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Best Rewards Credit Cards of 2017

Best Rewards Credit Cards of 2017

A Detailed Look On How Rewards Cards Work

Love free stuff? Credit card companies want you to sign-up for their rewards cards by promising free cash, frequent-flyer miles, store points and more.

Statistics show that almost 80% of people in the US have at least one credit card and the revolving debt sitting at over $884 billion as of January 2015. With almost 2 billion credit cards in use within the USA alone, the average person has around four credit cards in their wallet. Are you one of them?

If you're thinking about applying for one of these offers but don't know which one is right for you, keep reading!

The Appeal of Rewards

Do you like the idea of spending money and earning points? That's exactly what rewards cards promise: points for cash, frequent flyer miles, discounts on groceries and more.

Rewards cards are appealing because they provide a points system that makes customers feel as if they are being rewarded for spending money. In other words, the more you use a particular credit card or shop at the same store the more rewards you can accumulate.

Studies show that consumers are more likely to increase their spending if they are being rewarded for it. People like to feel as if they are a part of a community, and loyalty programs allow for that. If there's an incentive, you are more likely to spend. Credit card companies capitalize on this by providing their clients with rewards points for growing their loyal customer basis.

Banks can afford to provide these rewards because of their profits from the interest and fees they charge. Not all credit card users pay off their balances each month, and so the banks earn profits and transfer some of these profits to their loyal customers through the use of rewards points. Citigroup recorded interest profits of $11,822 million in 2015 while only paying out $5,483 million in compensation and benefits. Clearly, they are ahead of the game. There are enough people in debt to sustain their loyalty payout.

But how do these rewards cards work?

What You Need To Know

If you have a credit card, you are going to receive a monthly statement that may show the following:

  • Details of your charges on the card
  • The balance of your account
  • The balance of your account
  • The minimum repayment due - if you pay just the minimum amount you will be charged interest
  • Shows your monthly spending
  • Gives you your due date.

Important: Pay by the due date. Otherwise, you will be charged late payment fees.In the top right-hand corner, you can see the number of accumulated points - 164,413. These points can be redeemed for travel, merchandise, gift cards, dining and entertainment

Rewards cards are a great option and can offer a broad range of benefits.

Questions You Need To Ask

Before choosing a reward card, it's important to consider several factors and ask the following questions.

Are you paying back more in interest than you're earning in cash backs/rewards?

For example, if your interest rate is 10% and your rewards rate is only 2% and you're not paying off your card each month, you are 8% behind. But if you pay the card off every month, you do earn that 2%.

To put it another way, if you get 1 point per $1 spent, you often need to collect around 5,000 points to get $100 cash back. This amounts to a return of 2% - not bad if you pay off the balance.

If the point system is calculated as a percentage, what is the rate? 1% cash back could be equivalent to one point. So you still need to spend $1,000 to get back $10.

Are there any annual caps on points?

How many points can you earn before you hit the limit? Nowadays with fierce competition between banks, you'll often see 'no points cap' advertising - there is no limit to how many points you can accumulate.

Is the card provider charging you extra annual fees for the benefits of points?

Rewards cards often attract higher annual fees that users might not be aware of.

For example, The Citigroup Hilton HHonors Reserve Card has an interest rate of 15.49% and an annual fee of $95. You can earn 2 weekend nights after qualifying purchases.On the other hand, the Visa Signature Card has no annual fee and an interest rate from 15.49% to 19.49% and you'll receive 40,000 Hilton HHonors Bonus Points after making a qualifying purchase.

Ask yourself: what makes a qualifying purchase? What is easier to get: the two nights or 40,000 points? What will 40,000 points give you?

With this card, you can book a room for as little as 5,000 points per night to as much as 95,000 points depending on the location, time of year and room type.

For example, if you book a Reward Stay for check-in on March 31st – and check-out on April 2nd (2 nights), where the number of points required in March is 50,000 points and in April is 30,000 points, the total cost of the Reward Stay will be 80,000 points.

Do the points have an expiration date?

Having an expiry date on your rewards points can be annoying. More often than not, credit card companies don't have an expiration date. However, there are some benefits to having an expiration date for your points. It creates an urgency to spend (more money for the provider) and to use the points (benefit the user).

American Express, Chase and Bank of America don't have expiration dates as long as your account isn't overdue. Citi Thank You Points, for example, expire after three years. Others won't expire as long as you earn or redeem points within any twelve month period. This motivates you to keep using your card, spending money and earning points.

