Best Reward Credit Cards in 2020

Reward credit cards have tremendously evolved to become very competitive. The best reward programs offer higher sign-up bonuses, cashback on purchases, miles, and redeemable points, among other benefits.

Most reward credit cards work in the same way. You are allowed to earn points, cash or miles on every dollar charged on your credit card. You can then redeem the rewards for shopping, real money, or travel. You can earn rewards for spending on groceries, gas, electronic gadgets, music, and TV streaming, cable services, phone bills, travel, and hotel accommodation among several others.

What are Credit Card Rewards?

If you’re relatively new to the credit card arena, then it is important to make sure you understand what we mean by credit card rewards. In its most basic form, in order to entice new customers, some credit card providers will offer you a reward every time you make a purchase on your card. As we will discuss later, this can come in a range of different forms with cashback being the most widespread.

In order to set the scene, let’s take a look at a quick example based on traditional credit card cashback.

• You obtain a reward credit card that comes with a 3% cashback scheme on all purchases for the first year up to a maximum of $2,000 per month.
• In the first month, you spend $2,000 on fuel.
• This means that you would be awarded $60 in cashback, which is 3% of $2,000.
• Assuming that you make no other purchases, at the end of the month you would be required to pay $1,940.
• This takes into account the $2,000 that you spent, less the $60 cashback that you earned.

Sticking with the same example above, if you proceeded to pay the full $1,940 balance off in-full at the end of the month and you settled your balance in its entirety, then you wouldn’t pay any interest. As such, this is a perfect example of maximizing your credit card rewards offer.

Types of Reward Credit Cards

Reward Credit Card Pros and Cons

Why should you Consider a Reward Credit Card?

Save more on purchases

Reward programs allow you to earn some of your money back when shopping. Let’s say you are offered back 20% on purchases up to $$2,000 within three months; you will instantly receive $400 on hitting the target. However, you do not have to stretch on expenditure. Even without hitting the target, most issuers offer a 1% – 2% basic rate that applies on all purchases charged on the card.

Manage your Balances

Besides saving part of your money on every purchase, reward credit cards can be great for managing credit card balances. You can transfer your balances to a card that has higher reward yields and low APRs. Some issuers have a no-interest introductory rate that may go as high as 18 months. You can use this time to offset your balance while gaining a reward for every dollar charged on your card.

Build Credit Score

The more you save on purchases, the more money you have, hence, the more you can spend. If you pay your bills on time, reward credit cards can help you build a creditworthy score. This allows you to qualify for better programs such a gold and platinum reward cards. If your goal is building an excellent credit score, reward credit cards can achieve that as they are easy to manage.

Things to Consider when Taking Out a Rewards Credit Card

As is the case with any credit-based product, you need to make a number of considerations before taking out a rewards credit card. Below we’ve listed some of the most important factors that need to form part of your decision-making process when obtaining a new credit card for the purpose of claiming rewards.

Criteria used to Rank the Best Reward Credit Cards

• Simplicity of the reward program
• Reward yields
• Minimum qualifications
• Annual fees and other costs
• Sign-up bonus

Top 10 Best Reward Credit Cards

How to get the Best Reward Credit Card

Build a Better Credit History

The best rewards are reserved for those with good to excellent credit scores. If you have an excellent rating, credit card issuers consider your risk lower and therefore offer better APRs and terms. If you have a bad credit score, you can apply for a secured credit card that provides reward programs. As you make on-time payments, you will eventually build your score and get pre-qualified for better credit cards. Since all issuers offer variable interest rates, a better credit history will qualify you for the minimum APRs charged on their cards. Here are a few credit cards available to you even if you have a bad credit score.

Choose a Credit Card that Suits your Financial Expenses

Since there is no single credit card that fits everyone, choosing a card for your specific needs equates to finding the best card. For instance, if you are a small business owner who travels a lot and eats out, a travel credit card seems more feasible than earning points on grocery shopping. While you can do both, it is recommendable to find a card that helps you save more on charges you incur more often.

Shop Around

Different reward credit cards come with different rewards yields, terms, APRs, and charges. Several reward credit cards can meet your needs. Comparing various offers narrows down your options to the best issuers for your unique requirements.  You can look up for customer reviews and expert rating to compare issuers. It is also crucial to stay informed about fluctuating interest rates and better offers that emerge in the market.

Should I get a Reward Credit Card?

Reward credit cards are ideal if you make frequent purchases using your credit card. You can earn a decent amount, travel, or shopping equivalent by only using your credit card. It is also a perfect way to build your credit score and improves your financial management. All you need to do is pay your monthly bill on time to avoid rolling over balances and incurring high interests. When choosing a reward credit card, make sure you examine your credit card needs and how choosing any given offer impacts your finances prospectively.

Although some cards offer rewards for maxing your rewards, like spending $1,000 within a month, it is recommendable to stick to your primary intentions for getting the card. This way, you will avoid transferring balances and paying more interest than the reward you are getting. On the flipside, prizes can be used to upset some of your balances if the program allows rebates.

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