit Cards Give the Best Rewards?

Rewards credit cards have proliferated in recent years, with the best offers delivering cardholders hundreds, even thousands of dollars in rewards. It is not surprising that rewards cards claim several spots on our list of the overall best credit cards.

Read Also: Why do People Use Debit Cards Instead of Credit Cards?

Cashback, points, miles – whichever method you choose, the results can be, well, rewarding. In fact, because it is accepted that merchants up their prices to accommodate their costs due to credit card fees, consumers who use cards for their purchases actually come out ahead by $240 a year, while consumers who don’t end up behind to the tune of $50, according to the Federal Reserve of Boston.

Capital One® Venture® Rewards Credit Card

Why it’s the best rewards credit card for travel rewards

The Venture Rewards offers a terrific flat rate of 2X miles on every purchase, beating out most travel rewards cards and allowing you to rack up miles without worrying about tracking spending categories.

Pros

The sign-up bonus is one of the best: 100,000 miles after a $20,000 spend within the first 12 months or 50,000 miles after a $3,000 spend within the first 3 months. You’ll also find value with 2X miles on all purchases and in the wealth of travel partners where you can transfer your miles.

The Venture Rewards Credit Card is a fine choice for both domestic and foreign travel because of its versatility. Fly any airline and stay at any hotel – there are no blackout dates.

Cons

The annual fee isn’t waived in the first year. However, this is fairly common among travel credit cards of this caliber.

Chase Sapphire Preferred® Card

Why it’s the best rewards credit card for sign-up bonus

Earn 60,000 points after a $4,000 spend within the first 3 months of card membership; it’s worth $750 when redeemed for travel through Chase Ultimate Rewards.

Pros

In preparation for your upcoming travel, take a look at this card, with its partnerships with major airlines and hotel brands and the 2X points for spending on travel and restaurants.

They’ve also added new, limited-time (now through 9/30/20) bonus categories that may help consumers who aren’t spending as much on air travel right now: 3X points on Instacart delivery and pickup orders (on up to $3,000), 3X points at gas stations (on up to $1,500) and 5X points on select streaming services (on up to $1,500).

Cons

One potential setback is the $95 annual fee. However, if you use this card often and redeem your reward points, you can easily make up the cost of the annual fee.

Capital One® Quicksilver® Cash Rewards Credit Card

Why it’s the best rewards credit card for cash rewards

The Quicksilver offers 1.5% back on all purchases, making it a champion of simplicity. For those who prefer not to strategize spending based on rewards categories, this is an easy choice.

Pros

Complementing the simple and lucrative ongoing rewards, the Quicksilver’s sign-up bonus offers a nice little boost of $150 after a $500 spend within the first 3 months – not the most competitive, but beneficial and easy to achieve. Also, this card has no foreign transaction fees.

Cons

The Citi Double Cash Card may have a greater lifetime value. Although that card doesn’t have a sign-up bonus, the flat rewards rate is better.

Discover it® Cash Back

Why it’s the best rewards credit card for rotating cash back categories

Check out Discover’s 2020 cashback calendar and you’ll see that the card offers a great mix of bonus spending categories, ranging from grocery stores and gas stations to restaurants and online shopping.

And not only will you earn 5% cashback in these rotating categories (upon enrollment, on your first $1,500 in combined quarterly spending, then 1%), Discover will also match all the cashback you earn at the end of your first year.

Pros

You can earn rewards while you finance a larger purchase or pay down debt thanks to the Discover it Cash Back’s 0% introductory APR on both new purchases and balance transfers for the first 14 months (11.99% – 22.99% Variable after that). The card also charges no foreign transaction fee.

Cons

In order to earn the 5% cash back (on your first $1,500 in combined quarterly spending, then 1%), you must remember to enroll each quarter when the category changes. This can be a hassle for busy consumers or those who simply prefer to set and forget.

Additionally, Discover credit cards are not accepted as widely as Visa or Mastercard credit cards. This is especially worth keeping in mind if you plan to travel internationally.

Blue Cash Preferred® Card from American Express

Why it’s the best rewards credit card for everyday purchases

This card’s 6% cash back U.S. supermarkets (on up to $6,000 in purchases per year, then 1%) and 3% back at U.S. gas stations and transit will benefit nearly every consumer.

