We’ve picked the cards that will give you the biggest payback for the way you spend.
Choosing a rewards credit card may not seem so rewarding—at first. The market is crowded with contenders vying for space in your wallet, and comparing the card terms and features can easily eat hours of your time. About half of respondents to a TD Bank survey said that shopping for a new card can be overwhelming, or at least annoying. // But the effort is worth it. On a travel rewards card, for example, a 50,000-point sign-up bonus is worth an average of 1.6 round-trip flights, according to personal finance site NerdWallet. And by our estimate, the first-year rewards on everyday spending are worth about $500 or more for some cards. To ease the pain of making a selection, we pored over dozens of the top rewards cards and highlighted the cream of the crop. Then we broke them into categories to help you maximize your payback given your spending habits and desire for simplicity. Cash back is the most popular reward among card users, so we’ve dedicated a section to cashback cards. We’ve also offered up the best bets in travel and everyday spending, including cards with great rebates on groceries, gas and dining— a category in which card issuers have been cranking up rewards in the past couple of years. We named honorable mentions in each category, too; to see the full description, go to kiplinger .com/links/cards19.
Set your strategy.
Rewards card issuers continue to tinker with their offerings, the goal being to lure customers with generous paybacks while keeping their own balance sheets intact. After years of one-upping each other, “a lot of issuers have gotten tired of this arms race,” says Ted Rossman, industry analyst for CreditCards.com. There’s a school of thought in the industry that this cutthroat competition is not sustainable as customers get better at gaming credit card rewards, he adds. CHASE SAPPHIRE PREFERRED, one of our perennial winners among travel cards, no longer waives its $95 annual fee the first year. AMERICAN EXPRESS BLUE CASH PREFERRED, another one of our longtime favorites, especially for grocery purchases, dropped department stores from one of its top cash-back categories.
Other cards are experimenting with how they can offer initial bonuses and still encourage extended relationships with customers. “Many folks who chase big sign-up bonuses don’t nec essarily stick with the cards for long,” says Matt Schulz, chief industry analyst for CompareCards.com. One approach is to offer the bonus in tiers. The WORLD OF HYATT VISA, for example, our winner in the category of hotel cards, recently split its 50,000-point initial bonus into two parts—25,000 points if you spend $3,000 in the first three months, plus another 25,000 points if you spend $6,000 in the first six months.
Before you pick a card, set your own strategy. You can maximize earnings by carrying multiple cards with outstanding rewards in different areas— say, one with strong travel perks, one that pays a top rebate on gas, and an-other that provides generous rewards at your favorite retail store. But if you’d rather keep it simple, you may still reap hundreds of dollars a year by using a single card that pays back a solid rate on all purchases, such as CITI DOUBLE CASH, which is our “FlatRate Cash Back” winner.
Consider your spending patterns, too. Frequent travelers, for example, can glean significant perks by choosing a stellar all-purpose travel card or homing in on cards associated with the hotels and airlines they use most. Keep in mind that rewards cards often charge higher interest rates than those that don’t offer rewards, and if you carry a balance, the interest you pay will eat into your earnings.
To help you gauge how much you might gather in rewards for each of our winners, we’ve calculated a typical annual rebate, which draws on average spending patterns from the U.S. Bureau of Labor Statistics Consumer Expenditure Survey. Except where otherwise noted, we assumed $23,000 in total annual spending and subtracted the annual fee from the cash value of each rebate if the fee is not waived the first year. And unless other wise indicated, rewards do not have limits or expiration dates, and the travel cards do not have foreign transaction fees.
FLAT-RATE CASH BACK
Citi Double Cash Mastercard www.citi.com Annual fee: None Typical annual rebate: $460
If you prefer a healthy payback on everything you buy without worrying about categories or caps, this card is for you. You’ll earn 1% cash back each time you make a purchase and another 1% back when you pay the bill, for a total of 2%. Once you’ve accrued at least $25 in cash back, you can redeem it as a check, statement credit, or deposit into a Citi savings or checking account—or any checking account from which you’ve paid a Citi credit card bill at least twice. Rewards expire if you haven’t earned cash back in the past 12 months. Honorable mention: Alliant Cashback Visa Signature
CASH BACK IN ROTATING CATEGORIES
U.S. Bank Cash+ Visa Signature www.usbank.com
Annual fee: None
Sign-up bonus: Spend $500 in the first 90 days and get $150 back
Typical annual rebate: $370
This card provides considerable flexibility to earn high rebates in the categories in which you spend the most. You select two categories that earn 5% on up to $2,000 in combined spending per quarter. TV, internet and streaming services is an attractive new category for 5% rewards, and department stores, cell-phone bills, home utilities, fast food, movie theaters and ground transportation were recently among the other options. You also get 2% back in one category of your choice (including gas stations, restaurants or grocery stores) and 1% on everything else. Make sure you choose and activate your 5% and 2% categories each quarter—otherwise, you’ll earn only 1%. Redeem cash back as a deposit into a U.S. Bank checking or savings account, a statement credit, or a U.S. Bank prepaid debit card ($20 minimum). Rewards expire after three years. Honorable mention: Chase Freedom
CASH BACK FOR SAVERS
Fidelity Rewards Visa Signature www.fidelityrewards.com
Annual fee: None
Sign-up bonus: Spend $1,000 in the first 90 days and get $100 back
Typical annual rebate: $460
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