All these factors impact whether or not that specific rewards card is right for you.

3 Types Of Most Popular Rewards Cards

Cash back cards:

Cash back cards encourage cardholders to spend by offering them a percentage of the money back. These offers often range from 1-4% cash back, so if you spend $100 on groceries, you could get anywhere from $1 - $4 cash back.

If you spend $100 a week on groceries, after a year you might receive $52 to $208 cash back. Not bad if you're still sticking to your budget and not increasing your spending just to get a higher cash back.

Airline cards:

Airline cards earn you points for every dollar you spend that get converted into frequent flyer miles. If you consider yourself a bit of a globetrotter or travel often, these cards might be right for you.

Reward points can't be used for all flights. There are blackout periods in which seats on flights will not be available for frequent flyer miles. Then there's the issue of which card to get? Often, airline specific cards are limited to one airline (although these days many do have partner airlines where you can enjoy some benefits). It's worth checking into who your rewards points may be used with before signing up for a specific airline card. However, if you plan on only using one specific airline (Delta Air for example), an airline specific card might be your best option.

Retailer cards:

Retailer cards are store-specific and offer extra points or cash backs if used in their stores. Retailers do this to gain customer loyalty.

If you shop at a particular store often, signing up for a credit card with them might be a good idea. The benefits include extra cash back and points to use on entertainment, shopping and dining as a way to say 'thank you' for shopping there. Just remember to read the fine print. Retailer cards are created to encourage you to spend more in their stores so make sure there is a good points-to-rewards ratio.

Conclusion

Rewards cards can give you a little bonus at the end of each year in the form of cash back, free gas, shopping vouchers or frequent-flyer miles. However, they're only a good value if you're not accumulating debt in the process.

Finding the right card doesn't have to be complicated. Look for the features you'll use and making sure your rewards aren't costing you more than you're paying.

Showing 9 Offers

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Card Name Rewards Regular APR Get Started
Simmons Bank Visa® Platinum Rewards

Simmons Bank Visa® Platinum Rewards

Points Rewards
Points
9.75%
View Details
— or —
Apply Now
On Simmons First's secure website.
Terms and restrictions apply.
PenFed Defender American Express® Card

PenFed Defender American Express® Card

Cash Rewards
Cash
9.24—17.99%
View Details
— or —
Apply Now
On Pentagon FCU's secure website.
Terms and restrictions apply.
PenFed Defender Visa Signature® Card

PenFed Defender Visa Signature® Card

Cash Rewards
Cash
9.24—17.99%
View Details
— or —
Apply Now
On Pentagon FCU's secure website.
Terms and restrictions apply.
PenFed Platinum Rewards Visa Signature® Card

PenFed Platinum Rewards Visa Signature® Card

Points Rewards
Points
9.24—17.99%
View Details
— or —
Apply Now
On Pentagon FCU's secure website.
Terms and restrictions apply.
PenFed Premium Travel Rewards American Express® Card

PenFed Premium Travel Rewards American Express® Card

Travel Rewards
Travel
9.24—17.99%
View Details
— or —
Apply Now
On Pentagon FCU's secure website.
Terms and restrictions apply.
USAA Cash Rewards® Visa Signature® Card

USAA Cash Rewards® Visa Signature® Card

Cash Rewards
Cash
10.4—26.4%
View Details
— or —
Apply Now
On USAA Savings Bank's secure website.
Terms and restrictions apply.
USAA Rewards™ Visa Signature®

USAA Rewards™ Visa Signature®

Points Rewards
Points
10.4—26.4%
View Details
— or —
Apply Now
On USAA Savings Bank's secure website.
Terms and restrictions apply.
USAA Cashback Rewards Plus American Express® Card

USAA Cashback Rewards Plus American Express® Card

Cash Rewards
Cash
12.4—26.4%
View Details
— or —
Apply Now
On USAA Savings Bank's secure website.
Terms and restrictions apply.
USAA Preferred Cash Rewards Visa Signature®

USAA Preferred Cash Rewards Visa Signature®

Cash Rewards
Cash
12.4—26.4%
View Details
— or —
Apply Now
On USAA Savings Bank's secure website.
Terms and restrictions apply.
Advertiser Disclosure: The credit card offers that appear on this site are from credit card companies from which this site receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Data provided by Informa Research Services. Click here for more details on rate assumptions and criteria.
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