It’s about time I drone on about credit cards again. One of my favorite ways to get some extra cash is through rewards credit cards and there are some awesome ones out there for regular people like us who aren’t spending, say, $5,000 a month.
It used to be that owning a credit card was about customer loyalty. You pretty much used one card and would earn points based on the amount of spending. Over the last decade or so that model has shifted. There are a lot more sign on bonuses available now and because of this people tend to have more credit cards than ever. Earning bonuses on cards can be addicting but I must warn you that opening up too many new cards in a short period of time will hurt your credit score.
Before I begin I have a couple of caveats. First, if you have had trouble paying off credit card debt in the past I don’t want you to mess around with credit cards. To get any benefit from these cards you must pay the entire balance off every month. If you are the kind of person who can’t help buying that new laptop on a card, then paying it off over time this article is not for you.
Second, my card selections are based on low fees and modest spending. I despise cards that carry an annual fee so you can rest assured none of the cards on my list cost anything to own so you can sign up for them and never use them if you so choose. If you make a whole lot of money or spend a lot on a particular category consistently there are probably better cards out there for you.
Best For Travel
BankAmericard Travel Rewards® Credit Card
I love this card for one huge reason. You can earn 1.5 points per dollar for any purchase. Most cards these days will only pay you 1% on purchases so this is a bit of a boost. The downside is there aren’t bonus categories, just one flat rate. Redeem your points for travel expenses such as hotels, flights, rental cars, you name it. If you bank with Bank of America you get a 10% bonus when you redeem your points.
- 1.5% back on all purchases
- Bonus: $200 when you spend $1,000 in the first three months
- Redeem points for travel related expenses
- APR: 0% for 12 months, 15.24% – 23.24% after that (you shouldn’t care about this you’re going to pay off your balance every month)
Best For Everyday
Citi®Double Cash Card
The main reason this card ranks high with me is it effectively earns you 2% rewards back on every purchase. I have been suspicious of this card since I heard about it and the reason is they say you earn 1% as you buy and 1% as you pay. My first thought is that you would only earn the second 1% if you carry a balance every month but that isn’t the case. You earn the 1% either way so this card effectively pays 2%. This card isn’t for you if you like bonus categories or you want a sweet sign on bonus.
- 2% back on all purchases
- Bonus: None
- Redeem points for statement credit or cash
- APR: 0% for 15 months, 13.24%-23.24% after that
Best For Categories
This is one of those tried and true favorites that stays high on my list every year. First of all it has probably the best bonus out there $150 back after you spend $500 in the first three months–that’s 30% cash back. This card has categories that rotate every quarter and for 2016 your categories are gas, grocery stores, restaurants, and holiday shopping. Categories pay 5% back. Apparently the holiday shopping category is a new one so this card could be useful come that time a year.
- 1% back on all purchases, 5% back on categories
- Bonus: $150 when you spend $500 in the first three months
- Redeem points for cash or gift cards
- APY: 0% for 15 months, 14.24%-23.24% after that
Best For Gas Guzzlers
PenFed Platinum Rewards Visa Signature® Card
This card is a little odd. It is offered by a credit union and is only available to you if you are a member which means you’ll have donate to one of their selected charities (only about $15). Aside from the unusual application process this card is by far the best for gas. 5% back on all gas purchases all the time, 3% on groceries and 1% on everything else. That said, PenFed is very strict and you’ll only be approved for the card if you have excellent credit. Another thing I like about this one is it doesn’t exclude wholesalers like Costco for bonuses. You get 5% wherever you buy gas and that beats every other card hands down.
- 1% on all purchases, 3% on groceries, 5% on gas
- Bonus: $100 when you spend $1,500 in the first 3 months
- Redeem points for statement credit
- APY: 0% for 12 months, 10.24%-18.24% after that