It’s hard to see the complete story when it comes to reward credit cards. Advocates frequently claim that just about anyone rack up enough miles to earn a “free” plane ticket around the globe, or enough of a bill to earn hundreds of dollars in cash back. However, there are the cautious consumers as well, those who will readily point out the many credit card companies that fail to clearly state the potential risks of developing bad credit. For the cautious, rewards cards are steeped in the fine-print gotchas and watered-down perks. They often warn that such cards can raise your security deposit on utilities and your insurance premiums, as well as make it more difficult for you to land your next apartment and otherwise spiral deeper into debt. Nonetheless, rewards cards can be pretty darn handy if properly used, even with your supposed reservations.
With a little research — and a good deal of faith — anyone can find a low-risk card that actually provides real payouts. Luckily, we’ve done that research for you and created a guide to the most rewarding rewards credit cards. Yes, we used rewards twice in once sentence. Consider our guide an overview of best rewards credit cards available for every lifestyle. Hell, we’ll even layout the major gotchas often buried in the fine print. So long Cleveland, hello Nassau.
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There are a number of credit cards designed to reward you credit card purchases with miles toward flights, rental cars, and hotels. While most of them require cardholders to pay an annual fee, fortunately, there are several that do not. The Barclaycard Arrival Plus is one such offering, allowing you to ditch the annual fee and receive 20,000 — $200 worth of air travel — bonus miles after spending your first $1,000 in the first 90 days. It’s designed for travels who intend to rack up rewards sans an annual fee, letting you earn two points for every dollar spent on travel and restaurants, and one additional point for everything else.
Unlike airline-affiliated credit cards, Barclays card also allows you to fly on any flight throughout the world. The Arrival Plus card allows you to accumulate points you can then spend on plane tickets and other travel-related expenses without foreign transaction fees, while additionally giving you 10 percent of your miles back every time you redeem your points.
Potential Gotchas: Missing a payment will void any miles you many have gained during the billing period.
The Chase Sapphire Rewards Card is popular among travelers for two reasons: the card offers an unmatched signup bonus and doesn’t charge extra for foreign transactions. After you sign up and spend $3,000 with the card within the first three months, you’ll receive a bonus 45,000 ultimate reward points. Chase also offers the option to redeem points on its site, allowing you to earn up to 25-percent more miles if you desire to do so.
The annual-fee card allows you to earn nearly 25-percent more miles than you would with the Chase Freedom card (listed below), along with a point for every dollar spent and two for every dollar spent while traveling or at a restaurant. The card is even embedded with a chip for international travel, meaning your information will be further secured with encryption to help better prevent fraud and card cloning.
Potential Gotchas: The Chase Sapphire Rewards card has a $95 annual fee (waved for the first year) and only a select group of airlines honor the card.
In many respects, the Discover Card plays much like the Chase Freedom Card. There’s a familiar rotation of seasonal categories that kick back 5 percent on seasonal items, along with a one-time $100 reward for spending $500 within a given time frame. Furthermore, the card offers 0 percent APR for the first 18 months in comparison to the Chase Freedom Card’s 15-month window, with an additional 2 percent back on restaurants and gas up to $1,000. Discover can also one of the most forgiving credit cards and a phenomenal first-time credit card for people on a strict budget given the company will overlook the first late payment without boasting you APR. There’s also no foreign transaction fee and relatively-low rates on balance transfers (occasionally 0 percent APR).
Potential Gotchas: Missing payments can come at a cost, even though the company advertises the opposite. You’ll also need to sign up every time you want the 5 percent cash back, and unfortunately, Discover is known revoke your cash back if you miss two card payments.
As you might expect, one of the most popular credit cards out there is also one of the best. The Chase Freedom card remains one of most accepted years after its debut, allowing you to use it in nearly any scenario. Chase Freedom offers 1 percent cash back on every purchase, in addition to 5 percent cash back on rotating seasonal categories for up to $1,500, allowing you reap rewards year round and even greater benefits during times when you need them most. For example, you can earn 5 percent cash back on gas purchases June through August and 5 percent back on every Amazon purchases made in November and December.
You may have to reference Chases’ rewards calendar for the most up-to-date info on how to receive the 5 percent back, but you will still enjoy the 1 percent no matter the time of year. The card isn’t designed to maximize your rewards every day, but more for those summer trips to Yosemite and gifting your niece a Kindle come Christmas. Plus, there’s no annual fee and the card will pad your account with an additional $100 after the first $500 spent.
Potential Gotchas: You’ll have to sign up every time you want to reap the 5 percent back.
Believe it or not, but some cards actually do pay off — especially if you’re an avid Costco shopper. The Costco American Express TruEarnings Card is available to Costco members without an annual fee, while additionally touting 1 percent cash back on every purchase and 2 percent back when spending on travel and restaurants. The card even provides 3 percent cash back on gas purchases up to $4,000. Unfortunately, the card does require to retain your annual Costco membership ($55) and excludes purchases made at superstores, supermarkets, and convenience stores other than those with which the card shares its namesake. It also functions as your Costco ID and comes with 0 percent APR for the first six months, with 15.24% APR after that. All rewards will also return to you in the form of of Costco store credit.
Potential Gotchas: The card doesn’t actually provide cash back. Instead, you’ll be issued a Costco reward coupon based on the amount of “cash” you earn annually, one that expires after six months. Costco also only offers 3 percent back on gas up to $4,000, then it’s 1 percent back.
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