What are credit card rewards points?
Most cards have unique names for their rewards currency. For example, Delta calls its rewards ‘Delta Skymiles’ and American Express calls them ‘Membership Rewards.’ But regardless of what they’re called, rewards are generally redeemed for two things: travel or cash back.
With travel, we’re talking about anything from points that can be redeemed for a wide range of options around the world, to miles that can only be redeemed for airfare at a handful of airlines. Cash back options are also pretty varied. Some cards earn cash back and gift cards that you can spend at certain online retailers. There are even cards for those who want the best of both worlds.
The golden rule: Don’t carry a monthly balance on your credit card.
If you can commit to paying your balance off in full every month, the only two things you have to worry about are the signup bonus and redemption options. Take standard APR, for example. If you don’t carry a monthly balance on your card, what does it matter that your APR is 18%?
Redeeming points is just as important as earning them.
One of the key benefits of a great rewards card is being able to redeem points the way you want to. Your points don’t do you any good if you can’t use them. This applies across the board for different types of cards. Some airline cards and hotel credit cards are able to offer you a higher earning potential for purchases with their brand.
What are rotating cash back categories?
For rewards credit cards that offer cash back, you may be able to receive extra cash back in certain categories during a set period of time. For instance, both the Discover it® Cashback Match™ and the Chase Freedom® offer 5% cash back in rotating bonus categories.
In order to receive this cash back bonus, you must activate the categories through your account, then spend up to a certain limit at the selected stores.
Discover has already released their Cashback Bonus categories for 2018:
- January to March 2018: Earn 5% cash back at gas stations and wholesale clubs on up to $1,500 in purchases.
- April to June 2018: Earn 5% cash back at grocery stores on up to $1,500 in purchases.
- July to September 2018: Earn 5% cash back at restaurants on up to $1,500 in purchases.
- October to December 2018: Earn 5% cash back at Amazon.com and wholesale clubs on up to $1,500 in purchases.
Chase recently updated their Bonus Calendar to reveal that from January to March 2018 you can earn 5% cash back at cash stations.
How to save more money by maximizing points and miles
There isn’t a one-size-fits-all card that delivers superior points or miles on every conceivable spending category and has the most flexible point redemption options.
Owning two or three cards is the right number to get the most points or miles and still keep the cards active (assuming you’re paying off the balances). You’ll be able to take advantage of the bonuses and ongoing rewards without major limitations.
Here are the best rewards credit cards
- Chase Sapphire Preferred® Card: Most versatile
- Discover it® – Cashback Match: Best cash back bonus
- Capital One® Venture® Rewards Credit Card: Best no intro fee rewards card
- Blue Cash Preferred® Card from American Express: Best for families
- Chase Freedom®: Best cash back program
- Barclaycard Arrival Plus® World Elite Mastercard®: Best fixed-value rewards
- Discover it® Miles: Great first-year bonus
- Bank of America® Travel Rewards Credit Card: Best BoA card
- Premier Rewards Gold Card from American Express: Best perks
- Capital One® VentureOne® Rewards Credit Card: Honorable mention