Best Rewards Credit Cards for January 2020

We've vetted hundreds of card offers and analyzed thousands of data points to bring you a shortlist of our top rewards cards.

With each passing year, it seems as though credit card rewards only get better. Competition has never been higher in the credit card industry, and this has led to increasingly generous rewards programs and introductory offers. The best credit card rewards programs now offer extremely lucrative sign-up bonuses for new cardholders, plus high rewards yields on every dollar charged to the card. The most rewarding card on our list offers as much as $750 in travel value in the form of a new cardholder bonus, and a rewards yield as high as 4.5% in travel value for spending on restaurants and travel purchases, which showcases the value offered by the top rewards cards.

Selecting from hundreds of rewards cards on the market wasn’t easy, but having so many to choose from allowed us to be picky about which cards should make the list.

Here are the attributes we think are important for any rewards card to have:

• Simple rewards programs -- Complexity often works in the favor of the card issuer rather than the cardholder. We value programs that have clear rules for earning and redeeming rewards that don’t make you jump through hoops.
• High reward yields -- It should go without saying that a high rewards yield per $1 of spending is one of the most important criteria for making the best cards list. We like cards that offer a high reward rate on categories that make up a majority of a cardholder’s monthly budget.
• Low minimum redemptions -- Rewards aren’t worth anything until they can be redeemed. We prefer cards that have a no- or low-minimum redemption threshold. We think cards that have redemption minimums of $25 or less are best since cardholders will be able to redeem their rewards frequently.
• Annual fees that make sense -- Not all of the cards on this list carry annual fees, but we wanted to make sure that when they do, it’s because they offer something more (higher rewards yields or other perks) that can help make up for the cost.
• Sign-up bonus potential -- Many of the top cards offer a sign-up bonus valued from $150 up to $750. While they aren’t necessary to make the cut, we like offers that give cardholders an opportunity to get a jumpstart to earning rewards with new cardholder bonuses.

Credit card rewards are benefits you receive for the purchases you charge to a credit card. These programs date back all the way to the 1980s, when card companies started offering cash back and airline miles for making purchases on credit. Later, other companies rolled out credit cards that earned free long-distance minutes, or cash towards the purchase of an automobile.

Cardholders can expect to earn at least 1% in cash back or travel value on every purchase, and the best cards can offer rewards that rise as high as 5% on certain types of spending. Travel cards also boast features like free checked bags on flights, extended checkouts at hotels, and other perks that would have been unthinkable when the programs first began. It's also important to note that credit card rewards are typically only paid on purchases. Cash advances and balance transfers are generally not rewards-eligible purchases.

Credit card rewards generally come in two types: Some cards offer cash back, while others offer travel rewards that can be redeemed for flights, hotels, rental cars, and other travel-related purchases.

Cash-back credit cards

These rewards programs are simple to use, which is why they remain the most popular type of rewards cards today. When you swipe your card to make a purchase, you earn rewards based on how much you spend, and what you buy. Cash-back credit cards offer a certain percentage of cash back, typically paying an amount ranging from 1% to 2% of your spending. Some cards also offer bonuses for spending in certain categories, like gas or grocery purchases, where each $1 of spend can earn up to 5% back.

Cash back cards come in two different types:

1. Unlimited, flat cash back on all spending -- These cards usually offer rewards equal to 1% to 2% on every $1 you spend. Since all types of spending earn at the same rate, you won’t have to bother thinking about which card to use for certain purchases to get the most value. These cards are great for people who simply want to earn a reasonable rewards rate on all types of spending, and don’t want to bother carrying several cards in their wallets.
2. Category bonus cards -- These cards offer large bonuses for spending in certain categories -- say, 5% or even 6% cash back instead of the typical 1%-2% cash back rate. Most programs use a rotating bonus category program, wherein certain types of spending (department stores, home improvement stores, gas purchases, restaurants, etc.) earn at higher rates for three months out of the year. The downside with these cards is that the base rewards rate is usually pretty low (1% or less). If you spend heavily in a certain category, though, these cards can offer a lot of bonus value.

Travel credit cards

These cards are becoming more popular for cardholders who have good or excellent credit scores. Travel credit cards typically earn one to two “miles” or “points” for every $1 of spending, with each point or mile commonly redeemable for $0.01 of travel value. Some travel cards also offer category bonuses for spending on travel or swiping your card to pay a bar tab or restaurant bill. Some allow cardholders to redeem their miles or points for other types of rewards, but give preferential redeption rates for travel. The best credit cards rewards are often found on travel cards, but because many carry annual fees, and rewards are meant for travel redemptions only, they aren’t necessarily the best cards for everyone.

