Published in: Credit Cards | Aug. 7, 2019

Which Type of Rewards Credit Card Is Right for You?

By:  Lyle Daly

We are committed to full transparency as part of our mission to make the world smarter, happier, & richer. You should know that offers on The Ascent may be from our partners - it's how we make money. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.

Here’s how you can pick the type of rewards card that fits you best.

Smiling tattooed woman with credit card

Image source: Getty Images

If you’re familiar with rewards credit cards, then you probably already know that there are quite a few different types of rewards you can earn.

Some cards earn cash back, which works exactly how it sounds. Some earn points you can redeem for travel. And others earn points that are tied to a specific store or brand.

How can you know which type of card will be the most valuable for you? Let’s check out what each option has to offer.

Cash-back cards make rewards easy

Cash-back credit cards have been a big hit with consumers for years, and in our Why Swipe study, we found that they’re the most popular type of credit card by a wide margin. You should strongly consider a cash-back card if:

  • You want simple credit card rewards that don’t require any extra time or effort on your part.
  • You don’t travel that often.
  • You’re looking for a no-annual-fee card. Although there are a few cash-back cards that charge an annual fee, most of them don’t, so you won’t be short on options.

You can’t go wrong with a cash-back card. If you pick one, you’re guaranteed to get value from your credit card rewards, and you won’t need to figure out the best redemption option like you would with other types of rewards cards.

Travel rewards cards are perfect for frequent travelers

Just like the name suggests, travel credit cards are made with travelers in mind. Not every traveler needs this type of rewards card, though. Here are some signs that a travel card could be valuable for you:

  • You travel domestically at least twice per year or internationally at least once per year.
  • You’re willing to spend time looking for the most valuable redemptions for your points. If you usually have some flexibility regarding when you travel, that’s even better, as it makes finding redemptions easier.
  • You like to book more luxurious travel, such as airfare in business or first class or hotel suites. These tend to be where you can get the most out of your points.
  • You can make use of extra travel perks, such as a Global Entry/TSA PreCheck membership, airport lounge access, or travel credits.

As a general rule, the higher your travel expenses are, the more value that you’ll get from a travel rewards card.

These cards have plenty of travel-specific benefits that can save you a lot of money, but only if they’re benefits that you’ll use every year. The travel points you’ll earn can also provide considerable value, but you may need to look around for the best redemption options to get the most out of your points. 

Store cards are great when you’re loyal to one brand

Finally, we have store cards, which it seems like every major retailer is offering at this point. A store credit card is tied to one specific brand, and perks may include:

  • A discount on purchases at that brand
  • Rewards you can redeem for gift certificates
  • Purchase financing with 0% deferred interest offers
  • Free expedited shipping for online orders
  • An extended return policy
  • Access to special cardholder events and deals

Each store card is different, so you’ll need to see if the benefits of a store’s card are worthwhile for you. But since the benefits of store cards apply at one brand, you should only apply if you’re a frequent shopper there. If you don’t buy from a store at least once or twice per month, then you’d get more out of a different type of rewards card.

Picking the right rewards card

We’ll wrap it up with a couple of quick questions you can ask yourself if you’re still unsure about which type of credit card you need.

  • Do you spend a lot on travel each year? -- A travel rewards card will most likely save you the most money. If you answered no, move on to the next question.
  • Do you have a store you shop at once per month or more? -- Consider that store’s rewards card, but only if you’re confident that you’ll take full advantage of the card’s perks. Make sure you compare the store card to some cash-back cards to see if those would earn you more.

If you answered no to both of those questions, or if you just want the easiest credit card rewards, then you should pick a cash-back card.

Our #1 cash back pick has a surprise bonus

This may be the perfect cash back card! That's because it packs in $1,148 of value. Cardholders can earn up to 5% cash back, double rewards in the first year, and avoid interest well into 2020. With such a deep bench of perks you'll wonder how this card packs in a $0 annual fee. Best yet, you can apply and get a decision in two minutes. Learn more with our in-depth review.

Find the right card for you

Cash Back & Rewards