Pros

The introductory bonus – $250 after spending $1,000 within the first 3 months – is easily achievable and will kick-start your rewards earnings.

Cons

Unlike other rewards cards with an annual fee, the Blue Cash Preferred’s annual fee of $95 isn’t waived the first year. If that’s a deal breaker, you might consider the Blue Cash Everyday®, which has similar categories but with no annual fee.

Southwest Rapid Rewards Plus Credit Card

Why it’s the best rewards credit card for airline rewards

The card comes with a solid sign-up bonus of 40,000 points when you spend $1,000 in the first 3 months. You’ll also enjoy an annual bonus of 3,000 points each year after your account anniversary.

Pros

You’ll earn 2 points per dollar on purchases made with Southwest and its hotel and car rental partners, plus 1 point per dollar on all other purchases. Combine this ongoing rate with the card’s annual bonus and you should be able to make up the $69 annual fee.

If you’re a heavy spender, you may even earn enough points to qualify for the coveted Companion Pass. This can be a huge money-saver for those with families or partners.

Cons

The card’s travel perks aren’t particularly impressive: You won’t get any credits for an expedited airport security program or even a discount on in-flight purchases. Additionally, Southwest doesn’t have any airline transfer partners or much international reach, making it one of the least versatile travel rewards cards.

Wells Fargo Propel American Express® card

Why it’s the best rewards credit card for no annual fee

Few rewards cards offer such a competitive rewards rate and such comprehensive travel protections without charging an annual fee. Even better, there is no spend cap on the card’s 3X bonus categories, including dining, travel and transit, and select streaming services.

Pros

With no annual fee and no limits on rewards, this card is easy to love. There’s also the 20,000 points after a $1,000 spend within the first 3 months – that’s a $200 cash redemption value.

Cons

You’ll have to look hard for something not to like about this card. One potential drawback may be that there are no boosted rewards for groceries, one category that nearly everyone could benefit from earning rewards on.

Ink Business Unlimited℠ Credit Card

Why it’s the best rewards credit card for business cash back

It’s perfect for small-business owners who want to keep things simple. You’ll earn 1.5% cash back on every purchase, no matter where, when or what you buy. Redemption is a breeze, too: As long as your account remains open, your points never expire and you can redeem them for statement credits, direct deposits, travel rewards, gift cards and more.

Pros

Along with a sign-up bonus of $500 when you spend $3,000 in the first 3 months, you’ll enjoy a 0% introductory APR on new purchases for the first 12 months (13.24% – 19.24% variable APR after that). This could be a huge help if you need to finance a large business purchase or free up cash flow.

Cons

While 1.5% cash back is a solid rate for a card with no annual fee, other business cards can offer a higher rewards rate on general purchases or in specific, business-tailored spending categories. Even if these cards come with an annual fee, the rewards you’ll earn will usually be enough to make up for it.

Capital One® SavorOne® Cash Rewards Credit Card

Why it’s the best rewards credit card for dining and entertainment

The SavorOne’s rewards on dining and entertainment are supremely competitive, at 3% cash back for those categories.

Pros

In addition to the rewards on dining and entertainment, this card offers unlimited 2% cash back at grocery stores. Given the rewards this card offers, it’s rather remarkable that there is no annual fee.

Cons

While this is a strong no-annual-fee cash back card, it may not make sense for the ultra-frugal consumer. If you’re trying to cut back on eating out, as many people do when budgeting, you miss out on the card’s most lucrative rewards category. If you’d like to earn rewards for cooking meals at home, you can find better with the Blue Cash Everyday.

Capital One® VentureOne® Rewards Credit Card

Why it’s the best rewards credit card for flat rewards rate

With no annual fee, the VentureOne is a fine choice for the occasional traveler, in large part because you’ll earn a great flat rate of 1.25X miles on every purchase.

Pros

This card has a multitude of travel partners – more than 10 – which could allow you to transfer and stretch your miles even further. Options include Etihad Airways and Air France/KLM.

Cons

The sign-up bonus and the ongoing rewards are serviceable for an occasional traveler, but they both can be beaten by other cards, particularly ones with an annual fee. If you travel often, you’ll likely find more value in an annual fee card.

Bank of America® Cash Rewards credit card

Why it’s the best rewards credit card for customizable rewards

It’s perfect if your spending habits vary from month to month. You’ll earn 2% cash back at grocery stores and wholesale clubs, plus 3% cash back in a bonus category of your choice (on the first $2,500 you spend each quarter in 2% and 3% categories).

