How does a rewards credit card work?

A rewards credit card earns purchase rewards in the form of cash back, points, or miles. Every eligible purchase adds to your rewards balance, and you can then redeem your rewards with the credit card issuer.

How do I compare rewards credit cards?

To compare rewards credit cards, look at their rewards rates, bonus offers, annual fees, and any additional benefits they offer. These are the features that have the most impact on the value a card offers. You may also want to decide on one type of rewards card first, such as a travel card or a cash back card. If you know you want a specific type of card, then you can save time by only looking at cards in that category.

What is the best way to use credit card rewards?

The best way to use credit card rewards is the redemption method that offers the most value. This can vary depending on which rewards credit card you have. For example, travel cards usually provide the most value when redeeming rewards for travel, whereas cash back cards are designed for cash back redemptions. When you have a rewards credit card, make sure you review the different redemption methods so you can choose the best one.

How can I make the most of a rewards credit card?

To make the most of a rewards credit card, use it for every purchase to earn as much back as you can. However, don't make unnecessary purchases just because your card earns rewards. Follow your usual spending habits. Last but not least, always pay the full statement balance on your credit card to avoid interest charges.

11 Best Rewards Credit Cards of December 2021

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

With all the great offers available, a rewards credit card is practically a must-have. You could save money by earning cash back, travel rewards, or points with your favorite retailer on your purchases. The tricky part is sorting through all those credit card offers to find the one that fits your lifestyle.

To make it easier, The Ascent's experts have reviewed hundreds of options and put together a list of the best rewards credit cards. Below, you'll find quality rewards cards for everyone, whether you're looking for a big introductory bonus, no annual fee, or extra rewards in a specific bonus category.

Key Links

What is a rewards credit card?
Types of rewards credit cards
What is the best credit card for rewards?
What can you do with credit card rewards?
Should I get a rewards credit card?
Alternatives to rewards credit cards

Best Rewards Credit Cards

The Picks
Card	Rating	Great For
Wells Fargo Active Cash℠ Card	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: Unlimited cash back
Chase Sapphire Preferred® Card	Rating image, 4.50 out of 5 stars. 4.50 stars	Great For: Travel sign up bonus
Chase Freedom Flex℠	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: Bonus cash back
Blue Cash Preferred® Card from American Express Terms apply	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: U.S. gas and U.S. supermarkets
Citi Custom Cash℠ Card	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: Customizing your cash back
American Express® Gold Card Terms apply	Rating image, 4.50 out of 5 stars. 4.50 stars	Great For: Dining and U.S. supermarkets
Bank of America® Travel Rewards credit card	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: Travel card with no annual fee
Capital One SavorOne Cash Rewards Credit Card	Rating image, 4.50 out of 5 stars. 4.50 stars	Great For: Dining rewards with no annual fee
Citi Premier® Card	Rating image, 4.50 out of 5 stars. 4.50 stars	Great For: Travel rewards
Discover it® Student Cash Back	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: Students
Discover it® Secured Credit Card	Rating image, 5.00 out of 5 stars. 5.00 stars	Great For: Bad/building credit
Capital One Venture X Rewards Credit Card	Rating image, 4.50 out of 5 stars. 4.50 stars	Great For: Premium travel rewards

The Ascent's best rewards credit cards:

Unlimited cash back: Wells Fargo Active Cash℠ Card
Travel sign up bonus: Chase Sapphire Preferred® Card
Bonus cash back: Chase Freedom Flex℠
U.S. gas and U.S. supermarkets: Blue Cash Preferred® Card from American Express
Customizing your cash back: Citi Custom Cash℠ Card
Dining and U.S. supermarkets: American Express® Gold Card
Travel card with no annual fee: Bank of America® Travel Rewards credit card
Dining rewards with no annual fee: Capital One SavorOne Cash Rewards Credit Card
Travel rewards: Citi Premier® Card
Students: Discover it® Student Cash Back
Bad/building credit: Discover it® Secured Credit Card
Premium travel rewards: Capital One Venture X Rewards Credit Card

Ratings Methodology

What is a rewards credit card?

A rewards credit card is one that earns rewards when you use it to pay for eligible purchases. The reward you earn depends on the card. One card may offer a rate of 1.5% cash back on purchases. Another could offer 2 miles per $1 on your spending. There are also rewards cards that offer higher rates in specific categories, such as 3% on grocery store purchases.

