Editor’s note: Information about credit cards and card offers is accurate as of the date of publication. Some of the offers on this page may no longer be available.
The Bank of America content in this post was last updated on August 7, 2019.
When it comes to credit card features, cash back and sign-up bonuses still reign supreme for many Americans, according to a new survey by CreditCards.com.
Thirty-one percent of Americans say that a 3 percent cash back offer is the most appealing credit card feature. Sign-up bonuses aren’t far behind: the second most popular feature is a $500 cash sign-up bonus (17 percent) followed by one worth $1,200 in airline or hotel credits (11 percent).
As issuers continue to expand the breadth of ongoing rewards offerings, it’s not uncommon to find 4 percent cash back on dining or 3 percent on gas. But it’s important to align rewards with your own needs.
“Credit card rewards are not a ‘one size fits all’ proposition,” says Ted Rossman, industry analyst at CreditCards.com. “When comparing credit cards, ask yourself two key questions: How do I spend my money? And what do I want to get out of my rewards? Matching a card to your lifestyle will reward you for things you buy anyway, provided you pay your bills in full every month.”
Here’s a rundown on the features Americans value and how you can make sure you’re getting the most from your rewards options:
Millennials love sign-up bonuses
Millennials (especially younger millennials ages 23-28) are most likely to seek out a hefty sign-up bonus.
At 36 percent (39 percent for younger millennials), more than a third of all millennials prefer a sign-up bonus of either $500 cash or $1,200 travel credit. That’s more than the number who prefer 3 percent cash back (32 percent), zero percent interest on new purchases for 18 months (11 percent) or zero percent interest on balance transfers for 21 months (6 percent).
One explanation for this may be that younger millennials are more open to travel than other generations who are more likely to have obligations like kids or home ownership. Since income level tends to increase with age, younger workers may find a sign-up bonus of cash or travel credit more impactful than older generations.
Look beyond the bonus
Rossman warns against taking advantage of a lucrative sign-up bonus without considering the full picture, though.
“My advice to people would be to look at the whole package, and realize that when issuers are sweetening perks, they’re typically sweetening the ongoing stuff more than the one-time big bang of the sign-up bonus,” he says. “There’s nothing wrong with loving a sign-up bonus and getting a card for that reason, but don’t make that the one [consideration] and miss out.”
For a card with a great cash sign-up bonus as well as lucrative ongoing rewards, consider the Capital One® Savor® Cash Rewards Credit Card, which offers:
- A $300 sign up bonus after spending $3,000 within 3 months of account opening
- Four percent cash back on dining and entertainment, 2 percent cash back at grocery stores and 1 percent on everything else
- A $95 annual fee, waived the first year
Fewer people value zero percent interest offers
Where millennials prefer sign up bonuses, Gen Xers (29 percent), along with baby boomers (30 percent), have a much higher preference for zero percent interest offers on either new purchases for 18 months or balance transfers for 21 months, compared to the younger generation’s 17 percent.
Beyond age, the survey also reveals a disconnect between Americans who have credit card debt and their interest in zero percent offers that can help them pay it off.
Just 1 in 5 (20 percent) of Americans with credit card debt say the feature they value most is zero percent interest for 21 months on balance transfers. Meanwhile, 27 percent of those with debt prefer 3 percent cash back cards, and another 27 prefer either a cash or travel credit sign-up bonus.
While cash back and sign-up bonuses can add value to your spending, these rewards won’t make up for the average 17.8 percent interest rates Americans are paying on their credit card balances.
Making debt a priority
If you do have credit card debt, the time to take advantage is now, Rossman says.
“The Fed has put a hold on their rate hikes and that actually gives people a real opportunity,” he says. Not only can rate hikes increase your cards’ variable interest rates, but they also may lead to fewer or less generous zero percent offers.
“But you can still get a zero percent balance transfer for up to 21 months,” he says. “That should persist for at least several more months, just given that the Fed has put a hold on things. So now is the time to take care of those balances, and then you can start worrying about rewards.”
That 21-month balance transfer offer is available on the Citi Simplicity Card (then a variable APR of 16.99% – 26.99%), and you can score zero percent on balance transfers and new purchases for 20 billing cycles with the U.S. Bank Visa Platinum Card (then a variable APR of 14.74% – 25.74%).
“You just have to make a vow that you’re not going to put new purchases on that card,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report. “That is a big rule with balance transfer cards. And if it’s a card that you like, you can use it after you’re completely out of debt.”
Cash rewards rule
Where there are situations that call for sign-up bonuses or balance transfer cards, cash rewards rule for the majority of survey respondents, likely thanks to their simplicity.
“A lot of people just prefer simplicity,” Harzog says. “Their lives are complicated enough.”
Cash back offers are only getting hotter, which means choosing a cash back card that works best for you and your everyday spending can be even more lucrative long-term.
Choosing your best cash back match
If you’re looking for universality, flat cash back cards offer increasingly great rewards.
Today, some of the best include 3 percent cash back on all purchases on up to $20,000 for your first year with the Chase Freedom Unlimited® (then 1.5 percent) or 2 percent cash back on all purchases with the Citi® Double Cash Card (1 percent when you buy and 1 percent as you make payments for those purchases).
Like Rossman, Harzog also recommends evaluating the categories in which you spend the most to find the cash back card that works best for you.
“You can look at one thing that’s most important, but you should really look at your whole spending pattern,” she says. “How do you run your life? What do you spend money on? You can combine a couple of categories like that. It takes a bit of research, but it’s really worth it.”
If your top spending category is groceries, for example, you may benefit most from the Blue Cash Preferred® Card from American Express, which offers 6 percent cash back at U.S. supermarkets (on up to $6,000 per year, then 1 percent). If your spending varies a bit more, you may enjoy the freedom to choose your top category each month offered by the Bank of America® Cash Rewards credit card or your top two categories each quarter with the U.S. Bank Cash+™ Visa Signature® Card.
“The most important thing is, if cash back is what you want, focus on a card where you get the most value with your cash back.”
CreditCards.com is owned by Bankrate’s parent company, Red Ventures.
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