When you redeem your credit card rewards for trips, gift cards, statement credits, or cash back, it can feel like scoring free money. The top rewards cards not only come with great earning rates, but a ton of perks to go with it. It’s no doubt incentive for those with excellent credit scores to add cards to their wallets. But are there good rewards card options available to those with a less-than-excellent credit score?
How is my FICO score calculated?
Five factors make up your FICO score, with each factor weighted to determine a specific percentage of your total score.
- Payment history – Do you make your payments no more than 30 days after your due date consistently? (35%)
- Credit utilization – The amount owed on revolving credit accounts vs. your overall available credit (30%)
- Length of your credit history – the average age of all your accounts, as well as the age of your newest and oldest accounts (15%)
- New credit – Opening multiple new accounts or having many credit inquiries can temporarily reduce your credit score (10%)
- Credit mix – Creditors look for a mix of revolving (credit card) debt and installment loans, such as mortgages, personal loans, or vehicle loans, to show you know how to manage credit (10%)
How rewards credit cards affect your credit score
Paying your rewards credit cards on time will help your payment history. But if you habitually charge your cards to their limit in order to maximize your rewards, you could be hurting your FICO credit score without realizing it.
Even if you pay your credit card bill on or before the due date, you could be showing a high credit utilization ratio depending on when the card issuer reports your balance to the three credit bureaus. Since credit utilization accounts for 35% of your credit score, it’s smart to keep your balances below 50% (or even 30%) at all times.
Good credit vs. No credit: How you can still get a rewards card with no credit history
Banks and creditors consider people with a FICO credit score of 670 to 739 as having “good” credit. With a credit score of 670 and a steady income, you should be able to qualify for some of the best rewards credit cards for good credit, like Capital One® Venture® Rewards Credit Card and Discover it® Cash Back. However, you may not qualify for the lowest interest rates on these cards unless you have an excellent credit score of 740+.
Your credit score isn’t the only consideration when you are applying for a rewards credit card. Your annual income, your history with that bank or credit card provider, your number of accounts and even your number of accounts with that bank all factor into your eligibility for a rewards credit card.
If you have no credit history, it will be harder to get a rewards credit card, regardless of your income or your history with that bank.
Your safest bet is to apply for a secured credit card, where you deposit money to back the card, and can make purchases up to that limit. After several months of on-time payments, credit card issuers like Capital One and Discover may convert your secured card to a regular card.
Rewards cards for people with excellent credit
When your credit score reaches 740, it opens a new level of rewards credit cards.
Elite cards like the American Express Centurion (the famed “black” card) and the J.P. Morgan Chase Palladium Visa, made out of palladium and gold, may still be out of your reach, as these cards are by invitation only and reserved for those with a 7-figure income.
But for the rest of us, an “excellent” credit score of 740+, or even a good score of 670+, will earn you several top tier rewards cards with excellent benefits.
Chase Sapphire Reserve
If you have excellent credit, you may be eligible for Chase Sapphire Reserve, and you’ll earn 50,000 bonus points (worth $750 towards travel when redeemed through Chase Ultimate Rewards) when you spend $4,000 within the first three months of accounting opening.
This top-tier Chase card gains you access into the Chase Ultimate Rewards portal, where you can cash in your points for 50% more value in travel redemption than you’d get using them for cash. Earn 3 points per dollar on dining and travel (after earning the $300 travel credit), and 1 point per dollar on everything else. The annual benefits and rewards potential of this card far outweigh the hefty annual fee.
- Straightforward points system
- Up to $100 application fee credit for Global Entry or TSA PreCheck
- $300 statement credit for travel annually
- Access to airport lounges through Priority Pass
- $550 annual fee
- No introductory APR
Discover it® Cash Back
The Discover it® Cash Back is accessible to those with a good credit score, looking for a great all-around credit card with a promotional intro APR and no annual fee. Keep in mind, cards with the highest rewards – like Chase Sapphire Reserve – typically also come with a high annual fee. Discover it® Cash Back balances a low-cost credit card with 5% rewards in rotating categories on up to 1,500 in purchases each quarter after activating to provide tremendous value.
- 0% intro APR on purchases and balance transfers for 14 months (then a variable APR of 13.49% – 24.49%)
- No foreign transaction fees
- Discover matches your rewards earned the first year, dollar for dollar
- 5% rewards in rotating categories up to $1,500 in purchases every quarter, upon enrollment, 1% on everything else
- Redeem rewards on Amazon purchases
- No annual fee
- You must activate the rotating category rewards and keep track to maximize your earnings
- No traditional sign-up bonus
Capital One® Venture® Rewards Credit Card
The Capital One® Venture® Rewards Credit Card balances solid rewards with a moderate annual fee of $95, waived the first year. Like the Sapphire Reserve card, you’ll get up to a $100 application fee credit on Global Entry or TSA PreCheck.
The card delivers a generous one-time bonus of 50,000 miles after you spend $3,000 in purchases within the first three months of opening the account. Earn 2X miles on every purchase, every day, and 10X miles when you book and pay for a hotel stay through hotels.com/venture.
- Up to $100 application credit for Global Entry or TSAPreCheck
- Generous intro bonus
- No foreign transaction fees
- No intro APR
- Other cards may have better rewards in specific categories
Rewards cards for people without excellent credit
If you can’t unlock the rewards of these top-tier credit cards, there may be a high-quality credit card available for you – even if you have an average credit score or no credit history.
Credit One Bank® Visa®
Think you can’t get an unsecured credit card with a credit score of 300 to 670? Credit One Bank® Visa® can help. The rewards aren’t amazing, but you can earn 1% cash back on purchases that include gas, groceries and some utilities. You may even qualify for no annual fee, as the annual fee ranges from $0 to $99 and depends on your creditworthiness.
Best of all, Credit One regularly reviews your account for credit limit increases, permitting you to build your credit while you earn rewards.
- An unsecured credit card for people with poor to average credit
- Choose your own due date
- Earn 1% rewards in common spending categories
- No intro APR
- High regular APR of 20.24% – 26.24% Variable
- No sign-up bonus
Discover it® Secured
There aren’t many rewards credit cards for borrowers with no credit history. The Discover it® Secured card stands out, offering generous cash back rewards of 2% on gas station and restaurant purchases up to $1,000 each quarter, and 1% after that, as well as 1% on all other purchases, with no annual fee.
After eight months of on-time payments, Discover will review your account regularly to see if you can transition to an unsecured card.
- Build your credit while you earn cash back rewards
- No annual fee
- Discover matches your rewards at the end of the first year
- 10.99% intro APR on balance transfers for 6 months (then a variable APR of 24.49%)
- High interest rate of 24.49% Variable
- Security deposit of $200 to $2,500 required to open card
How to maximize your credit card
No matter your credit score, you can maximize your credit card rewards by paying attention to rotating spending categories and making sure to activate those cards.
Also, do your research to see which redemption methods give you the most value. In some cases, redeeming rewards through the Chase Ultimate Rewards portal may deliver a better value than cashing in Chase points through their travel partners; depending on what you’re redeeming for.
Track your spending to ensure you meet the introductory bonus requirements. Read the fine print that comes with your bill to find out if there are additional benefits you could be taking advantage of, such as travel insurance or access to airport lounges.
Finally, always pay your bills on time (and in full, if possible) to avoid interest charges and to improve your credit score with your rewards credit card.