A rewards credit card is exactly what it sounds like: a credit card that rewards you for your purchases. Used responsibly, a rewards credit card can help you save money on everything from travel bookings to Amazon purchases.

However, not everybody knows how to maximize their credit card rewards — and not everybody knows what a good rewards card can do for them. How do you earn a sign-up bonus? What types of rewards cards best suit your needs and what are the best ways to redeem your rewards? These questions are especially worth investigating if your credit card charges an annual fee.

Are rewards credit cards worth it? In most cases, yes, as long as you’re not carrying a balance and the annual fee (if the card charges one) is less than the value of the rewards you earn each year. Here’s what you need to consider.

The pros and cons of rewards credit cards

Is a rewards credit card worth it? It all depends on whether you’re able to use your rewards credit card responsibly — and that includes taking advantage of all of the rewards you earn. Here are some of the biggest benefits and drawbacks:

Pros

Cons

  • You may be tempted to spend more than you can afford in order to max out your rewards or sign-up bonuses.
  • You must redeem your rewards to save money, and some redemption options give you less value for your rewards.
  • The best rewards cards may charge an annual fee or require you to have good or excellent credit.

Should you get a rewards credit card?

Is it time to apply for a rewards credit card? If you don’t already have a good rewards card in your wallet, you may be leaving money on the table — especially if you travel frequently, buy a lot of groceries, pump a lot of gas or make a lot of retail purchases.

If your budget matches the average household budget, you’re probably spending close to $5,000 per year on groceries and a little more than $2,000 a year on restaurants. By applying for one of the best credit cards for groceries, you could earn as much as 6 percent cash back on eligible supermarket purchases — and if you add one of the best credit cards for dining out, you could earn 3 to 5 percent cash back on restaurants and takeout.

There are a lot of high-earning rewards credit cards with specialized bonus categories, so take the time to research your options and choose the rewards card that might be best for you. If you have travel expenses in your future, for example, you should definitely consider getting a travel rewards card.

When should you consider alternatives to rewards credit cards?

While most people will probably want a credit card that offers rewards, it’s worth noting that some non-rewards credit cards have their advantages.

If you have existing credit card debt, for example, you would be better off prioritizing a long balance transfer offer over rewards. The Citi® Diamond Preferred® Card doesn’t earn rewards, for example, but it does offer a 0 percent intro APR for 12 months on purchases and 21 months on balance transfers. After that, the variable APR will be 15.99 percent to 26.74 percent, based on your creditworthiness. Balance transfers must be completed within four months of account opening. This makes the Citi Diamond Preferred one of the best balance transfer credit cards on the market, and a much better money-saver (for someone with credit card debt) than a cash back card.

The bottom line

Though credit card rewards have their pros and cons, applying for a credit card that offers rewards is generally better than applying for a card that doesn’t. If you aren’t maximizing your credit card rewards, you’re missing out on money you can put toward travel bookings, statement credits and more.

If you’re on the hunt for the best rewards credit card for you, consider using Bankrate’s CardMatch™ to find a perfect match for your credit history, shopping habits and financial goals.