Choosing a new credit card? Here’s how to pick the best reward offer

NEW YORK, NY, May 04, 2021 /24-7PressRelease/ — With so many rewards credit cards on the market, it can be intimidating to figure out which credit card offers are best.

Points vs cash back vs co-branded rewards

Reward credit card generally fit into one of three categories: they either earn transferable points or miles, they earn cash back, or they earn co-branded rewards.

Co-branded credit cards are credit cards associated with a specific airline, hotel, retail chain or other company. They tend to offer rewards that bring the most benefit to brand loyalists, and sometimes their rewards will only be redeemable with the co-branded company.

Points or miles credit cards will allow you to earn transferable points or miles that you can spend multiple ways. These tend to be more flexible than co-branded credit cards in how you can use them, but may not have the same branded perks.

Cash back credit cards are the most flexible type of credit card reward, as they give you a simple cash value return on your spending. Cash back is typically available as a statement credit, paper check or direct deposit.

Choosing the best reward rate

The other key factor when comparing credit card reward offers is the rate at which you can earn rewards. Some of this is straightforward — 2% flat cashback is more than 1% flat cashback — but it can be a bit more nuanced.

Many credit cards will have bonus categories that earn more than the flat rewards rate. Common bonus categories include travel, dining, gas and grocery spending. If you spend a lot within a given bonus category, you can quickly earn a higher reward percentage than a flat rate reward credit card.

It’s also important to note that some points and miles have a redemption value that’s higher than their cash equivalent, especially when redeemed in certain ways. For example, each mile earned on a co-branded airline credit card could be worth as much as 1.5 or 2 cents, while a cash back rate is equivalent to cash value. However, maximizing your value with these rewards will limit how you can use them.

Other aspects to compare

New cardholder benefits: You may see credit card offers that highlight specific rewards for new cardholders. For example, some cards may offer a lump sum cash or points reward upon reaching a spending minimum, while other cards offer a waived annual fee or matched points or cashback for your first year. These offers can add substantial value, but it’s important that the card will continue to match your needs after those initial boosts are gone.

Additional perks: Many credit cards will come with additional perks in addition to the points or cashback you can earn. For example, some travel credit cards will have no foreign transaction fee, or flexible ways to redeem points or miles in addition to travel . Hotel credit cards may offer an annual free night on your cardholder anniversary, while student credit cards can even offer cash rewards for good grades.

Annual fee and APR: Of course, credit card rewards are only worth it if you earn more than you spend. Two of the main ways you can lose out with a credit card are annual fees and a high interest rate. An annual fee is usually worth it only if you use a card often and get a lot of value out of it — otherwise, there are many credit cards that offer no annual fee.

Savvy credit card users can avoid paying interest on charges by making sure they fully pay off their statement balance each month within the grace period. But if you’re not sure you can stick to that, looking for a credit card with a low APR or a 0% intro APR on purchases and/or balance transfers can help minimize the cost.

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