Like cash back cards, travel cards also come in two different types:

1. Travel portal rewards cards -- Some travel cards earn premium rates when redeemed through a card issuers travel portal. These same cards also tend to offer an extra perk in that the points you earn can be transferred to travel partners, making them more valuable for people who want to redeem points through hotel and airline loyalty programs.
2. Statement credit rewards cards -- These rewards cards are excellent for people who like to shop around for travel deals and want flexibility in how they book travel purchases. Many people prefer statement credit rewards cards because the rewards can be redeemed any time you can make a travel purchase, and aren’t subject to limitations like blackout dates.

People who are good at bargain shopping for travel deals may come out ahead with statement credit rewards cards. That’s because the rewards you earn can be redeemed for statement credits against a travel purchase made through an online travel agency (Priceline or Expedia, for example), as well as purchases made directly with a hotel or airline. If you’re the type of person who uses discounts and coupon codes and search high and low for a bargain, statement credit travel cards may offer more value to you.

Though it may sound like a cop out, there isn’t any one card that offers a rewards program that is obviously better for all people than any other credit card. We’d encourage you to compare credit card rewards based on the types of spending that make up the majority of your budget, since category bonus cards may be a better option for people who spend heavily in one particular corner of their monthly budget.

Before applying for a rewards card, there are three ground rules you should know:

• Don’t redeem travel rewards for cash -- one of the most important decisions to make is whether you want cash back or travel rewards. Travel rewards, though lucrative, usually convert into a lesser amount of cash than travel. Unless you know you will have travel expenses, a cash back card is usually a better choice.
• It doesn’t make sense to carry balances -- while spending more means earning more rewards, it doesn’t make sense to spend more money, or carry balances, in order to earn more in rewards. Just one or two months of carrying a balance can result in interest charges that vastly exceed the rewards you earn on your card. If you have credit card debt, a balance transfer card would be a smarter choice than a rewards card.
• Be smart about annual fees -- We think it only makes sense to pay an annual fee when it pays for itself. With so many no-annual-fee credit cards offering rewards yields of 1.5% in cash or travel, we think it’s smart to use this as the baseline to compare to an annual fee card.

If you follow the advice above, you’ll be well on your way to earning high rewards on all of your spending, whether it’s in the form of cash back or travel value.

There are plenty of ways to collect extra points, miles, and cash back without spending any extra money. Follow these simple credit card tricks, and you could be adding a zero or two to your points balance in no time.

1. Couple up your credit cards

Maybe your credit card offers extra points on travel spending, and the issuer has another card that offers extra points on groceries and gas. Consider getting a second card and switching them up depending on what you’re purchasing in order to maximize rewards.

2. Transfer unused points

If you’ve got a few thousand points sitting around in a rewards account you no longer use, you might be able to transfer those points to the rewards account you’re currently using. Check your rewards program’s point transfer policies and partnerships.

3. Put home improvements on the card

Planning on renovating the kitchen or adding a spare bedroom? Put those expenses on your rewards credit card, as long as you aren’t charged a fee to do so.

4. Add an authorized user

This one requires a judgment call on your part. Adding someone as an authorized user makes you responsible for any debt they accumulate and fail to repay. It also means that any mistakes you make, such as a late payment, will show up on their credit report, affecting their credit score. However, if you’re sure you can trust each other, many credit card offers give you extra bonus points -- usually around 5,000 -- for adding an authorized user who makes a purchase in the first few months. Plus, if that authorized user adds additional expenses to your card, the points they accumulate are added to your account.

5. Pay your mortgage or rent with a credit card

Services like RadPad and Plastiq let you pay your rent with a credit card. Your landlord doesn’t even have to sign up; these websites send a rent check to your landlord on your behalf. Unless you find a promotion, it will cost you a 2%-3% transaction fee. This means you’re paying $0.02 to $0.03 per $1, so you need to be getting back more than 2%-3% in rewards to profit. If you’re trying to hit a minimum spend requirement to get the sign-up bonus on a credit card offer, the 2%-3% fee is almost always worth it.

6. Pay tuition with a credit card

If you’re covering tuition for your kid or yourself, you might as well get a reward for all the money you’re spending. Most colleges now allow you to pay tuition with a credit card, although many charge a fee. If you’re lucky and the college you pay doesn’t charge a fee for credit card transactions, charge away. Just make sure you have the funds to pay off your credit card immediately.

7. Pay your taxes with a credit card

As of 2018, the fee for paying any taxes you owe the federal government is 1.87% to 2%. That means this option is only worth it if you’re getting more than 2% back, which can be in the form of high value points or a good cash-back credit card. If you’re trying to meet a minimum spend requirement for a sign-up bonus, this option has lower fees than paying your rent online.

8. Buy gift cards

Buying gift cards for places you know you’ll shop at is an effective way to hit a minimum spend requirement. This can also be a good way to get extra cash back. For example, if your credit card offers 5% cash back on groceries, buying restaurant or department stores gift cards at your local grocery store may let you get 5% cash back on purchases that aren’t part of your bonus category.