Is this the right card for me?

If you travel a lot, for business or pleasure, you’ll be spending enough on flights and hotels and other things to earn good points toward more flights and hotel stays. Keep in mind that not all reward points programs give you the option of redeeming points for travel, but most do. On the other hand, if you’re spending more than, say, $2,000 per month, you’ll be able to earn good points whether you travel or not. If you don't use a credit card often, you won’t be earning many points unless you’re happy to change your lifestyle and use your credit card for everything, making sure you pay back the balance on time each month of course.

Am I eligible to get one?

To qualify, you’ll need to be over 18 and a US resident. If you have a poor credit rating, or your income is very low, you might have trouble getting approval for a new rewards credit card and the rejection could damage your credit rating, so be careful.

What types of rewards are available?

There are a host of programs with which you can redeem your points for flights. Make sure you check whether they’re just redeemable with specific airlines, like Qantas or Virgin, or whether you can choose between a good selection of reputable airlines. Other cards allow you to redeem points for things like hotel stays. Sometimes you have to book through certain partner travel agencies or with certain hotel brands, so check to see how much freedom you actually have. If you’re a traveler, you might also want to check if you get complimentary travel insurance included in the features of the card. If travel isn’t your thing, you’ll be looking for other ways to redeem points. Many programs have online stores where you can purchase a range of products and merchandise - everything from watches, to technical gadgets, to cologne. Have a look at the store before you sign up and make sure they sell things you’d actually want or need and that items are a good deal. Fourthly, you can redeem points for gift cards or cashback . Sometimes it is more efficient to do one rather than the other so you want to read the fine print.

How can you tell a good rewards program from a bad one?

There are several factors to consider. Points are not equal across programs: You usually earn 1 point per $1 spent, but sometimes this goes as high as 3 points. But a point with one program is not equivalent to a point with another program - it depends on what those points actually buy. Points capping, points expiration: Most programs limit the amount of points you can earn in, say, a year. For the big spender particularly, this can be limiting and frustrating. Secondly, some points expire. This is a frustration for the lower spender who might take a while to build up enough points to get anything of real value. Both capping and expiry information will be found in the small print of the program. Annual fees and interest rates: You should see whether there are annual or start up fees involved in signing up for the reward program and for the credit card. In addition, rewards points credit cards often come with both higher fees and interest rates. Flexibility: Some cards only allow points for flights on one airline; others allow users to exchange them for flights on several airlines, or redeem them for cash back, merchandise or gift certificates. Ease of points redemption: Unfortunately, some companies make it quite difficult to redeem points in the hope that people won’t bother. You might have to squint through the depths of the fine print to find out how on earth to get something back for your points. Look for a rewards points program that makes redemption simple and straight forward. Some even offer automated redemption, where cash back goes straight into your account at the end of the month based on the points you’ve earned. Bonus points: As an introductory offer, many reward credit cards will offer you the opportunity to earn bonus points. Sometimes to get them you have to spend a lot of money or shop in a particular store.

Do balance transfers and cash advances earn reward points?

They do not. And, in fact, a rewards credit card may have higher interest rates on these transactions than a regular card.

Compare Credit Card Rewards for the USA | Review Bonuses & Earn Rates

Rewards credit cards

Earn points as you spend to get free flights, upgrades, free gifts, shopping vouchers, cash back and more with rewards cards.

By Andrew Boyd | Updated Sept. 7, 2023

A rewards credit card is a type of credit card which earns rewards points (also know as loyalty points) for each dollar spent on eligible purchases. Eligible purchases are transactions which are not purchases of cash (such as purchases of foreign currency banknotes), or cash equivalents (such as a balance transfer), or other non-qualifying transactions as defined by the card issuer (such as interest charges and other account fees).

Rewards point redemption options

Rewards points (also known as loyalty points) can be exchanged for benefits chosen by the cardholder from a range of redemption options, which may include:

Merchandise from an online catalog
Retail gift cards
Money off supermarket or other shopping at the checkout
Movie tickets and other entertainment
Exchanging the card’s brand of rewards points for airline frequent flyer points
Cashback to the card account
Payment of the card’s annual fee
Travel and accommodation
Charity donations

Frequent flyer credit cards

Frequent flyer credit cards are a type of rewards credit card. In this case the card is linked to an airline’s frequent flyer program (e.g. Delta Skymiles or United Club). The rewards points earned take the form of frequent flyer points directly credit to the cardholder’s frequent flyer points account, rather than converting the card’s brand of reward’s points into frequent flyer points.

American credit card rewards programs

There’s a wide variety of credit card rewards points programs in the US. Among the most popular are:

American Express Membership Rewards
Capital One Rewards
Chase Ultimate Rewards
Citi Rewards
HSBC Rewards
Wells Fargo Rewards
US Bank Rewards

Points earning rates

Points earning rates are expressed in terms of points earned per dollar spent on eligible purchases (e.g. 1.5 points per dollar). Earning rates vary from card to card, with more expensive cards (i.e. those with a higher annual fee) tending to have a higher points earning rate.

However, earning rates are not directly comparable across different rewards programs. For example, a card may have a high earning rate, but the number of points required for an identical redemption may be higher than the required points in a different reward program where card earning rates per dollar are lower. The required number of points for a David Jones $50 gift card, for example, is not consistent across all American credit card reward programs.

Points caps and thresholds

Some cards have limits on the number of points that can be earned in a single month or year.

Where there is a points cap, after the points cap is reached the points earning rate drops to zero for the remainder of the period (e.g. 1.0 points per dollar, up to $5,000 spending or 5,000 points earned per month, 0 points per dollar thereafter).

Where there is a points threshold the earning rate falls but does not disappear, once the threshold is reached (e.g. 1.0 points per dollar, up to $5,000 spending or 5,000 points earned per month, 0.5 points per dollar thereafter).

However, a few cards do have both a points threshold and an absolute cap on points.

Points expiry

Each rewards program has its own rules about points expiry, so it’s important to read the rewards program’s Terms & Conditions if you have a rewards credit card.

While some reward programs say that points do not expire as long as your credit card account is current (and they may give you a 90 days grace period in which to spend the points after your card account is closed), other programs require some earning or redemption activity in your points account to prevent points expiry (e.g. points expire if there has been no points earning or redemption in the previous 24 months). In some cases points automatically expire within three years if they are not used.

First purchase bonus points

Many rewards cards offer large quantities of bonus points as an incentive to new cardholders. There is usually a target spending amount to be reached within a nominated period in order to qualify for the bonus points (e.g. spend $3,000 in the first 90 days after card approval and earn 80,000 bonus points). These bonus points can be worth several hundred dollars, depending on the rewards program and the way they are redeemed.

Higher annual fees and interest rates

Rewards credit cards tend to have higher annual fees and interest rates than cards with no rewards points on offer. In some cases the high annual fee is charged to partly offset the cost of other complimentary benefits (such as free travel insurance or airport lounge access) often attached to rewards credit cards.

However, there are a few rewards credit cards with a low or no annual fee and/or a relatively low interest rate on balances carried from month to month.