Knowing everything you need to look for when comparing credit card rewards offers is crucial to ensuring you are choosing the right card for your needs and lifestyle.

In this blog post, we will cover everything you need to know when comparing credit cards.

Understanding Credit Scores

Your credit score is one of the most important factors when applying for a new credit card. Credit card issuers use your credit score to evaluate your creditworthiness and determine if you qualify for a card as well as what credit terms you will receive.

Before applying for a new credit card, it’s a good idea to check your credit reports and scores from Equifax, Experian, and TransUnion. This allows you to identify and dispute any errors which could be negatively impacting your score. You can also get a free credit report annually from each of the credit bureaus at annualcreditreport.com.

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Credit Card Rewards Programs

Credit card rewards programs allow cardholders to earn rewards on their spending such as cash back, points, miles, etc. The main types of rewards programs include:

  • Cash-back Rewards: Earn a percentage of money back on purchases. Typical cashback rates range from 1-5%. Cash rewards can be redeemed as statement credits, checks, or deposits.
  • Travel rewards: Earn points or miles that can be redeemed for travel purchases. Common programs are Chase Ultimate Rewards and American Express Membership Rewards. Points can be transferred to airline and hotel partners.
  • Airline miles: Earn frequent flyer miles directly with an airline co-branded credit card. Miles are best redeemed for awards
  • Hotel points: Earn points for free hotel stays by getting a co-branded hotel credit card. Points are typically most valuable when redeemed at that hotel chain. Examples include Hilton Honors and Marriott Bonvoy cards.

Choosing the right card for you

To estimate potential earnings, look at where and what you typically spend the most money on. If it’s gas and groceries, you’ll want to find a credit card that offers great rewards for gas and groceries. See our recommendations here.

If you typically spend the most money each month at online retailers like Amazon, you’ll want to find a card that offers good rewards in that category. Different types of credit cards offer different rewards for each type of spending category, so it’s important to assess your spending habits in order to choose the right card for you.

CardsRewardsAnnual FeeSign On bonus
Discover It5% on quarterly categories

1% on everything else
$0
Cash-back match: Discover will match all the cash back rewards you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer.
Bilt Mastercard5% on quarterly categories

1% on everything else
$0Earn $300 Back
after you spend $3,000 in purchases on your new Card within the first 6 months of Card Membership. You will receive the $300 back in the form of a statement credit.
American Express Blue Cash Preferred®6% at U.S. supermarkets

6% on select U.S. streaming subscriptions

3% at U.S. gas stations
and on transit

1% on other purchases
$95
Earn $250 back after you spend $2,000 in purchases on your new Card within the first 6 months of Card Membership. You will receive the $250 back in the form of a statement credit.
Blue Cash Everyday® Card3% on Groceries at U.S. Supermarkets

3% on U.S. Online Retail purchases

3% on Gas at U.S. gas stations, 1% on other purchases
$0$200 bonus in the form of a statement credit after you spend $2,000 in purchases within the first six months of card membership.
American Express® Gold Card4X Membership Rewards® Points
at restaurants & supermarkets

3X Membership Rewards® Points
for flights booked

1X Membership Rewards® Points
per dollar spent on all other eligible purchases
$250Earn 90,000 Membership Rewards® Points
after you spend $6,000 on purchases on your new Card in your first 6 months of Card Membership.
Last updated April 11, 2024

APRs, Interest Rates and Costs

The APR (Annual Percentage Rate) is the interest rate you are charged on credit card purchases and balances.

The APR takes into account the card’s interest rate and any fees to determine your overall borrowing costs. It’s important to understand how APRs impact your long-term spending with a credit card.

Higher APRs mean you will pay more in interest charges over time, especially if you carry a balance from month to month. For example, a card with a 15% APR will charge $150 in interest per year on a $1,000 balance carried over 12 months. However, a card with a 25% APR will charge $250 in interest on the same balance.

It’s wise to choose cards with lower APRs whenever possible. This will minimize interest fees and allow more of your payments to go towards reducing your principal balance. Cards marketed towards consumers with excellent credit scores tend to have lower APRs.

