Key takeaways

  • When choosing the best rewards card for yourself, consider what type of rewards you want to earn and take a close look at your spending patterns.
  • It’s also important to consider your overall goal for the card — is it to pay off an existing credit card balance while earning cash back rewards or to enjoy heightened points on travel, for example?
  • Before you choose, make sure to compare your options side by side and consider cards you can prequalify for.
  • Be careful not to carry a balance since the interest you pay will likely eat up the rewards you earn.

Choosing a rewards credit card can be tough. There are so many types of cards available, all with their own pros and cons. Trying to examine all the features and benefits to reach a decision can seem overwhelmingly complicated.

Ultimately, you’ll get the most from your rewards card by strategically selecting a card that caters to your style of spending. So when you break it down, there are only a handful of things that you really need to consider.

Choosing a rewards card boils down to four simple steps: determining the type of rewards you want to earn, ensuring the card aligns with your spending, selecting a card with the right features and establishing whether you’re qualified for the card based on your creditworthiness. This guide will break down those steps and show you how to choose the best rewards card for your situation.

1. Decide what types of rewards you want to earn

To find the best rewards card for you, the first step is to narrow down the type of rewards you want to earn. Various cards earn different types of rewards, so it is important to know what you want to do with your rewards before choosing a card.

For example, if you’re somebody who wants to keep it simple, a cash back card may be the best fit. If you want to earn points or miles to redeem for travel or other experiences, a flexible rewards card or airline card may be a better choice.

Not sure what kinds of rewards would work best for you budget? Get a more complete picture of your spending profile with Bankrate’s Spender Type tool. Learning what kind of spender you are and how the types of rewards cards work will go a long way toward whittling down your rewards card options.

2. Categorize your biggest expenses

The main long-term value of a rewards card is its earnings rate on purchases. So, you want to choose the card that offers the highest possible earning potential in the purchase categories on which you spend the most.

For example, if you spend most of your money on travel, it makes sense to choose from one of the best travel credit cards so you’ll have access to top-notch rewards rates. Or, maybe you’re a big-time home cook. In that case, one of the best grocery rewards credit cards will suit you well.

Use a budgeting app or sit down with pen and paper to figure out how much you spend each month on major categories like dining out, groceries, travel and gas. Then, compare rewards cards that offer the best earning potential for your spending habits.

3. Compare card features and benefits

Now that you know the type of rewards you want to earn and where you do most of your spending, it’s time to develop a shortlist of cards to consider and compare their features. Here are some card features and benefits you should think about when comparing options:

  • Welcome bonus: A welcome bonus is a sign-up offer designed to encourage new cardholders to apply for a credit card. This may be in the form of bonus cash back, bonus points or miles (after meeting a minimum spending requirement during the first few months of card membership), or an accelerated earning rate on one or more purchase categories for a limited time. Check out our picks for the best credit card sign-up bonuses.
  • Fees: Fees have the potential to offset any rewards you earn, so it’s important to consider what fees accompany your card — such as annual feesforeign transaction fees or late payment fees.
  • 0% intro APR: Some rewards cards offer an introductory 0 percent APR on purchases and/or balance transfers that often last anywhere from 12 to 21 months. This allows you to finance large purchases or consolidate credit card debt in a single place without paying interest for a limited time. Here are our picks for the best 0 percent interest credit cards.
  • Interest rates: If you pay your bill in full each month, the interest rate is irrelevant because you won’t be paying any interest. However, if you think you may find yourself carrying a balance from one month to the next, it’s important to be aware of your credit card’s regular annual percentage rate (APR). A good APR for you will depend on your circumstances, but keep in mind that the current average APR is hovering above 20 percent. Also remember that it never makes sense to prioritize earning rewards overpaying your credit card bill in full. The interest you rack up will almost always be greater than the rewards you earn.
  • Additional perks and benefits: Credit card perks can offer a lot of value if you make the most of them. Some cards offer travel benefits like lounge access, a free first checked bag, companion flight tickets or travel insurance. Others even offer under-the-radar perks like rideshare credits, access to special events, cell phone protection, extended warranties and much more.

4. Make sure you qualify for the card you want

Not all credit cards are available to every potential customer. Credit card companies typically offer the cards with the best benefits to customers with good or excellent credit scores. So even if you find a card that suits your needs, you’ll still need to qualify based on your creditworthiness.

In most cases, each time you apply for a new credit card the issuer will perform a hard pull on your credit. These inquiries can have a negative impact on your credit score, dropping it a few points each time a hard inquiry is made.

Obviously, you don’t want to waste time and lower your credit score by applying for cards you’re unlikely to qualify for. Check your credit score to ensure that you meet the card’s minimum qualification requirements. If the issuer doesn’t specify a range, it’s best to err on the side of caution and assume that you’ll need good to excellent credit to apply.

Going through a preapproval or prequalification process, however, is an even better way to make sure you qualify than just looking up your credit score. While preapprovals and prequalifications still don’t guarantee that you’ll get the card, it does mean that you’d know whether you have high approval odds.

You can see if you prequalify or are preapproved for your chosen card by going to the issuer’s website or by using a third-party tool like Bankrate’s CardMatch. CardMatch not only shows you whether you’re preapproved for the card you’ve been eyeing, but also other similar cards from different issuers.

The bottom line

Choosing the best rewards credit card for yourself is an important decision. The right credit card can help you earn cash back or other rewards on your purchases, save on interest and get access to other perks like travel insurance. By analyzing your spending habits and points redemption preferences, you can determine which type of rewards program will work best for you.

Compare cards based on their earning potential, rates, welcome bonus, fees and other features. You’ll be able to choose more easily from a short list of options. Then, check your approval odds by getting preapproved or prequalified. Follow these guidelines, and you’re sure to choose a rewards credit card that is a good fit for your needs.