Make your plastic work for you by earning perks for your purchases. Here’s a guide to the cards that give you the most bonuses for your buck.
Here’s the deal: For any rewards card to be worthwhile, it must be completely paid off each month. We’re talking zero balance. Not you? Not worth it. The interest will quickly erode any rewards you might earn. Know you can do it? Read on for our top picks.
--Hallie Goodman and Kristin Koch
BEST FOR: WORLD TRAVELERS
Unless your loyalty lies with one carrier, skip the airline-specific cards and opt for a bank-issued card instead. To rack up travel points fast, the Capital One VentureOne Rewards card is a great card. You’ll earn 1.25 miles for every dollar you spend, and when it’s time to redeem them, there are no blackouts or expiration dates. Plus, there’s no annual fee.
Another option is the American Express Starwood Preferred Guest Credit Card. This baby is a favorite among globetrotters thanks to its incomparable hotel rewards program, which gives you free nights and upgrades at Starwood Hotels and Resorts (including St. Regis, W Hotels, Le Meridien and Sheraton) all over the world. You’ll earn five points for every dollar spent at any Starwood property, as well as one point for every dollar spent on all other purchases. You can also transform the points you earn into miles (good news: points aren’t airline-specific!). They’ll even reward you for doing it: Get a 5,000 air miles bonus for transferring 20,000 points into miles. Even better, you only need 20,000 points or miles to get a free domestic flight, and there are no blackout dates with this card either. You’ll get There’s a $65 annual fee (also waived for the first year).
BEST FOR: ASPIRING INVESTORS
Dreaming of a bigger nest egg? With the Fidelity Rewards American Express Card, for every dollar spent, 2 percent will be deposited into a Fidelity account and there’s no limit on the cash rewards you can earn. Choose either a 529 college savings plan (for your kids’ future) or an IRA (for your future). If you spend a thousand dollars a month, you’ll earn $240 a year to invest. That means, if the account was to earn 5 percent a year (which is not terribly far-fetched), in 10 years you’d have more than three grand saved. Ka-ching!
Don’t want to wait until you turn 65 or your first kid leaves for school to cash in on your rewards? The Capital One No Hassle Cash Rewards Credit Card lets you earn 2 percent cash back on everyday purchases made at grocery stores and gas stations and 1 percent cash back on all other purchases. You can choose to receive your cash back at any time, and then invest that money as you please or sock it away in your savings account. And there’s no limit on this one, so if you’re a big spender, you could save a sizeable chunk of change over time.
BEST FOR: PRACTICAL TYPES
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The Discover More Card has three things going for it: lots of cash back, no annual fee (which is unusual for a rewards card) and no APR on the first 12 months of purchases or the first 15 months of balance transfers. With this card, you’ll earn 5 percent cash back on specific categories (which automatically change quarterly) like gas, groceries and home improvements, and 1 percent on everything else. Just keep in mind that because the cash-back categories change, you won’t always save when you fill up or grocery shop, and you’ll probably want to schedule your home improvements accordingly.
A really good all around cash back credit card is the Blue Cash from American Express Card. It has the highest payout (up to 5 percent) for “everyday purchases,” like gasoline, groceries and drugstore buys and up to 1.25 percent cash back for all other purchases. (One caveat: You won’t get the highest rebates until you first spend $6,500 on your card.) There’s no minimum spending required and no limit on the cash reward you can earn (oh, and no annual fee and no APR for the first six months).
BEST FOR: PUNCTUAL PAYERS
Want a pat on the back for good financial behavior? The Citi Forward is your card. Earn 100 points each month just for paying your bill on time, and use those points to earn discounts at major retailers. Plus, they’ll even reward you for going green: Sign up to go paperless and spend at least $250 within the first three months, and you’ll earn 2,500 points. The card has no annual fee and no interest for 12 months on balance transfers and seven months on purchases. Even cooler? After the introductory period, you can earn up to a .25 percent APR reduction just for paying on time for three billing periods in a row.
Likewise, the Discover Motiva Card
rewards you for making timely payments. Instead of points though, you’ll get one full month’s interest back (it’ll show up as a credit on your statement) for every six on-time payments. You’ll get from 5 to 20 percent cash back when you put down your plastic at any of the retailers listed on Discovery’s online shopping site (including Barnes & Noble, West Elm and Home Depot) and 1 percent back on all other purchases. You can use your cashback bonus to purchase anything from computers to flowers, pay off your card balance, or just deposit it into your back account. Feeling generous? You can even donate your bonus to charity.
Nestpert: Farnoosh Torabi, finance guru and author of the new book Psych Yourself Rich.