The interest rate specifically refers to the periodic finance charges applied to your balance. Fees are additional costs like annual fees, foreign transaction fees, etc. While fees affect your overall costs, the interest rate has the biggest impact for cardholders who keep balances.

Pay off statement balances in full each month to avoid interest charges entirely.

Annual Fees and Benefits

Annual fees are a common component of many credit card offers, especially premium travel and rewards cards. Cards with annual fees typically offer more generous rewards rates, bonuses, and benefits compared to no-fee cards. However, the fees can range from $95 up to $695 for the most premium cards like the American Express Platinum and Chase Sapphire Reserve.

When deciding if an annual fee card is worthwhile, you’ll want to estimate the potential monetary value you can get from the card rewards and then compare it to the fee amount. For example, the Chase Sapphire Reserve has a $550 annual fee, but offers a $300 annual travel credit, 3x points on travel and dining, airport lounge access, and other premium benefits. For frequent travelers, it’s possible to come out well ahead even after accounting for the fee. But if you won’t be spending a lot on travel and dining, you won’t reap many benefits from that card and the fee won’t be worth it.

Issuers also offer ways to offset annual fees through statement credits and additional points or miles. For instance, the Amex Gold Card has a $250 annual fee, but gives up to $120 in dining credits each year, reducing the effective cost to $130 [1]. Similarly, co-branded airline and hotel cards frequently reimburse the annual fee after meeting a certain spending threshold.

Analyzing annual fee cards takes some time, math and estimating of your potential perks usage. But for certain spending patterns, these premium cards can provide outstanding value and benefits that outweigh the fees.

Signup and Welcome Bonuses

A big factor to consider are the signup and welcome bonuses available. These bonuses typically reward you with a lump sum of cash back, points, or miles when you meet a minimum spending requirement within the first few months of opening a new card account. It’s important to check how much you have to spend within what amount of time when comparing these offers. Some can be for very large amounts of money that you may not be planning to spend, so you won’t get the bonus. Signing up for a card shortly before you plan to make a big purchase can help ensure you get that welcome bonus.

The most lucrative signup bonuses are often on premium travel rewards cards, where you could earn 50,000 points or more. This Nerdwallet article highlights some of the top offers available in April 2024, including up to 80,000 points from Chase and 100,000 points from American Express.

To earn these bonuses, you’ll need to meet a minimum spending requirement, usually between $500-$5,000 within the first 3 months. Make sure you can comfortably reach the spending level organically based on your budget.

Resist the urge to sign up for multiple cards in order to get the sign up rewards bonus. It will hurt your credit score and when credit card companies notice you doing this, they can cancel your card or deny your applications for future cards.

Foreign Transaction Fees

This is only important to note if you plan on using your credit card in another country. When traveling internationally or making foreign purchases online, credit cards can charge an additional fee known as a foreign transaction fee. This is typically around 3% of the total transaction amount. To avoid paying extra fees, look for credit cards that do not charge foreign transaction fees if you know you’ll be using your card in another country. Many student credit cards do not have foreign transaction fees, making them a good option for study abroad trips.

When reviewing credit card offers, carefully check the fine print for foreign transaction fee information. Some cards may say “no foreign transaction fees” but only on certain purchases or after meeting spending requirements. It’s best to avoid these conditional offers when possible. Stick to cards that waive foreign transaction fees entirely to maximize savings on international or foreign transactions.

With the right no foreign transaction fee card, you can make purchases abroad without worrying about extra costs. This provides significant savings for frequent travelers or those who make regular foreign online transactions. Just be sure to pay your bill on time and in full each month to avoid interest and late fees, which can negate any foreign transaction fee savings.

Credit Utilization and Limits

Credit utilization ratio is an important factor in your credit score. It measures how much of your total available credit you are using. Experts recommend keeping your credit utilization below 30% for the best credit scores. For example, if you have a credit line of $6,000, you would want to keep your spending below $1,800 each month in order to keep your credit score in good standing.

The lower your utilization ratio, the better it is for your credit. Paying down balances to get utilization near 0% can lead to a quick boost in your credit score. However, you don’t need to obsess over getting to 0% every month. As long as you pay your statement balances in full each month, letting some utilization report is fine.

