Think a credit card is just a piece of plastic? Think again. Sure, credit cards are useful for making purchases and paying them off later (responsibly, of course). But the best credit cards also earn rewards like cash back or airline miles, and offer plenty of additional benefits.
If you don’t already have a credit card that racks up points and saves you money on travel or other expenses, it’s time to rethink what’s in your wallet. Here are eight things you should look for in a credit card to get the most out of your everyday spending.
1. Figure Out the Kinds of Rewards You Want
Credit card rewards come in many different flavors, so your first step will be to hone in on the type you want to accrue.
- Cash back: Some credit cards earn 1% to 2% (sometimes more) cash back on purchases, which you can then redeem for statement credits to lower your monthly payment. These are often the most basic rewards cards, and the easiest to maximize.
- Airline miles and hotel points: Other cards are co-branded with a specific airline or hotel chain so that you can earn frequent-flier miles or hotel points on your purchases and then redeem them for travel.
- Transferable points: These types of points are the most versatile since you can transfer them to the credit card’s participating airline and hotel partners, but also redeem them for travel directly through the issuer, or even for cash back, among other options.
Decide what type of rewards you’ll get the most use out of, and then narrow your search to the credit cards that earn them.
2. Look For a High Welcome Bonus
Introductory bonuses are a great way to rack up a lot of rewards quickly. When you apply for a new credit card, you might be eligible to earn hundreds, or even thousands, of dollars’ worth of rewards by using your card to make a certain number of purchases within the first few months. After that period is over, your card will earn rewards at its normal, everyday rates.
Related: The Best Credit Card Bonuses Of 2021
3. Manage Minimum Spending Requirements
Be sure to note any spending requirements that might be in place for you to earn a bonus and make sure that you can meet them responsibly. In other words, don’t run up big balances or risk late payments simply to score a bonus since the value of the points you earn will be wiped out by late fees and interest charges.
4. Take Advantage of Intro Financing
In addition to bonus rewards, some credit cards offer great introductory financing terms for new cardholders. For example, a common offer is 0% intro APR (annual percentage rate) for 15 months from account opening on purchases and balance transfers. If you need more time to pay off new purchases, or to tackle balances from other cards, you can leverage an intro APR offer to do so without incurring hefty interest charges. Just beware that making late payments can still impact your credit score and balance transfers are subject to fees.
5. Find an Affordable Annual Fee
Some credit cards charge annual fees. That is, a price you pay every year to keep your account open and to continue enjoying your card’s benefits. These can run the gamut from $0 (for cards with no annual fee) up to hundreds of dollars per year.
Before you open a new credit card, make sure you can afford its annual fee. More importantly, think about whether you will get more value from the card’s benefits than its annual fee costs. A card with a $500-plus annual fee may offer plenty of value-added benefits including annual statement credits toward travel purchases and at restaurants. If you’re not taking advantage of the benefits, a card’s annual fee probably isn’t worth paying for.
6. Search For Strong Everyday Earning
In addition to its welcome bonus, any credit card you get should earn extra rewards in specific categories where you tend to make a lot of purchases, such as dining, groceries, or gas. That way, you can maximize your spending beyond the first few months you carry a card.
For instance, a card may earn 1% cash back on most purchases but also offer unlimited 4% cash back on dining, entertainment and a variety of popular streaming services, plus 3% at grocery stores. If these tend to be your major expense areas each month, you can get a lot of additional cash back by choosing this card over one that earns a flat 1% to 2% back on everything.
7. Pinpoint The Travel Benefits
If you decide on an airline or hotel credit card, peruse its day-of-travel benefits and make sure it includes what you need.
An airline credit card should offer perks like free checked bags, priority boarding and discounts on in-flight purchases such as food. Many airline branded credit cards offer a first checked bag for free as well as savings on in-flight food and beverage purchases.
Hotel credit cards should come with benefits like automatic elite status (and perks like room upgrades, bonus points on stays, and late check-out) and even annual free nights each year you pay an annual fee.
In addition to those perks, some airline and hotel cards will reimburse cardholders up to $100 once every four years for a Global Entry application (or $85 for TSA PreCheck) for access to expedited airport security and customs and immigration lines. Still others confer access to airline lounges when cardholders travel, which can make the airport experience all the better.
With any travel credit card you get, make sure it includes perks you’ll actually use on the road, but don’t pay higher annual fees for benefits you might not take advantage of.
8. Don’t Forget About Purchase And Travel Protections
Since the main purpose of credit cards is to make purchases, you should choose one that will protect those purchases in case an item you buy is lost, stolen or damaged.
If you get a travel credit card, look for one that will protect you when your plans go awry. Covered incidents can include trip cancellation or interruption if you need to cancel or cut your trip short. Many cards include secondary auto rental coverage with some of the more premium cards offering primary coverage.
Related: The Best Travel Credit Cards Of 2021
Bottom Line: Don’t Leave Money on the Table!
Far from simply being convenient forms of payment, many credit cards offer valuable rewards and benefits that can save you on travel or other expenses.
To find the right one for your needs, think about the types of rewards you want to earn and the benefits you would like a card to include. Then focus on the products with annual fees you can afford and, above all, make sure you use your card responsibly since you wouldn’t want to rack up debt and expensive late fees and interest charges that would negate the value of any rewards you earn. Once you take a few key factors into consideration, you should be able to find the right card for your needs and start racking up rewards quickly.