Rewards Credit Cards for January
With all the great offers available, a rewards card is practically a must-have. If you’re trying to find one, read on — we’ve sorted through hundreds of options to choose the best rewards credit cards. While we considered several factors, the most important were the cards’ rewards rates, bonus opportunities, and fees.
Rewards Credit Cards for January
We’re rewards card enthusiasts, so we’ve tried many of our top picks ourselves. On our list, you’ll find quality options for every situation, whether your priority is getting a huge welcome bonus, racking up cash on everyday expenses, or scoring flexible travel points.
Best rewards credit cards
- Unlimited cash back: Wells Fargo Active Cash® Card
- Travel card with no annual fee: Bank of America® Travel Rewards credit card
- Travel sign up bonus: Chase Sapphire Preferred® Card
- Bonus cash back: Chase Freedom Flex℠
- U.S. gas and U.S. supermarkets: Blue Cash Preferred® Card from American Express
- Unlimited rewards in certain categories: Wells Fargo Autograph℠ Card
- Dining and U.S. supermarkets: American Express® Gold Card
- Premium travel rewards: Capital One Venture X Rewards Credit Card
- Dining rewards with no annual fee: Capital One SavorOne Cash Rewards Credit Card
- Students: Discover it® Student Cash Back
- Bad/building credit: Discover it® Secured Credit Card
- Small businesses: Ink Business Preferred® Credit Card
- Travel and gas: U.S. Bank Altitude® Connect Visa Signature® Card
What is a rewards credit card?
A rewards credit card earns cash back, points, miles or some other type of reward for purchases. The amount you earn depends on the card and in some cases the spending range. For example, there are cards that offer a 2% flat rate on purchases. Others offer higher rates in some categories, such as 3% on groceries.
Each eligible purchase adds to your rewards balance. So, if you spend $100 on a card that offers 2% cash back, you’ll get $2 in rewards. You can redeem rewards when you have enough to meet the redemption minimum. Fortunately, many of the best rewards credit cards have no minimums, so you can redeem rewards at any time.
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Types of Rewards Credit Cards
There are three types of rewards cards: travel rewards credit cards, cash back credit cards, and store credit cards.
Types of Rewards
That’s simple enough, but there’s one tricky part that we should mention before we get into each type of rewards card. Some rewards cards technically fall into multiple categories — but there’s usually only one category that best fits each card.
A popular example is the Chase Sapphire Preferred® Card. It earns points that you can use for travel, cash back or store gift cards, so it can fit into any of the three types of rewards cards. However, its points are most valuable when you use them for travel and earn bonus rewards on travel purchases. For that reason, we consider it a travel credit card.
Travel Rewards Credit Cards
If traveling is one of your favorite things, travel credit cards are basically made for you. These cards earn rewards that you can use to cover travel purchases like airfare or hotel stays.
Travel cards are the most complex type of rewards card. That’s mainly because the way you can use travel rewards depends on the card. Here are some examples:
- Airline credit cards earn frequent flyer miles. You can redeem miles with an airline for a free flight.
- Hotel credit cards earn points in hotel loyalty programs. You can use points to book stays with that hotel chain.
- Some travel cards, including most no-annual-fee travel cards, let you redeem rewards for travel purchases at a fixed cash rate, such as $0.01 per point.
There are also some cards in popular rewards programs that offer transferable rewards. That means you can transfer your rewards to any of the partners in the card issuer’s rewards program. These programs usually let you redeem rewards at a fixed rate. Here are the top travel rewards programs that give you these options:
- American Express Membership Rewards
- Capital One Venture Awards
- Chase the ultimate rewards
- Citi ThankYou Rewards
Cash back credit cards
Cash back credit cards are as straightforward as it gets, and that’s a big part of why they’re so popular. When you use your card for a purchase, you get cash back. That could be 1%, 2%, or even 5% or more for purchases in a bonus category.
