Best Rewards Credit Cards of September 2022 – Forbes Advisor

Rewards cards are classified in many ways, but two common types include cash-back cards and travel rewards cards. Cash-back cards earn a percentage of eligible purchases as cash back, often redeemable as a statement credit or deposit into a bank account.

Travel rewards cards offer points or miles and are often co-branded with airline or hotel partners to earn credit card points or miles with travel loyalty reward programs. Redemption options for travel rewards cards often involve brand-specific redemptions, such as for stays at hotels or airline tickets.

Cash-Back Rewards

Depending on the specific cash back card used, a consumer may earn a flat-rate or tiered-rate cash back on eligible purchases. Earning schemes and structures may involve higher earning rates in certain spend categories such as gas or dining and may also include caps on the amount of rewards earned.

How Does Cash Back Work on Credit Cards?

With cash-back credit cards, cardholders earn cash back for making eligible purchases. Cash-back cards offer significant variety regarding several key terms, including earning structure: Some offer a flat cash-back rate on all purchases while others offer higher rates in individual categories such as groceries or gas.

Flat Rate Cash-Back Credit Cards

A flat-rate cash back credit card offers one standard rate for all purchases. Cardholders can earn anywhere from 1% to 2% or quite rarely more, depending on the offer.

A few examples of flat-rate cash-back cards include:

Flat rate cash-back credit cards are easy to manage because you can expect one rate for every purchase. On the other hand, they tend to offer lower rates than tiered-rate cash-back cards.

Tiered-Rate Cash-Back Credit Cards

Tiered cash back credit cards typically have various rates for different purchase categories, like travel, dining, gas, grocery or drugstore purchases. Some credit cards will offer better rates for certain types of purchases while providing a flat rate for all other purchases.

For example, the Chase Freedom Unlimited® card earns 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% cash back on eligible dining and drugstores and 1.5% on all other purchases.

Co-branded store cards can also feature lucrative offers, even with limits to how much you can spend. For example, the Costco Anywhere Visa® Card by Citi* earns 4% cash back on eligible gas for the first $7,000 per year and then 1% thereafter, 3% cash back on restaurants and eligible travel purchases, 2% cash back on all other purchases from Costco and and 1% cash back on all other purchases.

Before applying for a tiered cash back card, think about which types of purchases you make most frequently. You likely don’t need a card primarily focused on rewarding gas purchases if you don’t have a car.

Rotating Category Cash-Back Credit Cards

A rotating cash-back credit card typically cycles through purchase categories about every three months. Cardholders may be offered a higher than average rate (sometimes as much as 5%) for one type of purchase for a limited time. It might sound enticing, but card issuers can limit or cap how much you can earn or spend. Issuers often determine the bonus categories themselves.

For example, the Discover it® Cash Back earns 5% cash back on everyday purchases at different places each quarter up to a quarterly maximum of $1,500 in spending when activated. Plus, earn unlimited 1% cash back on all other purchases – automatically.

Rotating rewards might appeal to some, but cardholders sometimes must remember to activate certain categories and know in advance they will be making specific purchases at different times of the year. Generally, it’s easier to maximize reward potential with a flat-rate or tiered-rate cash-back credit card.

How Do I Get Cash Back on Credit Cards?

Many cash-back credit cards offer online redemption through the card issuer’s website. Check with your card issuer or read the terms and conditions of the reward program or card agreement to understand exactly how to redeem rewards. Cash back will often be redeemable as a statement credit, credit toward past purchases, check or deposit to a bank account. Not all cards offer every redemption option, so be sure to examine the card agreement carefully before applying. Some cash-back cards require a minimum redemption amount.

Flexible Travel Rewards

A travel rewards credit card earns points or miles on qualifying purchases, which can often be redeemed either in partnership with an airline or hotel loyalty reward program or with the card issuer’s reward program for travel, including for airline tickets, hotel stays or cruises.

How Do Travel Credit Cards Work?

Travel rewards cards offer similar earning structures to cash back rewards cards but earn points or miles instead of cash back. Like cash back cards, these cards may also offer a welcome bonus for spending a certain amount on the card in a specific period of time following account opening.

Points or miles from co-branded cards are often associated with rewards programs apart from the card issuer. This is often the case with airline or hotel-branded cards. For example, your airline miles may be earned from your airline travel, but with a co-branded card, you can also earn them with everyday purchases.

Travel credit cards typically also offer additional benefits such as airline fee credits, hotel or resort rebates, lounge access, and more.

How Much Are Credit Card Points Worth?

Point value varies and often depends on the card issuer, the airline or hotel co-brand and what redemptions are made. Points are typically worth between one and two cents per point, but it can vary significantly by program and even on the type of redemptions you typically make.

Flexible points typically offer a known minimum point value for redemptions, whereas points earned through a hotel or airline program will be more variable. For example, Chase Ultimate Rewards points are worth 1.25 cents per point for Sapphire Preferred cardholders and 1.5 cents per point for Sapphire Reserve cardholders when booking travel through Ultimate Rewards. Ultimate Rewards can also be transferred at a 1:1 rate to airline and hotel partners like United and Hyatt, but then the point value will be based on the specific redemption in the partner program.

How Do I Redeem Travel Rewards?

Travel reward redemptions often come with complex terms and conditions specific to the cardholder agreement. Every card is different, but many flexible travel reward cards feature an online site where redemptions can be made for travel.

Are Travel Rewards Cards Worth It?

