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The Chase Freedom® is not currently available to new cardholders. Please visit our list of the best cash-back cards for alternative options.
No matter what you spend your money on, a rewards credit card can help you earn extra on your purchases.
But beyond knowing the basics, you should ask yourself a few questions before applying for a new rewards credit card. After all, each new card application adds a hard inquiry to your credit report, whether you're approved or not.
Especially now, as popular travel rewards cards are changing so much, it's important to stay informed. Major card issuers, including Chase, Capital One and Citi, are expanding rewards programs in response to how the coronavirus pandemic has changed the way consumers use rewards.
Below, Select outlines four questions to ask yourself before you apply for a new rewards credit card so that you know exactly how you'll maximize its value.
Your first step should be looking at where you spend the most.
If you're usually on the road for work, consider a gas rewards credit card. If you plan on eating out with friends or your partner, choose a card that rewards you for your restaurant spending, like the U.S. Bank Altitude® Go Visa Signature® Card.
There are also rewards cards that let you earn in multiple categories, like the Blue Cash Preferred® Card from American Express. This card offers a generous 6% cash back on select U.S. streaming subscriptions and at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 3% back at U.S. gas stations, as well as on transit, and 1% back on other purchases. Cash back is received in the form of statement credit.
With most cash-back cards, you earn a certain percentage of cash on your spending. The Capital One QuicksilverOne Cash Rewards Credit Card (a good card for average credit) offers an unlimited 1.5% cash back on all your purchases. Other cards, like the Chase Freedom® and Chase Freedom Unlimited®, let you earn points that can be converted into a dollar value.
And if your rewards card doesn't earn you cash back, it most likely rewards you in points or miles. The American Express® Gold Card is one example, which offers Membership Rewards® points on your purchases. Meanwhile, an airline credit card like the United℠ Explorer Card offers miles for your spending on United products and at restaurants and hotels.
Because your rewards are worth a specific amount of money, you'll want to pay close attention to the card's redemption rate. The typical value of rewards hovers around 1 cent per point/mile. Make sure you are receiving a 1:1 value when you cash in, otherwise you're leaving cash on the table. To calculate the value, take the cost of the item you want to buy and divide it by how many points are needed.
Some rates will be even higher when redeemed a certain way. For example, Chase Sapphire cardholders can use the Chase Ultimate Rewards® (CUR) portal and new Pay Yourself Back feature to receive 25% to 50% more value on their points, which is an increased value of 1.25 cents to 1.50 cents. Before the pandemic, Chase only offered this premium value on travel redemptions.
And likewise, you could potentially devalue the amount of your points and miles, too. This is common with gift cards and paying with points at online checkouts. Be sure to check the dollar value of your points before you cash them in.
Finally, stay on the lookout for when your rewards both hit your account and expire; one big mistake rewards cardholders often make is waiting either too long or not long enough to redeem and missing out on their earnings.
Because rewards cards have a lot of value, they usually come with annual fees and high interest rates. Some cards may also charge a fee when you redeem your rewards. Make sure you read the fine print on the card's website before applying. There is usually a link to "pricing and terms" as well as "offer details" that are worth checking out.
With regard to interest, pay your balance on time and in full every month to avoid being charged interest. If that's not possible, consider a 0% APR credit card with rewards if you think you'll have trouble making a full payment the first month or so but still want to earn on your spending.
The Amex EveryDay® Credit Card has an introductory 0% intro APR for on purchases for 15 months from the date of account opening (after, 14.49% to 25.49% variable APR, see rates and fees), and offers 2X Membership Rewards® points at U.S. supermarkets on up to $6,000 per year in purchases (then 1X) and 1X Membership Rewards® points per dollar spent on all other purchases. Use your Membership Rewards® points as statement credits toward eligible charges you make on your card, such as retail, dining, entertainment and more.
Rewards credit cards present an exciting opportunity to earn more on your purchases while also building credit.
Before you apply, make sure you shop around for the best card for your spending habits and check your credit score. Many of the best cards require good or excellent credit to qualify.
And while charging everything to your card may earn you more rewards, make sure you only spend what you can pay back in full when your monthly bill comes.
For rates and fees of the Amex Everyday® Credit Card, click here.
Information about the Amex Everyday® Credit Card, Capital One Savor Cash Rewards Credit Card, Capital One QuicksilverOne Cash Rewards Credit Card and Chase Freedom® has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.