The 3 Types of Credit Cards You Need to Play (and Win) the Rewards Game

Credit card rewards can pay you for your everyday spending, and with a little effort, you might be surprised at how much value you can get. It wasn't that long ago that a 1% cash back rewards rate was the industry standard, but now there are higher rates, category-specific rewards, and more. And to truly maximize the rewards for your spending, you'll probably need more than one credit card (the average American has four).

We'll discuss the other aspects of maximizing credit card rewards responsibly toward the end. But there are three main types of credit cards most reward-seekers should keep.

1. A solid flat-rate rewards card

The "backbone" of a solid credit card rewards strategy is a card that pays a high rate of cash back on every purchase. The Wells Fargo Active Cash® Card (see rates and fees) is one solid example, as it offers a 2% cash back rewards rate on all purchases, as well as a 0% introductory APR for 15 months from account opening on balance transfers and purchases. (After that, the go-to rate of 20.24%, 25.24%, or 29.99% Variable APR applies.) Whatever your flat-rate cash back rewards credit card pays, the idea is that this is the lowest reward percentage you should get for your spending.

2. A top-notch travel credit card

Travel credit cards often have excellent rewards rates, as well as extra benefits that appeal to travelers, such as free checked bags or no foreign transaction fees. And if you're a frequent traveler, a travel credit card could be a solid part of your rewards strategy, especially if you regularly fly the same airline.

Consider the Delta SkyMiles® Gold American Express Card as an example. Yes, it has a $0 introductory annual fee for the first year, then $150. (see rates and fees.) But benefits like free checked bags for everyone on your reservation can easily justify the cost. The card earns 2 miles per $1 on Delta purchases, as well as at supermarkets and restaurants. Terms apply. And while this might not sound like a superior rewards rate to what cash back cards offer, the key idea is that airline miles are often far more valuable than the standard $0.01 cash back "points" redemption rate. In fact, if you're strategic about redemption, it's not unheard of to get $0.03 or even more in travel value for airline miles.

3. Cards for specific types of purchases

Finally, some cash back rewards cards offer different rewards rates in different spending categories. For example, the Blue Cash Preferred® Card from American Express offers 6% cash back on up to $6,000 in grocery store spending per year, as well as 3% back on gas, rideshare, and other transit expenses. Terms apply. See rates and fees.

Other cards might offer higher rewards rates on travel expenses, restaurants, and other categories, and then there are co-branded cards that offer high rates at specific merchants, such as the Prime Visa, which gives 5% back on Amazon, AmazonFresh, and Whole Foods, and Chase Travel purchases with an eligible Prime membership purchases.

It's not just about the credit cards you carry

To be sure, playing the credit card rewards game the right way involves more than just picking the right combination of credit cards. And it's not right for everyone -- if you're uncomfortable with using credit cards for everyday purchases, there's nothing wrong with using debit cards or cash instead.

Most importantly, rewards strategies only work if you pay your credit card balance off in full every month. A whopping 56% of credit card account holders don't do this. Before you try your hand at the rewards game, be sure you're prepared to only use them for purchases you can pay off before the bill is due. The average credit card APR is about 24% as of this writing, and carrying a balance can erase the value of even a generous rewards program very quickly.

It's also important to take cards' welcome bonuses into account, which can be extremely valuable in some cases. And many cards have targeted discount and statement credit offers, such as $20 back after spending $100 at a certain retailer, and these are generally stackable with your standard rewards rate.

The bottom line is that there are a lot of moving parts when it comes to maximizing credit card rewards. The best strategy depends on your spending needs, how comfortable you are with managing several different credit card accounts, and other factors. But getting the right combination of cards in your wallet is an important step in the right direction.