As many of you know, I don’t use credit cards. I have been well aware that there are some great credit card rewards programs out there that are very enticing. In fact, when we were paying off our consumer debts, I played the balance transfer game and continually transferred our balances to get 0% and earned some nice rewards in the process. But when we finally paid them off, we decided to get rid of them and just a cash-back debit card.
The main reason was that while I knew I was disciplined enough to reap the credit card rewards without getting burned, I just didn’t think it was worth the effort. Considering the fact that the late fee from just one missed payment could negate months worth of point, miles, or cash back rewards it just didn’t seem worth the effort.
I want to issue a strong warning about them. I have seen a lot of people who thought they could handle having a credit card end up in a bad situation. It really takes a unique type of person and a lot of pro-active diligence to be able to use a credit card specifically for rewards and come out ahead. Carrying a balance and paying 15% interest just to get some miles or points just doesn’t make any sense. Please don’t do this.
Do yourself a favor and know your weaknesses and if you aren’t a person who isn’t 100% confident that you will pay off your credit card balance each month – don’t even bother looking for the best reward credit card – just get started paying them off ASAP and avoid them like the plague.
So after that long disclaimer you are probably wondering why I am writing about rewards cards anyway. Well, the fact is that I am becoming increasingly aware that a lot of the CPF readers do use credit cards specifically for the rewards programs. I want CPF to have the articles that the readers want to read – so if a lot of you want to know about the best credit card rewards programs, then I want to write the article (with a big fat disclaimer to start it out). 
Some of the best credit cards rewards offers out there
I just got my recent issue of MoneyAdviser (which is quickly becoming my favorite publication) and they did a lot of the heavy lifting in finding the great reward cards. Some of them offer cash back rewards, some points, and some miles that can be used to travel. According to them none of the cards listed limits the amount of points, miles, or cash back that you can earn. Also none of the cards charge an annual fee in the first year.
Card |
APR |
Features |
Amazon.com Rewards Visa |
13.24%, 18.24% or 21.24% | $30 back after first purchase. 3 points per $1 spent on Amazon.com; 2 points per $1 at gas stations, restaurants; 1 point per $1 elsewhere. Points never expire and can be converted to cash. |
| Blue Cash Everyday(SM) Card from American Express | 0% for 12 mths, then 17-22.24% | 3% cash back at supermarkets, 2% at gas stations & department stores, 1% elsewhere. |
| American Express Costco TrueEarnings | 0% for 6 mths, then 15.24% | 3% cash back at gas stations and restaurants, 2% on travel, 1% elsewhere. No annual fee if you are a Costco member. |
| Capital One No Hassle Cash Rewards | 0% for 9 mths, then 14% | 2% cashback on gas and groceries at major supermarkets, 1% on everything else. Rewards never expire and can be redeemed at any time. No balance transfer fee. |
| Capital One Venture | 13.9% | 2 miles per $1 spent. 10,000 bonus miles after spending $1,000 in first 3 months. No foreign transaction fee. |
| Chase Freedom | 0% for 6 mths, then 15% | 5% cash back in rotating categories like airline, gas, groceries, and home improvement. 1% for all other purchases. |
| Fidelity Rewards AmEx | 13.9% | 2 points for every $1 you spend. Points can be redeemed for merchandise or converted to cash and transferred to your Fidelity account. |
Credit card companies seem to change their rewards info regularly, so all of the above info is of course subject to change, so check with the card companies and check the fine print before signing up for any of the credit card reward offers.
Do you use any of these rewards cards? Or do you have a favorite that isn’t listed?
{ 18 comments… read them below or add one }
We use the Visa from Principal Bank http://www.principal.com/bank/credit-card.htm with 1% cash back on all purchases, applied to your balance on your anniversary date. Awesome on-line bank and we’ve been happy with the card. We use an electronic version of envelope budgeting that ensures we stay within budget and that we can pay the card off, in full, at the end of every month. We get about $600/year and could get more if I moved some bills to pay through the card.
I’m one of those people who didn’t use a credit card much if at all (along with my husband), because debit was easier. But then we got the Costco Amex, and once we realized how quickly the rewards add up, I switched all our debit spending to it. We’ve used it for 1.5 years now. Last year we got $550 back. That’s way more than my 6 mo. buffer made in a money market account. But you’re right – you have to be careful to not pay late, and to always pay in full. For that reason I don’t recommend it to most people…
I appreciate you and this blog. It’s nice to have reminders to stay on track toward paying off debt!
