Rewards credit cards offer cardholders the chance to gain additional value from their everyday purchases by earning rewards points per dollar spent. These rewards can be classified as rewards points, frequent flyer points, or cashback. After accumulating enough, you can redeem your rewards for a variety of benefits, including flights and upgraded seats, hotel stays, merchandise, gift cards, or even statement credits to reduce your credit card bill.
"Over the years, I've used rewards credit cards extensively in business and in a personal capacity. When you redeem rewards points for high value items like business class seats on long haul flights, it's hard to put a value on the experience."
David Boyd
CEO at Credit Card Compare
Different types of rewards credit cards
Several types of rewards credit cards are available, each catering to different preferences and spending habits. Some common types include the following:
- Cashback cards: Cashback cards reward cardholders with a percentage of the amount spent on the card back into your account as cash.
- Points and miles cards: Points and miles cards allow cardholders to earn points or miles for every dollar they spend. These can be redeemed for various rewards like flights, hotel stays, or merchandise.
- Co-branded cards: These are cards are affiliated with a specific retailers, airlines, or hotel chains and offer rewards specific to the respective brand. These cards are ideal for frequent customers of the affiliated brand.
How rewards credit cards work
Rewards credit cards typically operate on a points-based system where cardholders earn certain points for every dollar spent on the card. These points accumulate over time and can be redeemed for rewards based on the card issuer's redemption options. Some cards may offer bonus points for specific spending categories or sign-up bonuses for new cardholders.
Benefits of rewards credit cards
- Earn rewards on everyday spending: One of the main advantages of rewards credit cards is the ability to earn rewards on everyday purchases like groceries, gas, and bills. This can help cardholders maximise their spending and get more value from their purchases.
- Travel benefits: Many rewards credit cards offer travel perks such as airline miles, hotel discounts, and travel insurance. These benefits can make travelling more affordable and convenient for cardholders.
- Sign-up bonuses: Some rewards credit cards offer lucrative sign-up bonuses for new cardholders, which can include bonus points, cashback, or statement credits. These bonuses can provide an excellent value for cardholders who meet the spending requirements.
How to choose a rewards credit card
When choosing a rewards credit card, it's essential to consider your spending habits, redemption preferences, and any associated fees. Here are some factors to keep in mind:
- Rewards structure: Consider how the card earns rewards, the redemption options available, and whether the rewards align with your preferences and lifestyle. Rewards structures can vary significantly from card to card, on spending thresholds as well as rewards earn rates.
- Annual fees: Some rewards credit cards come with annual fees. Evaluate whether the rewards and benefits outweigh the annual fee cost in your case.
- Interest rates: Check the card's interest rates, especially if you plan to carry a balance. High-interest rates can negate the value of the rewards earned.
- Bonus offers: Look for cards with attractive sign-up bonuses and promotions that can boost your rewards earnings in the short term.
Methodology for our rewards credit card comparison
When choosing cards for inclusion in our rewards credit card comparison table and their rank order, we considered the following attributes and their associated metadata.
- Annual fee initial year: The cost of the card's annual fee for the first year. Lower is better.
- Annual fee ongoing: The cost of the card's annual fee after the first year. Lower is better.
- Apple Pay enabled: Compatibility with Apple Pay. Considered beneficial if possible.
- Balance transfer offer: The presence and terms of any introductory balance transfer offers. Lower rates for longer are considered better.
- Card type: The card's network, such as American Express, Mastercard, or Visa. The network can affect where it can be used.
- Cashback terms: If the card earns cashback, what the terms and limits are on how much cashback can be earned.
- Cashback type: Specifics of the card's cashback program if there is one, including any restrictions on earnings and the nature of the cashback benefits, whether through spending, sign-up bonuses, vouchers, or points conversion.
- Foreign exchange fee: Whether there is a fee for converting transactions in a foreign currency or spending abroad. Lower is better.
- Interest-free period: The length of the interest-free period provided. Longer is better.
- Introductory purchase rate: Details of any introductory rates for purchases. Lower rates for a longer period is considered better.
- Late payment fee: Charges applied for late payments. Lower is better.
- Lounge access: If the card comes with airport lounge access, what lounges are accessible, how many passes are available, etc.
- Maximum credit limit: If published, the highest possible credit limit offered.
- Minimum credit limit: If published, the lowest credit limit offered.
- Minimum income required: If published, the minimum amount of income required as per the issuing bank's eligibility criteria. Lower thresholds make the card available to more applicants.
- Purchase rate ongoing: The ongoing purchase rate after any promotional period ends. Lower is better.
- Rewards program: How the card's rewards program is structured, how flexible it is, availability of redemptions, etc.
- Samsung Pay enabled: Compatibility with Samsung Pay. Considered beneficial if possible.
- Sign-up bonus: The availability of sign-up bonuses, associated spending targets, and terms. Larger sign-up bonuses with lower spending criteria are considered better.
- Target market: If the card is available for businesses or consumers.
Our rankings may not reflect what matters most to you. Be sure to compare key rates, fees, and features against your own financial priorities before deciding.