How do I compare credit card rewards programs?

Choosing the Right Credit Card Rewards Program: A Savvy Shopper’s Guide

Ever feel like you’re missing out on free money? With the right credit card rewards program, you could be earning cash back, travel points, or other perks just for making your regular purchases. But how do you pick the best one? Let’s break it down.

What Are Credit Card Rewards?

Credit card rewards are incentives offered by card issuers to encourage you to use their card. The more you spend, the more rewards you earn. It’s like getting a loyalty discount just for being a customer!

The most common types of rewards include:

• Cash back - You earn a percentage of your purchases back in the form of cash or statement credits.
• Travel points/miles - You rack up points that can be redeemed for flights, hotel stays, and other travel expenses.
• Retail/brand rewards - Some cards offer rewards specific to certain stores or brands, like gas stations or grocery chains.

Comparing Rewards Programs

Not all rewards programs are created equal. Here are some key factors to consider:

• Earning rate - How much do you earn per dollar spent? Typical rates range from 1-5%.
• Bonus categories - Many cards offer higher earnings in certain spending categories like dining or gas.
• Annual fee - Is there an annual fee for the card? If so, do the rewards offset the cost?
• Redemption options - How flexible are the redemption choices? Can you redeem for cash, travel, merchandise, or statement credits?

To maximize your rewards, look for a program that aligns with your typical spending habits.

Surprising Rewards Facts

• 🤯 Some credit card rewards are worth more than others. For example, travel points can be worth 1-2 cents each when redeemed for flights or hotels.
• 😲 Many people leave rewards on the table. According to one study, Americans failed to redeem over $16 billion in rewards value in 2019!
• 🔥 Credit card sign-up bonuses can be incredibly lucrative, sometimes worth $500 or more in rewards value.

Putting It All Together

• For everyday spending: A flat-rate cash back card like the Citi Double Cash (2% back on all purchases) can be a solid choice.
• For travel: Co-branded airline or hotel cards often provide the best value for frequent travelers.
• For maximizers: Some people juggle multiple cards to earn the highest rates in various spending categories.

The right rewards program can put extra money in your pocket without changing your spending habits. Just be sure to pay your balance in full each month to avoid interest charges that negate the rewards value.

Learn More

• Credit Card Interest Rates - How interest charges work and why it’s crucial to avoid them.
• Building Credit - Using credit cards responsibly to establish and improve your credit score.
• Budgeting Basics - Strategies for managing your money and avoiding overspending.