Hi Bob,
Great post. I often struggle with this one as well. I can see some people are able to manage their finances like clockwork and thus, never run up a balance and pay interest. For others, it’s like having a drink.
As you say, we have to know our weakness; hence, know thyself (Socrates). I think it’s best to not take the risk if someone has had a problem in the past.
Good things to think about.
Take Care,
Mike
Never been good with credit cards. It’s this compulsion I have to spend when it comes to other people’s money. Accumulated some bad debts in my 20s and took a long time to pay off. I cut those cards up forever and have been using debit cards for over a good decade now….never looked back. I guess I just the monetary strength to resist buying crap with my cards…oh well, no ones perfect.
The entire purpose of free hats, free shirts, free this and that, airline miles, rewards, 1% back, etc… is to get us to play their game. to use credit cards and get in debt so they make money. Ask yourself: Why do they work so hard to get us involved? They win and we lose that is why.
it’s a marketing gimmick. There is no good thing in using a credit card other than making them money
I don’t use a credit card now just out of principle. I may try one soon though to feed a for fun brokerage account or to get plane tickets.
I have been considering the Fidelity one you mentioned that puts 2% into a brokerage account. It’s hard to beat an average reward of 2% on any card. I’m also considering an AMEX airline card that I heard about in the mail. It is promising 2 round trip tickets. Sounds too good to be true though so I’m checking out the details first.
The rewards on these cards seem very interesting and enticing but a huge factor is the annual fee of being a cardholder which, like a late charge or an interest payment, can negate any points or miles that have been accrued (which you have pointed out). What is your opinion on paying an annual fee for a credit card with rewards? Granted, with this list of cards there is no annual fee for the first year as you stated but is it really worth it after that??
I use the AX Costco card & get about $600-900 back yearly from purchases. And I don’t have to spend the $ at Costco, but can take the check into Costco, walk up to Customer Service & walk away with the cash.
For years I’ve made it a rule to:
1. Save all credit card receipts
2. Week’s End: add them up & write a check
3. Put the check clipped to the receipts in a drawer
4. Bill Arrives? I bundle the 4 weekly checks in the envelope & voila!
I use the Chase Amazon card. I admit to having abused it in the past, so I would strongly echo Bob’s warning here. However, since I work for a small non-profit and often have to charge work purchases and get reimbursed later, I’ve racked up points pretty quickly. I plan to use them to get my hubby’s anniversary gift next month – 5 years (already! time flies when you’re having fun!) If only time flew as quickly when you’re digging yourself out of debt…
My husband and I are using our credit cards instead of our debit cards for safety reasons. We have the cash to pay the balance and are enjoying some very nice rewards as a result, for “cash” purchases we were going to make anyway. I haven’t paid for gas in several months, instead have been using the gas cards I’ve earned with my points. Of course, this requires having the cash available to pay off the balance so you’re not actually getting into credit card debt.
What is unsafe about debit cards? I use mine all the time. No problems.
I was wondering if you know where I can find out more about becoming a prepaid credit card merchant for a reputable company?
Thank you.
http://christianpf.com/prepaid-debit-or-credit-cards/
Thanks for this Bob! I’m a student looking for a credit card to use mostly when traveling for safety and rewards purposes. This has helped me compare some and get general advice! So thank you so much! If you have any more information on student cards or ways to get approved for a lower interest rate that’d be so helpful!
Citi Forward is a great card offering 5% reward for restaurant (fast or sit down), books (amazon.com), and Music/Movie/Entertainment. 1% on everything else, no annual fee. Plus they drop the interest rate each month you pay on time. I use this card, and alternate between Chase Freedom and Capital One No Hassle. Pay it off every month and no worries.
LOL Jamie…do you really expect people to pay 60,000 per year just to get 600 back? LOL
We have the Discover card, and sign up for every category which earns 5%. Shopping thru the Discover site is a great way to earn high rewards – up to 20%. We paid for our entire Christmas last year, and had money left over! Not all cards pay cash – some only offer gift certificates, miles, products, etc.. So you really have to check!
I am a single mom. I never did the bills or was taught. I need help with how to do organization fast of all the paper bills, receipts, insurance papers, etc. each month, or how to buy insurance for the house + car. I stack it in a pile on the desk. Then is I don’t know what to do from there…how to figure out when to pay, what to do with the paper receipt, what is needed at years end, etc. I goes into a cardboard box with the year on it. HELP!!