Plus, you can switch your 3% bonus category once each calendar month – choose from gas, online shopping, dining, travel, drug stores, and home improvements and furnishings.

Pros

You’ll earn $200 in online cash rewards if you spend $1,000 in the first 90 days. Given this card’s practical everyday bonus spending categories, meeting that requirement should be no sweat. The card also comes with a 0% introductory APR for 15 billing cycles on new purchases (13.99% – 23.99% variable APR after that), making it a solid option if you need to finance a large purchase.

Cons

The 2% and 3% cashback categories are capped at $2,500 in combined spend each quarter. After that, you’ll earn just 1%.

What Types of Rewards are Offered With Credit Cards?

When you look back at the history of credit cards, they started out simple and standard: Each issuer produced one card with one set of features.

Today, credit cards come in multiple different levels with ranging interest rates, fees and reward programs, so before you fill out an application, it’s important to know which will best suit your financial situation and lifestyle.

The following is a brief description of the most common types of credit cards available

Standard credit cards

These credit cards are the most common and are readily available from most banks and financial groups. They are unsecured, which means you do not have to put down a security deposit to prove the money can be repaid. The way the annual percentage rate is offered or calculated for these cards can vary. Here are two examples:

• Balance transfer credit cards
  Balance transfer credit cards allow consumers to transfer a high interest credit card balance onto a credit card with a low interest rate. Typical in the market today are balance transfer credit cards with an introductory annual percentage rate (APR) of 0 percent, with that introductory or “teaser” rate lasting several months up to a year. The terms of balance transfer credit cards varies between offers, so be sure to thoroughly read the terms and conditions for each card.
• Low interest credit cards
  Low interest credit cards offer either a low introductory APR that jumps to a higher rate after a certain period, or a single low fixed-rate APR. Low interest cards can be very useful when consumers need make a large purchase because it allows several months to a year to pay it off with very low or no interest. Before using a low interest card, read all the terms and conditions of the introductory rate so you will not be surprised by fees or accumulated interest.

Credit cards with rewards programs

Reward credit cards allow users to earn incentives for making purchases with their credit card. Points accumulate for each dollar charged on the card, and cardholders can redeem these points for various rewards.

Reward cards usually require better-than-average credit for approval. There are seven major types (not including airline miles / frequent flier cards, which we’ll discuss a bit later).

• Cash back credit cards
  This type of credit card allows you to earn cash rewards for making purchases. The more the card is used, the more cash rewards you receive. Most cash back cards earn users around 1 percent of total purchases, excluding interest and finance charges. Some cards offer a higher cash back percentage with increased usage; others offer a higher cash back percentage at select merchants or for particular types of purchases. Since cash back programs are costly to credit card companies, some of these cards have an annual fee that can vary from $50 to $100. This type of card is best for people who are faithful about paying off their balances each month. If used appropriately, a cash back credit card can earn the cardholder a significant amount of money over time.
• General reward points credit cards
  Reward credit cards are similar to cash back cards in that cardholders can accumulate points toward a reward structure, which is based on how much the card is used over time. General reward cards offer cardholders a variety of items to cash points in for: gift cards, electronics, hotel stays, plane tickets, jewelry, pet supplies and more. Reward programs and promotional offers often change; thoroughly review a card’s terms and conditions before applying.
  Some general reward credit cards come with an annual fee; most have no annual fee. Reward cards are best for people who regularly pay off their balances each month. By minimizing their finance charges, individuals will reap greater benefits from the associated rewards credit card.
• Hotel or travel points credit cards
  This is a genre of credit cards specific to hotels and travel. Some cards are co-branded with hotels. These credit cards allow you to earn points for all purchases, in addition to bonus points for dollars spent on stays at the respective hotel chain. You can redeem your points for free nights and upgrades at the hotel chain your card is co-branded with.
  Then there are broader hotel and travel cards with which points can be redeemed for travel, theme park admission, stays at major hotel chains and more. Because these reward programs can be costly for credit card companies, many of these cards come with an annual fee. If you are not a frequent traveler, the annual fee may negate the benefit of the rewards earned.
• Retail rewards credit cards
  These credit cards are co-branded with a major retailer, such as Disney or Amazon.com. Points are accumulated by making everyday purchases, though cardholders are awarded with double or triple points for making purchases from the co-branded retailer. Reward points must be redeemed for products or services from that specific retailer. Try not to carry a balancr with retail cards; their interest rates tend to be higher.
• Gas cards with points or rebates
  Gas cards come in two species: general and brand-specific. General cards treat all gas companies equally, while brand-specific cards favor one gas company. A general gas rebate card, for example, may give you 1 percent cash back for general purchases but rewards you with 5 percent back for buying gas or having auto maintenance done at any company. A gas-company-specific card, in contrast, will give you a 1 or 2 percent rebate for regular purchases, but you will earn 5 percent rebate only when buying gas at that company’s gas stations.
  If you tend to be loyal to a certain gas company, a brand-specific card may benefit you, but if you tend to just stop at whichever station is closest, you may be best with a general gas rebate card. Additionally, it’s important to remember that a gas company may be very popular in one state, but uncommon or nonexistent in other states, making brand-specific credit cards less than ideal for long road trips.

