What Kind of Rewards Credit Card Is Right for You?

Updated on September 8, 2018
Stephanie-Lynn4 profile image

Stephanie is a business marketing professional with a passion for personal finance.

Knowing which credit card provider is most commonly accepted in your area can be important when choosing which card to go with.
Knowing which credit card provider is most commonly accepted in your area can be important when choosing which card to go with. | Source

Choosing A Rewards Credit Card Can Feel Overwhelming!

Do you go with cash back or travel? Generic or brand specific? In this article, I'll break down the 5 most popular types of rewards credit cards, as well as the pros and cons of each. Because as long as you're being financially responsible, rewards credit cards are a great way to get more out of money you would already be spending in the first place!

Airline Rewards Cards

Source

Whether it's Delta or Southwest, airline rewards cards are exactly what they sound like. Every time you make a purchase, you earn points that can eventually be used on flights with the airline of choice. So let's break down some pros and cons of these cards:

Pros:

  1. Airlines are almost always running promotions that will give you a lump sum of points if you spend a certain amount in the first three months.
  2. There are typically different levels to choose from that decide how many points you earn per dollar, as well as whether or not you have to pay an annual fee.
  3. Any time you purchase a flight from the airline you get double or triple points, which is great if you travel frequently.

Cons:

  1. You can only use your points on one airline provider which can limit what flights you take an where you go.
  2. The cards that earn more points per dollar often have a high annual fee.
  3. If you don't travel a lot you won't be able to use or gather points as quickly.

Cash Back Cards

Because who doesn't love cash?!
Because who doesn't love cash?! | Source

Who doesn't need a little extra cash at the end of the day? The answer is no one, and that's why cash back cards are generally heralded as the most popular type of rewards card. Every time you spend money, you make a percentage back, seems simple enough! So let's break down some pros and cons of these cards:

Pros:

  1. YOU GET CASH BACK! Enough said.
  2. You can use the cash you earn to pay off your balance at the end of the month.
  3. There is almost always a cash bonus offered when you spend a certain amount in the first 1-3 months.

Cons:

  1. The cash back percentage can be as low as 1%, meaning if you spent $100 you're only getting $1 back.
  2. The cards that earn more points per dollar often have a high annual fee.
  3. While you are earning cash back every time you spend it can take a LONG time to add up to a significant amount.

Retail Rewards Cards

Who doesn't love a good retail therapy session!
Who doesn't love a good retail therapy session! | Source

Do you ever wish that someone would pay you to shop at your favorite store? Well, that's the basic premise behind retail rewards cards! You can open them with many large retail chains, and depending on your shopping habits they can really pay off. So let's break down some pros and cons of these cards:

Pros:

  1. If you shop at a specific large retailer like Target or Victoria's Secret all the time, you can earn points or cash vouchers to use at the store.
  2. Cardholders often get special coupons from the store.

Cons:

  1. You are only rewarded for shopping at the specific store.
  2. The cards often have an extremely high APR%.
  3. It is only really worth it if you shop at the store very regularly.

General Travel Rewards Cards

Hotels, flights, rental cars? These points cover it all!
Hotels, flights, rental cars? These points cover it all! | Source

Maybe you love to travel but don't want to dedicate yourself to one brand or airline, a general travel points card may be right for you! So let's break down some pros and cons of these cards:

Pros:

  1. You can use your points on any travel expense in the form of reimbursements.
  2. You have the freedom to gain points anywhere, anytime.
  3. There is almost always a points bonus offered when you spend a certain amount in the first 1-3 months.

Cons:

  1. The value of your points can be low, meaning you may need 50,000 before you can even use them.
  2. The cards that earn more points per dollar often have a high annual fee.
  3. You have to do all the legwork to get your expenses paid for rather than just applying points when you book a trip.

Gas Cards

If you drive a lot for school or work, this may be the card for you!
If you drive a lot for school or work, this may be the card for you! | Source

A long commute can be a pain, but if you're earning cash back every time you visit the pump it could make all the difference to your wallet. Gas rewards cards give you gift cards or points that you can use any time you fill up your tank. So let's break down some pros and cons of these cards:

Pros:

  1. If you are driving long distances or have a car that guzzles gas, this card could be a great way to save money on a regular expense.
  2. With gas prices constantly changing it doesn't hurt to have a guaranteed discount.

Cons:

  1. The cards are often brand specific, so you may have to go out of your way to visit a Shell rather than just stopping at whatever chain is nearby.
  2. You have to be filling up your tank at least weekly for this card to be worth it.

Finding The Card That's Right For You

At the end of the day, the card you choose will come down to lifestyle and personal preference, but I hope these pros and cons helped you to at narrow down your options to a single category. Now go out there and make your money work for you!

Which Card Category Will You Choose?

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This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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