credit cards

The Points Guy: How to pick a rewards card

Which factors should I consider before applying for a rewards credit card?

Some cards have huge sign-up bonuses, so take that into account. For example, the Chase Sapphire card sends you 40,000 points after you spend $3,000 in the first three months. That's a $500 value. And the $95 annual fee is waived for the first year. So even if you pay the fee the second year, you're still coming out ahead.

The Capital One Venture card is probably one of the best fixed-value cards, but right now the sign-up bonus is only 10,000, which is a $100 value. It also has a $59 annual fee starting in the second year. So, before you get this card, make sure to consider the sign-up bonus in comparison to the annual fee. You need to ask: Year after year, is that card going to work for me?

And, frankly, if you're not getting more value than the annual fee, I recommend two things. A lot of credit card companies will let you downgrade to a card that has no annual fee. That way you keep the credit line open, and it doesn't have a negative impact on your credit. Or, you could just cancel the card. It could impact your credit score, but it's not a major worry for most people with good credit who pay their bills.

For international travelers, it's critical you get a card that does not have foreign transaction fees because if you use a card that does, you're paying up to 3 percent in fees, which negates the value of any of the points you earned.

Once I have my card, how can I maximize my rewards?

One great way to boost your rewards is to shop through online portals offered by credit cards, airlines and other companies with points programs. Never go directly to a retailer's website. For example, the Chase Ultimate Rewards shopping portal will give you 10 points per dollar spent at Kohl's. And that's in addition to the points you earn for using your credit card.

The Chase Freedom card this quarter is giving five points per dollar spent at Kohl's, so if you click through the shopping portal to the Kohl's website, you earn 10 points per dollar for going through the portal and then an additional five for using your Freedom card. In essence, that's 15 percent back. Plus, you can still use coupon codes and get free shipping.

Also, you can register your credit or debit card with various dining programs. By doing that, you can earn up to five frequent-flier miles per dollar when you go to one of the participating restaurants. So if you use a credit card like the Sapphire Preferred with a dining program, you'll get double points on dining and then up to five miles per dollar in whatever airline program you want.

Any closing advice?

I think it's very important to get the big bonuses on the credit cards. And I think the trick in getting the most value out of your miles or points is to understand the different frequent-flier programs. Once you accrue all these points, you need to learn how to use them well. You have to treat your miles and points like money.

Editor's note: Brian Kelly is founder of the popular rewards points site ThePointsGuy.com. He has spent years learning how to squeeze value out of frequent flier and credit card points programs. Brian consults regularly with the travel industry about loyalty programs, and dishes out his signature tips and advice via Twitter and at the site.

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