Airline mile / frequent flyer credit cards

While certain general reward credit cards allow points to be redeemed for plane tickets among other things, there is a subset of reward cards specifically for air travel. This type of card allows consumers to earn airline mile credits whenever they make purchases.

Some cards are co-branded with a specific airline, while some are generic and can be redeemed for tickets with a variety of airlines. Points can be redeemed for airline travel, much like frequent flier miles.

• Airline-specific credit cards
  These cards are associated with one airline. Typically, the cardholder accumulates points from both making purchases with the card and by flying on the specified airline. These cards come with other perks — for example, some allow you to earn double points when you use the card to purchase plane tickets with that airline, get priority boarding and avoid baggage fees.
• Generic airline miles cards
  These credit cards allow you to redeem your reward points for air travel through any airline, travel agent or online travel site. This is a great option for people who aren’t involved in a frequent flier program and aren’t loyal to any particular airline. It allows you the flexibility of redeeming your miles for whichever airline best suits the needs of your trip. With a generic airline card, you gain points for every dollar spent on the card, but because it is not associated with a particular airline, you can’t gain additional points by flying.

Each airline credit card is a bit different, so be sure to read the card’s terms and conditions to find out how many miles you gain for every dollar spent.

Other things to look for are how many miles you need before you qualify for a free plane ticket, if there is a cap on points that can be earned annually and whether or not unused airline miles expire. Some expire in five years while others do not expire at all.

Airline mile reward programs can be costly for credit card companies, so many of these cards come with an annual fee. This type of reward program is beneficial for frequent travelers or those who want to use their card to plan vacations, but the associated fee might make them impractical for other cardholders.

Bad credit and/or credit repair cards

Credit can easily go from good to bad due to poor budgeting or simply by an overlap between jobs. If your credit score is less than satisfactory, it does not mean you cannot qualify for a credit card. There are several options available to those who have had bad credit in the past and for those who are currently trying to repair their credit.

Depending on your specific situation, debt consolidation or use of introductory APRs on balance transfers may be wise choices. If you still need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help rebuild poor credit histories.

• Secured credit cards
  Secured credit cards require collateral for approval. A security deposit of a predetermined amount is needed in order to secure the credit card, and the security deposit generally needs to be of equal or greater value than the credit amount. Collateral can come in the form of a car, boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history.
  Cards that help rebuild credit often come with low credit lines (such as $250) and additional fees, such as an application fee, may apply. Be sure to read over any terms and conditions for these add-on services before applying. If you use the card responsibly and pay all your bills on time, you can ask for a credit line increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track.
• Prepaid credit cards
  Prepaid cards are not credit cards at all, but are used and accepted just like them. The advantages of prepaid cards is that there are no finance charges and they help you avoid debt since all purchases are paid for beforehand. With these cards you determine the credit line by transferring however much money you’d like to have available to spend to the card. This eliminates the risk of running up credit card debt and makes the budgeting process much easier.
  Although most prepaid cards do not charge finance fees, other fees may apply, including monthly fees, startup or application fees, over-limit fees, ATM fees, reload fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying.

Specialty credit cards

These types of cards are for consumers with unique needs for their credit use, such as business professionals and students. These credit card programs are designed specifically to meet the needs of those individuals.

