Points, Miles, And Cash Back: The LV Guide To Credit Card Rewards

Points, Miles, And Cash Back: The LV Guide To Credit Card Rewards

At LearnVest, we believe that you should always make money on your money, from beginning to end: You should earn interest in a savings account before you spend and then credit card rewards once you do spend. In order to help you make the most of your money, we bring you the 9 rules you must read for rewards cards.

We also bring you a chart with the best rewards credit cards, grouped by type—cash back, points, and travel—courtesy of Dr. Mary Ann Campbell, a certified financial planner who works at IndexCreditCards.com. These top picks are for cards with no annual fees, because we don’t think you should ever pay for your card:

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Here’s what you need to know in order to choose the very best card for you:

1. Know What “Up To” A Certain Percent Means

“When it comes to credit cards, what might be best on the surface might not actually be best,” says Gaurav Gupta, director of the New York consulting firm Novantas LLC, which consults for credit card issuers. For example, the fine print of a credit card may say that you’ll get “up to 1%” cash back, meaning that some rewards may actually give back less than 1%. Know what you’re getting into.

2. Study Your Categories

The fine print can also limit the categories that count for rewards (like hotels vs. restaurants vs. gas stations). For some cards, your ability to get cash back on gas may even depend on whether you buy inside from the clerk or at the pump. Pay attention to these rules before signing up.

3. Don’t Believe The Hype

Credit card marketing materials might brag about giving a 10% reward on purchases, but the fine print might state that you can only get that kind of percentage on the first $200 in purchases, Gupta said.

4. Weigh The Rewards Collectively

One card might give back 5% to 10% on gas, but only a 0.5% on everything else—that might not be as good as a card that gives a smaller percentage on gas, but 1% on everything else.

5. If You’re Dealing With Points, Find The Ones That Go The Furthest

“Some gift cards like American Express will give you a $100 gift card for 1,000 points – a penny for a point, which is a pretty good ratio,” said Henry Helgeson, co-CEO of a company that processes credit card payments.

6. Plan Multiple Cards Wisely

LearnVest suggests that you use one main card for the vast majority of your purchases but have a second emergency card in case you lose your wallet. To make the most of credit card rewards, plan these strategically: “For some consumers, their primary card is their cash back card,” Helgeson said. But, for instance, “They may also have a secondary card so they can save up points to redeem a free hotel night.” Make your emergency card count, too.

7. Choose The Rewards Program That Best Fits Your Lifestyle

That’s the advice of Dr. Mary Ann Campbell, a certified financial planner and spokeswoman for IndexCreditCards.com. It also may behoove you to get a cards that distributes rewards multiple ways by letting you choose between points, cash back, and airline miles.

8. Specifics Change All The Time, So Know The Best Info Sources

We like IndexCreditCards.com, which features an index of over 1,200 cards. CardRatings.com is another site with card ratings written by consumers throughout the country. For even more card details, check out CreditRatings.com, which provides links to various additional ratings sites.

9. Most Important Tip Of All: Pay Your Bill On Time

“There really aren’t going to be very many rewards if you don’t pay your credit card in full monthly, because you are going to negate your rewards with fees and interest,” Campbell said.

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