For many, travel rewards have become a way of life, and credit cards offer a handy way to unlock travel benefits. Beware of generally higher interest rates and fees with rewards credit cards. It’s important to carefully manage credit card accounts since carrying a balance and racking up interest charges will quickly outweigh any rewards earned. Do the math on your personal spending and consider how you’ll use the benefits before applying for a new card.

Airline Miles

Frequent travelers may consider airline credit cards. These cards allow you to use your earned miles or points with an airline’s reward program. Cards like these are co-branded with a specific airline, but issuer-branded cards may offer more flexibility to redeem points/miles with different airlines. One major consideration with airline cards are the additional benefits: Many cards unlock access to travel lounges, waive checked baggage fees or provide other travel-related perks. If you aren’t sure where to start, Forbes Advisor has a list of the best airline rewards credit cards.

How Do Airline Miles Work?

Airlines offer reward or “frequent flyer” programs to encourage brand loyalty from customers. Though traditionally miles were earned for spending with the airline, co-branded credit cards offer the ability to earn airline reward program miles as a reward for spending on a credit card nearly anywhere. These miles can usually be redeemed toward upgrades, benefits or award ticket purchases.

Each airline loyalty program and each co-branded airline credit card will work differently. Be sure to read the fine print in the cardholder agreement and terms of use for the reward program before applying for a credit card as a means of earning more airline miles.

How Do I Earn Airline Miles?

Because each airline miles program functions differently and your travel preferences and needs will vary from the next person’s, the best way to earn miles you’ll find valuable will depend on your situation. For example, if you fly Alaska Airlines exclusively, an Alaska co-branded credit card might make sense for you, but if you fly a different airline each time you travel, a general travel card or set of cards may make more sense.

How Do I Redeem Airline Miles?

Since most airline mile rewards cards will deposit accumulated miles directly into your reward program account, the easiest way to redeem miles is often with the airline. This may vary per program, as each rewards program is different. Some miles may have much better value when transferred to a partner airline, but value is ultimately measured by the specific redemption made.

How Much Are Airline Miles Worth?

The value of your airline miles will depend on the type of airline mile and the price of any given redemption. For instance, if a flight costs 50,000 miles or $500, you’ll be redeeming your points at 1 cent per mile. If that same flight costs $1,000 or 50,000 miles, you’ll earn 2 cents per mile. The value of an airline mile varies with each redemption. Typically, a good redemption for an airline mile is anything around 1.5 cents per mile or higher.

How Do I Buy Airline Miles?

Most major airlines allow customers to buy airline miles online. We advise cardholders to focus on earning bonus miles instead of spending money out of pocket to buy miles. Generally, purchasing miles from an airline is more costly than earning them by means of reward.

Delta SkyMiles® Gold American Express Card cardholders can earn . That’s worth about $1,000 in SkyMiles, knocking that initial spend on everyday purchases down by 50%. Customers can purchase 70,000 Delta SkyMiles on the Delta website for $0.035 per mile, totaling $2,450 out of pocket (in addition to other expenses).

No matter how tempting it is to buy more miles from an airline, keep your eyes to the skies looking for reward opportunities instead.

The exception is if you have a known upcoming redemption and are short a few thousand miles or you know that the comparable cash ticket price is higher than the cost of buying miles.

Hotel Points

Hotel credit cards provide perks such as elite status, award-free nights and more while also allowing cardholders to earn rewards often redeemable for additional stays. If you are a loyal patron of a specific brand of hotel, this type of credit card may help you achieve a higher status or provide the occasional discount or award-free stay. If you’re not loyal to any specific hotel, a general travel card with flexible rewards may allow you to transfer points to multiple loyalty program partners or book any hotel you want with your points.

How Do Hotel Points Work?

If you’re loyal to a specific hotel brand, a co-branded credit card can be a great way to earn rewards fast and achieve elite status with the hotel’s loyalty program. If you don’t have a hotel preference, you may want to consider a travel rewards credit card that allows you to transfer points or miles to multiple loyalty programs.

How Do I Get Hotel Points?

Hotel loyalty program points can often be accumulated in several ways, but a rewards credit card may be a convenient way to build up a points stash. The exact ratio of points per dollar earned will depend on the specific card and its structured terms. While spending money with your card is the main way you’ll earn these points, being savvy with how you redeem them can maximize the value of your rewards.

How Much Are Hotel Points Worth?

Some but not all issuers allow hotel points to be redeemed for cash and provide a cash value redemption rate—but this may not always be the most effective use of the points. The value of a point is often measured by the monetary or other value of the product or service the points are redeemed for.

Different hotel points are worth different amounts and each redemption has a different value. As a general rule, for all programs other than Hyatt, a good redemption is when a hotel point is worth 0.5 to 0.8 cents or more. For Hyatt, you can expect a higher value of 1.5 cents or more for a good redemption.

Business Rewards

Business credit cards offer plenty of benefits to companies both large and small. The key to finding the best credit card for you is figuring out which perks matter most to your business and determining what you value most: rewards, cash back, perks or help building credit. If you are looking to open a business rewards credit card, Forbes Advisor maintains a list of the best business credit cards.

How Do Business Rewards Work?

A business credit card keeps your business and personal expenses separate. It also offers a way to track how much you’re spending on your business, especially at tax time. Some small business cards come with a rewards program, and some also offer welcome bonuses.

Reward Programs for Small Businesses

For liability reasons, it’s often important to keep your business finances separate from your personal ones. As a small business grows, it may be time to consider a credit card specifically designed for a small business. A business credit card offers a tool to access the credit you need to grow the operation month-to-month while also earning cash back and other valuable perks.

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