As you use your card, your reward balance will grow. If you spend $100 on a card offering 1.5% cash back, then the card issuer would add $1.50 to your rewards balance. You can redeem your rewards any time you meet the redemption minimum. Many of the best rewards credit cards also don't have a minimum, in which case you can redeem rewards at any time.

Types of rewards credit cards

There are three types of rewards cards: travel rewards credit cards, cash back credit cards, and store credit cards.

Note that some top rewards cards technically fall into multiple categories, but there's still usually a single category that best describes each card. The Chase Sapphire Preferred® Card is a popular example. It earns points you can use for travel, cash back, or store gift cards. However, its points are most valuable when used for travel, and it earns bonus rewards on travel purchases. For those reasons, it's considered a travel credit card.

Travel rewards credit cards

A travel credit card earns rewards you can redeem for travel. This can include airfare, hotel stays, vacation rentals, car rentals, cruises, and much more. Travel credit cards, some with no fee, usually offer special travel perks and no foreign transaction fee. Most come with an annual fee, though.

There are a few different ways to use travel rewards depending on the card. Some cards let you redeem rewards at a fixed rate toward cash travel purchases.

Airline and hotel cards earn rewards in the provider's loyalty program. United Airlines cards earn miles in the United MileagePlus program, Hyatt cards earn points in the World of Hyatt program, and so on. With this type of travel rewards card, you can use your rewards for bookings through the loyalty program.

Certain cards in major credit card rewards programs offer transferable rewards. That means you can transfer your points to any partners in the card issuer's rewards program. Let's say you have the American Express® Gold Card. You could send rewards to the airline and hotel partners in the American Express Membership Rewards program.

Compare more picks: Check out The Ascent's best travel rewards cards

Cash back credit cards

A cash back credit card earns rewards in the form of cash back. There are a few different ways to redeem cash rewards.

Just about all cash back cards let you apply your rewards as a statement credit on your credit card account. If you have $100 in cash back, you could use it to reduce your credit card bill by $100. A word of warning -- credit card companies typically don't consider cash back a substitute for your minimum payment. If there's a balance on your cash back card, then you still need to pay at least the minimum amount.

Many cash back cards also let you deposit cash back into your bank account or request a check.

Compare more picks: Check out The Ascent's best cash back credit cards

Store credit cards

Store credit cards work a bit differently than travel cards and cash back cards. There are quite a few retailers that have their own store cards, and each retailer sets the rules with the cards it offers. This type of rewards card is only recommended if you spend a lot of money at the store in question. For most consumers, cash back cards are the better choice.

Most store cards earn rewards you can redeem for a gift card with that store. There are exceptions, though. Certain store cards also offer cash back, with the Costco Anywhere Visa® Card by Citi being one example. Some store cards offer a discount on purchases instead of rewards.

There are two basic categories of store cards. Closed-loop store cards only work at that retailer and any other brands it has. Open-loop store cards can be used with other merchants. Some stores only offer one of the two, whereas others offer both options. When stores offer both, they generally approve customers with lower credit scores for closed-loop cards. Applicants with better credit can qualify for open-loop cards.

Here's an example of how this works. Let's say you apply for a credit card with T.J. Maxx. Any of the following could happen:

You could be approved for the TJX Rewards® Credit Card. This is a closed-loop card, meaning you could only use the card at T.J. Maxx and its other brands.
You could be approved for the TJX Rewards® Platinum Mastercard®. This is an open-loop card that can be used anywhere Mastercard is accepted.
T.J. Maxx could also, of course, deny the application.

TIP

How can I maximize my credit card rewards?

Use your rewards card for every eligible purchase: If you don't, you're leaving money on the table. Always pay by card so you can earn rewards on your spending.

Stick to your budget: A common mistake is making unnecessary purchases and using rewards to justify it. Don't let credit card rewards convince you to overspend.

Pay off your credit card every month: Credit card interest will cost more than any rewards you earn. Avoid this by always paying your entire statement balance.

What is the best credit card for rewards?

For the typical consumer, the best credit card for rewards is the Wells Fargo Active Cash℠ Card. It earns an unlimited 2% cash rewards on purchases and charges no annual fee. In addition, it offers a generous welcome bonus and a 0% intro APR.

