It’s hard to imagine living in 2023 without a credit card. You can’t book travel, rent a car or shop online without one. Meanwhile, credit cards let you earn rewards and even reap some perks, depending on the credit card you choose — the trick is figuring out which one is the right match for your lifestyle and spending habits. In this article, we'll provide a helpful overview of rewards credit cards and how to choose the right one for you.
Simply put, rewards cards are credit cards that let you earn rewards as you use them to pay for purchases.
Each credit card has its own reward structure. Some offer cash back rewards, which are applied to your credit card bill, which lowers how much you need to pay. Others offer points, which are more flexible and can be redeemed for a range of items, such as travel bookings, kitchen appliances, gift cards, entertainment and even, if you wish, cash back.
When it comes to travel cards, the rewards can be a bit more fun. Some cards offer airline miles, which you can collect to get free flights. Programs like AIRMILES and Aeroplan even allow points from some other rewards cards to be converted into their programs, giving travelers more flexibility when planning their trips. Common perks of these cards include companion passes, which let you fly with a friend for free, and access to airport lounges, making travel that much more civilized. Depending on your chosen card, you might even get free or discounted hotel stays or room upgrades.
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While the specific requirements depend on the card you apply for, most credit card providers will look at the same things:
They use this information to determine if they think you can pay the annual fee (often, the better the rewards card, the more likely it has a fee of $100/year or more) and determine how risky it would be for them to extend credit to you. At this point, they’ll also assess you for an introductory credit limit, which may increase as you pay your bills on time.
People always want to know which credit card is the very best. Unfortunately, there’s no one card that will work for every consumer. Since your lifestyle and financial situation are unique, you’ll have to consider the following:
One way to assess your options is to use a credit card comparison tool: A credit card comparison tool can help you compare different credit cards and their features to find the best fit for you.
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All these rewards can sound exciting, but before you start "travel hacking” and maximizing those perks, there are some potential risks or downsides:
Credit cards can help you save money, earn rewards on everyday purchases, and offer fun perks like exclusive access to swish lounges and cool events. However, it all comes down to choosing the right card for your spending goals and habits.
Like with any credit product, there are risks. You need to be aware of what you’re signing up for, but hopefully, reading this guide has prepared you to pick the right card(s) and get you started in reaping those juicy rewards.