• Business credit cards
  These cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cash back programs and airline rewards. The difference is these cards come with many additional benefits and perks exclusively for those in the business world.
  Some of these bonuses include: Business expenses kept separate from personal expenses; special business rewards and savings; expense management reports; additional cards for employees; and higher credit limits.
  Every credit card is a bit different and promotional offers often change, so be sure to thoroughly look over the terms and conditions for each specific card before applying.
• Student credit cards
  Many college students need a credit card, but they generally have little or no credit history, which makes it difficult to get approved for a traditional card. Student credit cards are specifically designed for those enrolled in accredited four-year colleges and universities to help them build a credit history from the ground up.
  Compared to consumer credit cards, student credit cards are often scaled back somewhat in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step toward building a solid credit history with this type of credit card.  Once they’ve proven financial responsibility, it will be much easier to qualify for reward cards and higher credit lines.

What is the Smartest way to use a Credit Card That has Rewards?

Having a rewards credit card comes with a lot of benefits. From being able to improve your credit score to being able to access money whenever and wherever you need it, the value of credit cards is huge. But, the most appealing benefit of a rewards credit card is earning rewards every time you shop.

Most credit card companies award points based on the frequency of credit card use, attitude toward repayment, and other criteria as determined by the company.

Sadly, many Americans never redeem their credit card rewards. This is a boon for the credit card companies, but a bust for consumers. You may not realize that you can redeem your credit card reward points for almost anything—from airline tickets to paying for a new TV, shopping at a discounted rate at online stores, or even donating them.

Here are some ways to redeem your credit card reward points for shopping online.

1. Shop online

If you’re looking for a discount on your next online shopping spree or even looking for some cash back, your credit card rewards points can provide both. Some credit card issuers let you use rewards points to pay for all or some a purchase at select online stores.

2. Get cash back

Getting money deposited in your bank account or getting a statement credit is a great way to use your reward points. You can use the money to pay your bills, add to your savings balance, or reduce your credit card debt. You can also use the rewards to pay off part of your existing debt or move it into an account that pays you interest.

Credit card rewards can go a long way if you know how to use and maximize them properly.

3. Redeem your reward points for gift cards

Buying gift cards is an ideal way to use your credit card rewards. Gift cards give recipients value and flexibility. And many credit card companies join with retail stores to give you an extra perk when you redeem your points for a gift card.

For example, redeeming $20 worth of rewards or points for a gift card, might get you another $25 gift card instead. And some card issuers let you redeem smaller amounts of points for gift cards compared with the points required for larger reward items. So you can get a gift card for a larger monetary amount for fewer points.

4. Get discounts on airfare and hotels

If you redeem your accumulated card rewards for travel, you can net hundreds of dollars in savings on airfare and hotel accommodations. The caveat is that travel-related rewards often require that you have a lot of points saved up.

Travel rewards may also be subject to blackout dates, which may make this redemption option less desirable for some. But, if you’re willing to let your points add up and work around the blackout dates, you can get some great free travel. All you have to do is log into your online reward portal and get your discount.

You may also be able to use your rewards for car rental to create more room in your travel budget.

5. Donate your credit cards rewards to charity

You can share your rewards in more ways than just redeeming them for gift cards for others or yourself. You can actually donate rewards points from some cards to charitable causes. So, the next time your points are about to expire or you just want to share the wealth, donate your points to a charitable cause.

Read Also: The Best Ways to Use a Credit Card – Turn it Into Cash

Be aware though that some card issuers require a minimum number of points before you can donate them, so check before making any plans.

6. Pay off your balance

By avoiding the urge to spend more than you are able to pay back, you put yourself in a position to rack up more rewards. The more interest paid out every month, the less valuable the rewards become.

7. Narrow your spending

It is easy to forget the value of money when rewards come into play. The more credit cards you use, the fewer the rewards accumulating per card. You may want to focus all your spending on a card that has the best value in areas where you spend the most instead of spreading purchases across multiple cards, making it harder to earn rewards.

8. Watch for bonus offers

If you make a point for each dollar spent, you may be missing on some rewards. Card issuers roll out bonus offers all the time, so it is important to keep an eye out. Some credit card issuers give an increased rate in select areas.

Other credit card issuers give their user’s bonus offers through their website. Some of these include having double or triple cash back if the users shop through their online rewards platform.