Wondering what you can do with this cash back? Almost all cash back cards let you put your rewards towards your credit card bill as a statement credit. With $100 in cash back, you could cut your credit card bill by $100. The one important thing to know here is that cash back typically isn’t considered a substitute for your minimum payment. If there’s a balance left, you still need to pay at least the minimum due.
Many cash back cards also let you deposit your cash into your bank account by direct deposit or request a check in the mail.
Store credit card
Store credit cards are one type of rewards card that I don’t recommend for most people. A cash back or travel card is usually a better deal. But store cards are everywhere, and if you shop at a store you often use some, so it’s worth knowing how they work.
Store credit card
Most store cards earn rewards that you can redeem with that store for a gift card. There are exceptions, such as the Costco Anywhere Visa® Card by Citi, which earns cash back. And some store cards offer discounts on purchases or zero-interest financing instead of rewards.
Store cards can be “closed-loop” or “open-loop”. Closed-loop store cards only work at that retailer and any associated brands. Open-loop store cards can be used with other merchants. Some stores offer only one of the two, and others offer both options. While stores offer both, they typically approve customers with low credit scores for closed-loop cards. Applicants with better credit may qualify for an open-loop card.
For example, let’s say you’re T.J. Apply for Maxx Credit Card. Any of the following may occur:
- You have been approved for a TJX Rewards® Credit Card. This is a closed-loop card, meaning you can only use it at T.J. Maxx and its other brands.
- You’ve been approved for the TJX Rewards® Platinum Mastercard®. This is an open-loop card that can be used anywhere MasterCard is accepted.
- You are not approved for any T.J. Maxx Credit Cards.
What is the best credit card for rewards?
For many people, the best credit card for rewards is the Wells Fargo Active Cash® Card. It earns unlimited 2% cash rewards on purchases and charges no annual fees. Additionally, it offers a generous welcome bonus and a 0% intro APR.
The biggest reason we recommend this Wells Fargo card is its cash back rate. Whatever your spending habits, you get competitive cash back on all your payments. In fact, the unlimited 2% cash rewards rate is the best we’ve seen.
There is no single card that is the best rewards credit card for everyone. That’s why we always suggest comparing your options to find the one that’s best for you. Your best rewards card might be one with bonus categories that fits your spending to a T, or a travel card that helps you cover expensive airfare. With the right fit, you can maximize your credit card rewards.
Learn more about how to choose the best rewards credit card in the video below. If you’re ready to get started, here’s how to apply for a credit card.
What can you do with credit card rewards?
After earning credit card rewards, you can redeem them through the card’s rewards program. The ways you can redeem them depend on the card. Here are the most common redemption options for credit card rewards:
- Get cash back, as a statement credit on your credit card bill, a direct deposit to a bank account, or as a check.
- Use them for travel through the card issuer’s travel portal, as a statement credit toward previous travel purchases, or by transferring them to airline or hotel loyalty programs.
- Redeem them for store gift cards.
- Redeem them for products or services.
When you log in to your online account, there should be a clear option to redeem rewards. Choose this to see what your redemption options are and pick the one you want.
Check how much value you get with each redemption method. People sometimes assume they get the same value no matter how they use their rewards. This is a common mistake that can cost you money. The value often depends on how you use your rewards. For example, if your card earns travel points, you may also be able to redeem them for cash back, but at a much lower rate per point.
Should I get a rewards credit card?
You should get a rewards credit card if you have a good credit score and will pay the bill in full every month.
Rewards cards are usually a great choice. You’re going to pay for purchases anyway. Why not use a rewards card to get something back on that money you’re spending? There are only a couple of situations where a rewards credit card isn’t the right fit:
- You don’t have a good credit score: Learn how to increase your credit score and work on that first. It usually takes a FICO® Score of at least 670 to get any of the best rewards credit cards. By improving your credit, you can qualify for rewards cards that offer much more value.
- You won’t pay in full every month: Every month you carry a balance, the card issuer can charge you credit card interest. The cost of interest almost always outweighs your rewards.
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