Most consumers will get the greatest value from a card with a high rewards rate across every spending category. The unlimited 2% cash rewards rate offered by this Wells Fargo card is the best we've seen.

Keep in mind that this isn't the best rewards credit card for everyone. Your best rewards card could be one with bonus categories that fit your spending to a T or a travel card that helps you cover expensive airfare. It's important to find the rewards card that matches your lifestyle and spending habits. That way, you'll be able to maximize your credit card rewards.

Learn more on how to pick the best rewards credit card in the video below.

What can you do with credit card rewards?

After earning credit card rewards, you can redeem them through the card's rewards program. Redemption options depend on the card you have. Here are the most common things you can do with credit card rewards:

Get cash back, either as a statement credit on your credit card bill, a direct deposit to a bank account, or as a check
Use them for travel through the card issuer's travel portal, as a statement credit toward previous travel purchases, or by transferring them to airline or hotel loyalty programs
Redeem them for store gift cards
Redeem them for products or services

When you log in to your online account, there will be an option to redeem rewards. You can choose this option to see what your redemption options are and pick the one you want.

The value of your credit card rewards can vary depending on the redemption method. For example, if your credit card earns travel points, you may also be able to redeem them for cash back, but at a lower rate per point. Before using your rewards, compare what they'll be worth with each redemption method so you can get the most value from them.

Should I get a rewards credit card?

You should get a rewards credit card if you have a good credit score and you plan to pay the bill in full every month.

Rewards cards are usually a great choice. If you use them correctly, they can save you a lot of money. There are only a couple situations when you shouldn't focus on getting a rewards card.

If you don't have a good credit score, you should work on that first. It usually takes a FICO® Score of at least 670 to be approved for any of the best rewards credit cards. By improving your credit, you'll be able to qualify for rewards cards that offer much more value.

A rewards card also isn't worth it if you won't pay in full. Every month that you carry a balance, the card issuer can charge you credit card interest. The cost of that will almost always outweigh your rewards.

Here are the pros and cons of having a rewards credit card:

Pros

Earn rewards on purchases
Many offer welcome bonuses
Typically include complimentary shopping and travel protections
Can build your credit when you consistently pay your bill in full

Cons

Often have high APRs
Can encourage you to spend more money
May charge an annual fee
Top rewards cards are only available to consumers with good credit

Alternatives to rewards credit cards

Your financial situation may call for a different type of credit card. Here are a few alternatives to rewards credit cards that could be more useful for you:

0% intro APR credit cards: Credit cards with a 0% intro APR on purchases. If you won't be able to pay your credit card bill in full for any reason, then 0% intro APR cards are the best option. They're especially helpful for financing big purchases. The credit card company won't charge you interest for the duration of the intro period.

Credit cards for bad credit: Credit cards that are open to applicants with a poor or limited credit history. While credit cards for bad credit tend to be light on benefits, they can help you improve your credit.

Balance transfer credit cards: Credit cards with a 0% intro APR on balance transfers. When high-interest debt is costing you money every month, balance transfer cards can come in handy. You can transfer your debt over and avoid interest for the length of the intro period.

FAQs

A rewards credit card earns purchase rewards in the form of cash back, points, or miles. Every eligible purchase adds to your rewards balance, and you can then redeem your rewards with the credit card issuer.
To compare rewards credit cards, look at their rewards rates, bonus offers, annual fees, and any additional benefits they offer. These are the features that have the most impact on the value a card offers.
You may also want to decide on one type of rewards card first, such as a travel card or a cash back card. If you know you want a specific type of card, then you can save time by only looking at cards in that category.
The best way to use credit card rewards is the redemption method that offers the most value. This can vary depending on which rewards credit card you have. For example, travel cards usually provide the most value when redeeming rewards for travel, whereas cash back cards are designed for cash back redemptions.
When you have a rewards credit card, make sure you review the different redemption methods so you can choose the best one.
To make the most of a rewards credit card, use it for every purchase to earn as much back as you can. However, don't make unnecessary purchases just because your card earns rewards. Follow your usual spending habits. Last but not least, always pay the full statement balance on your credit card to avoid interest charges.

This device is too small

Best Rewards Credit Cards for December 2021