How to Choose a Rewards Credit Card

Quick Answer

You can choose the best rewards card for you by checking your credit score, deciding what type of rewards card you want and then comparing the offers on cards that you can likely qualify for and fit your criteria.

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Choosing a new rewards card might feel daunting, but don't let analysis paralysis stop you. After all, there is no single best rewards card—the best option for you will depend on your creditworthiness and preferences. By checking your credit and limiting your search based on the type of rewards you want and how you plan to use the card, you can narrow in on a handful of options before applying for the best one.

1. Check Your Credit Score

Check your credit score to get a sense of what type of credit card you will likely qualify for—you can get your credit score for free from Experian to see where you stand. Having good to excellent credit may be a requirement for some of the best rewards cards, but there are also options for people with good, fair and poor credit.

2. Choose a Type of Rewards

Start narrowing your search by choosing between the three common types of credit card rewards.

Cash Back

Cash back rewards can be a good option if you want to know exactly how much your rewards will be worth. The cash back will accrue in your credit card account. You can then redeem your cash back rewards by requesting a statement credit, check, transfer to a bank account or one of the card's other redemption options.

There are many cash back rewards cards, and rewards rates often range from 1% to 2% of purchases for cards that offer the same rewards rate on every purchase. Some cards offer bonus rewards, but only for specific types of purchases.

General Credit Card Rewards Programs

Many credit card issuers have their own rewards programs, including American Express, Capital One, Chase and Citi.

These programs often offer more flexibility in how you can redeem your rewards. You might be able to choose cash back options, book travel or transfer your rewards to partner hotel and airline loyalty programs.

The flexibility can be a good thing, and you can find some high-value redemptions if you're willing to learn about the rewards programs and how to maximize transfers and redemptions. Travel-hacking blogs and forums can help you learn about particularly good deals.

However, there are also often low-value redemption options that give you less than one cent per point. If you wind up using your rewards this way, you might have been better off with a cash back card.

Hotel and Airline Miles or Points

You can also earn rewards in a hotel or airline's loyalty program by getting a cobranded hotel or airline credit card.

The loyalty program will dictate how you can redeem your rewards, and there may be limited options compared to cash back or credit card rewards programs. However, these cards also often come with brand-specific benefits, such as status in the loyalty program, free checked bags or an annual voucher for a free hotel stay.

Getting one of these rewards cards might make sense if you frequently travel with the same hotel or airline brand.

3. Consider Bonus Rewards Types and Categories

Credit cards use one of four systems for determining the rewards you earn when using your credit card:

  • Flat-rate cards: This type of card offers the same rewards rate on every purchase.
  • Tiered rewards cards: This card offers bonus rewards on purchases in certain categories, such as travel or dining.
  • Rotating rewards cards: The card issuer chooses new bonus reward categories every three months.
  • Dynamic rewards cards: You can change the bonus reward categories, or they automatically change based on your spending each billing cycle.

In addition to the rewards structure, consider the card's bonus categories. For example, the best gas credit cards are generally tiered or dynamic rewards cards that offer bonus rewards on purchases at gas stations.

Consider where and how you plan to use this credit card to see what might be best. If you have other rewards cards, you could also look for a new rewards card that will complement those cards' rewards structures and bonus categories.

4. Review the Common Credit Card Fees

Consider the common credit card fees, such as:

  • Annual fees: You may have to pay this when you open your card (although some cards waive the fee the first year) and after each cardholder anniversary. If you close your card before the first year is up, some credit card issuers might take back any intro bonus rewards you earned.
  • Balance transfer fees: This is the fee to transfer balances to the credit card. It's often 3% to 5% of the amount you transfer and only applicable if you transfer balances.
  • Cash advance fees: You'll pay a fee if you use your credit card for cash advances, which generally isn't a good idea because the cash advance may be subject to a higher interest rate in addition to the fee.
  • Foreign transaction fees: A fee for using the card outside the U.S. and to make purchases in foreign currencies.

How you plan to use the card could dictate what's best. For example, if you plan to travel abroad a lot, look for a rewards card that doesn't have foreign transaction fees. There are also plenty of rewards cards without annual fees, but sometimes the annual fee is worth paying to get higher rewards rates and extra cardholder benefits.

5. Get Prequalified

With a few specifics in mind, you can try to get prequalified for credit cards that will fit your criteria. Credit card issuers have prequalification tools that you can use to see which of their cards you'll likely qualify for without impacting your credit score.

You can use Experian CreditMatch™ to compare credit card offers from multiple credit card issuers that partner with Experian. It's a free feature within your Experian account—the same account you use to check your credit report and score for free.

Filter the cards based on your credit score and what you're looking for, and then compare the results to find the best option. CreditMatch may also highlight several cards based on the cards' attributes and your unique credit profile, although personalized offers aren't available in every state.

6. Compare Intro Bonuses

Many credit cards offer intro bonus rewards to new cardholders. Sometimes, you can only receive the intro offer on a credit card once every few years—or only once ever—and the offers may change periodically.

With this in mind, you'll want to compare the intro offers from your top two or three cards to see if one stands out as the best option right now. You could also try to find out if the card had higher intro bonuses in the past, an indication that you might want to hold off on applying until a better intro offer returns.

If you plan to use the card for a major purchase or balance transfer, also look into the introductory 0% annual percentage rate (APR) offers.

7. Apply for the Best Rewards Card

At this point, you've probably narrowed in on a handful of top choices. Decide which one is at the top of your list and complete the online application to see if you get approved.

If you don't get approved right away, you could try contacting the card issuer to see if there's anything you could do to change their mind. Perhaps your credit reports were frozen, and you forgot to thaw them before applying. Or maybe you only listed your income from your primary job on the application, but you'll qualify if you include all your applicable income.

If you still don't get approved, you could try again later or move on to the next card on your list.

Monitor Your Credit Score and Credit Card Offers

In addition to earning rewards, you can use your new credit card to improve your credit score. And you can use your Experian account to monitor your credit score for free. You might qualify for more credit cards if your credit score increases. And keep an eye on credit card offers to see if opening another new rewards card makes sense.