“How to Select the Perfect Rewards Credit Card for You”

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Consumer Credit and Finance Education

At O1ne Mortgage, we prioritize consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.

Steps to Choose the Best Rewards Card

Choosing a new rewards card might feel daunting, but don’t let analysis paralysis stop you. After all, there is no single best rewards card—the best option for you will depend on your creditworthiness and preferences. By checking your credit and limiting your search based on the type of rewards you want and how you plan to use the card, you can narrow in on a handful of options before applying for the best one.

1. Check Your Credit Score

Check your credit score to get a sense of what type of credit card you will likely qualify for—you can get your credit score for free from Experian to see where you stand. Having good to excellent credit may be a requirement for some of the best rewards cards, but there are also options for people with good, fair, and poor credit.

2. Choose a Type of Rewards

Start narrowing your search by choosing between the three common types of credit card rewards.

Cash Back

Cash back rewards can be a good option if you want to know exactly how much your rewards will be worth. The cash back will accrue in your credit card account. You can then redeem your cash back rewards by requesting a statement credit, check, transfer to a bank account, or one of the card’s other redemption options.

General Credit Card Rewards Programs

Many credit card issuers have their own rewards programs, including American Express, Capital One, Chase, and Citi. These programs often offer more flexibility in how you can redeem your rewards. You might be able to choose cash back options, book travel, or transfer your rewards to partner hotel and airline loyalty programs.

Hotel and Airline Miles or Points

You can also earn rewards in a hotel or airline’s loyalty program by getting a cobranded hotel or airline credit card. The loyalty program will dictate how you can redeem your rewards, and there may be limited options compared to cash back or credit card rewards programs. However, these cards also often come with brand-specific benefits, such as status in the loyalty program, free checked bags, or an annual voucher for a free hotel stay.

3. Consider Bonus Rewards Types and Categories

Credit cards use one of four systems for determining the rewards you earn when using your credit card:

• Flat-rate cards: This type of card offers the same rewards rate on every purchase.
• Tiered rewards cards: This card offers bonus rewards on purchases in certain categories, such as travel or dining.
• Rotating rewards cards: The card issuer chooses new bonus reward categories every three months.
• Dynamic rewards cards: You can change the bonus reward categories, or they automatically change based on your spending each billing cycle.

4. Review the Common Credit Card Fees

Consider the common credit card fees, such as:

• Annual fees: You may have to pay this when you open your card (although some cards waive the fee the first year) and after each cardholder anniversary. If you close your card before the first year is up, some credit card issuers might take back any intro bonus rewards you earned.
• Balance transfer fees: This is the fee to transfer balances to the credit card. It’s often 3% to 5% of the amount you transfer and only applicable if you transfer balances.
• Cash advance fees: You’ll pay a fee if you use your credit card for cash advances, which generally isn’t a good idea because the cash advance may be subject to a higher interest rate in addition to the fee.
• Foreign transaction fees: A fee for using the card outside the U.S. and to make purchases in foreign currencies.

5. Get Prequalified

With a few specifics in mind, you can try to get prequalified for credit cards that will fit your criteria. Credit card issuers have prequalification tools that you can use to see which of their cards you’ll likely qualify for without impacting your credit score.

6. Compare Intro Bonuses

Many credit cards offer intro bonus rewards to new cardholders. Sometimes, you can only receive the intro offer on a credit card once every few years—or only once ever—and the offers may change periodically.

7. Apply for the Best Rewards Card

At this point, you’ve probably narrowed in on a handful of top choices. Decide which one is at the top of your list and complete the online application to see if you get approved.

Monitor Your Credit Score and Credit Card Offers

In addition to earning rewards, you can use your new credit card to improve your credit score. And you can use your Experian account to monitor your credit score for free. You might qualify for more credit cards if your credit score increases. And keep an eye on credit card offers to see if opening another new rewards card makes sense.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you make the best financial decisions!

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