Over time, request credit limit increases on your cards. Higher limits will allow you to spend more while keeping utilization low. Check if you have pre-approved offers to increase your limits without a hard credit pull. Take advantage of automatic increases when offered by your card issuer.

Application Timing and Impact

When you apply for a new credit card, the issuer will perform a hard inquiry on your credit report to evaluate your application. This results in a small, temporary drop in your credit score – typically less than 5 points. This impact is minor and your score will recover within a few months. It’s important not to apply for too many cards in a short period, as multiple hard inquiries can have a larger cumulative effect on your score.

Card Issuers and Relationships

The top credit card issuers in the US market currently include Chase, American Express, Citi, Capital One, and Bank of America. Having an existing relationship with a card issuer can improve your approval odds and provide additional benefits.

For example, those who already bank with Chase and have accounts like checking, savings, or investments are more likely to be approved for premium Chase cards like the Sapphire Preferred or Reserve. Similarly, current American Express cardholders may be targeted for pre-approved offers to upgrade to premium cards like the Platinum or Gold. Amex also provides perks like Membership Rewards point transfers and exclusive events to its cardholders.

On the other hand, issuers like Capital One and Citi tend to rely more heavily on credit scores and do not place as much weight on existing relationships. But they may still offer pre-approved offers to upgrade cards or cross-sell other products to current customers.

So, consider any accounts you already have with top issuers and the potential advantages of consolidating cards with your primary bank. Just be sure to still compare specific card benefits rather than applying solely based on brand loyalty.

Ongoing Account Management

Once you have your card, it’s important to regularly monitor your credit card accounts for any changes to terms, benefits, or new promotional offers. Credit card issuers sometimes adjust aspects of their rewards programs, interest rates, fees, and other features. For some things, they are required to give you notice beforehand, but not for all things. Staying up to date with these changes allows you to fully optimize your cards and make sure you aren’t losing out on money or getting charged extra fees.

Many issuers send notifications about upcoming changes in account statements or separate mailers. You can also proactively check your accounts online or call the number on the back of your card to inquire about new promotions. Set reminders to periodically review your credit cards every 6-12 months.

When beneficial new offers arise on one of your existing cards, you can typically request to product change to that card version through the issuer’s online form or phone support. This allows you to access improved rewards or benefits without having to apply for a new card. Similarly, you may be able to downgrade cards with annual fees to no-fee versions while retaining your credit line and history.

Strategically applying for new cards from the same issuer you have a relationship with can lead to higher approval chances and better initial credit limits. However, it’s wise to space out applications by 3-6 months to minimize the temporary credit score impact from each hard inquiry. Planning product change and application timing wisely helps maximize long-term card benefits.

Key Takeaways

These are the key takeaways to consider when comparing credit card reward offers:

Cash-back or Travel Perks – Decide which you prefer.

Spending Categories – Take note of what you typically spend the most money on and find a card that offers good rewards for those categories. If the spending categories are not for things you typically spend money on, find a different card (i.e. the card offers great rewards on dining out, but you rarely dine out).

Annual Fees – You’ll need to do some math and see if the reward benefits justify the card fee, what benefits the card offers and if you would actually get use out of those benefits (i.e. access to airport lounges – will you utilize that benefit enough to justify the fee?). There are many different benefits that cards with fees offer, so it can take some time to sift through all of the different card benefits, but doing this is crucial when considering a card with an annual fee so that you can be sure you’ll actually get good use out of the offered benefits.

Interest Rates – I cannot stress this enough: pay off your full balance every month and you won’t need to worry about interest rates. However, if you for any reason plan on only paying the minimum balance due, you will need to consider a card with the lowest interest rates. But again, paying off the full balance each month will keep you from owing interest and keep you out of credit card debt.

Foreign Transaction Fees – If you go out of the country frequently or for long periods of time, you’ll want to consider the foreign transaction fees and look for a card with no or very low fees.

Disclosure: This post may contain affiliate links, meaning we receive a commission for purchases made through these links, at no cost to you.

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