Best Points Credit Cards of 2019

What You Should Look for in a Points Credit Card

There are so many credit cards on the market that reward customers with points that it can be hard to decide which one to get. Some are great for travelers, while others are geared toward certain types of consumers. Do you spend a lot on gas and groceries? How about airfare and hotels? Maybe you have a favorite retailer? It’s important to pick a card that’ll reward you for your spending habits.

Don’t forget that you have to be able to use your points once you earn them, too. Some cards are very limited in this regard. You may be able to use your points only for cash back or even at just one store or website. While other cards allow you to transfer points to a variety of airline and hotel programs for free flights and stays. Figuring out how you want to use your points is as important as knowing how many points you’ll earn.

Let’s take a look at some important aspects of points cards you’ll want to consider before submitting your next application.

• Aspect #1: Where Can You Use the Card?

  Most points cards are issued by major banks and use common payment networks. If the card has a Visa, MasterCard, American Express or Discover symbol on it, you can use it just about anywhere. It’s worth mentioning, though, that American Express and Discover aren’t quite as widely accepted as Visa and MasterCard. Discover is particularly difficult to use while traveling abroad. If you get a Discover or Amex card, you’ll probably also want a Visa or MasterCard as a backup.

  All of the major rewards cards use one of the major payment networks, including the Green, Gold and Platinum cards from Amex, Chase’s Sapphire lineup and Citi’s ThankYou cards, not to mention the Discover it cashback card lineup, co-branded airline and hotel cards, U.S. Bank’s FlexPerks cards, Bank of America’s Travel Rewards cards, Capital One’s Venture cards and many more.

  The most limiting cards tend to be retail or store credit cards. While some of these cards use Visa or MasterCard payment networks and can be used anywhere, like Barnes & Noble Mastercard®, others are tied to the store that issues that card. The Home Depot Consumer card, for instance, can be used only at Home Depot. This severely limits the usefulness of the card.

  There may be a few reasons to get store card, but generally speaking, you’ll do better with a more general rewards card. We’ll talk about this some more as we go along.

• Aspect #2: Can You Use the Points?

  There are a few basic types of points cards, and they can be categorized by how flexible the points are in their respective rewards programs. Store-branded cards generally offer the lest flexible points. If these cards earn rewards, which they don’t always do, they’re typically tied to the store that the card is branded by.

  The Old Navy Visa® Credit Card, for instance, can be used anywhere Visa is accepted, but it earns points that can only be redeemed for certificates toward purchases at Old Navy and its parent company’s stores (Gap, Banana Republic, Althleta).

  The next step up in flexibility is offered by cards that allow you to use points for purchases from their rewards program’s website. The U.S. Bank FlexPerks Travel Rewards Visa Signature is good examples of this sort of card.

  The FlexPerks card is designed for travelers, so you’ll use the points you earn to redeem for travel through its programs online portal. That may not sound particularly flexible, but you can buy all sorts of travel, from airfare to cruises, from just about any provider. You just have to buy it through the FlexPerks rewards program’s website.

  A slightly more flexible version of that type of travel rewards program allows you to use points toward statement credits to essentially reimburse yourself. This allows you to buy travel from just about anyone, not just through a specific website, and then redeem points toward that cost. There are even some cards that allow you to redeem points for statement credits toward any purchase, not just travel. These are essentially cashback cards.

  The most flexible and potentially valuable rewards currencies are transferable points. The major players are American Express Membership Rewards, Citi ThankYou, Chase Ultimate Rewards and Starwood Preferred Guest. Points earned in those programs can be used for a wide variety of things. Depending on the card and the program, they can be used to purchase travel via the program’s website, transferred to airline and hotel partners, redeemed for gift cards from a variety of merchants and more.

  If you know a little about using miles for free flights, you can get a lot of value for your points by transferring them to partner airlines. It can take a bit of research and work to find the best redemptions, but instead of getting one cent per point, you could easily get two cents or more for award flights. Some redemptions, particularly for premium cabin seats on international flights, can get over five cents per point.

  Think about it. If you had, for example, 20,000 points that are worth one cent each, you’d get $200 worth of travel, gift cards or statement credits. That’s the standard deal for many cards. But if you got two cents per point by transferring them to, say, United Airlines first and then buying a flight, you’d get $400 of value out of the same number of points. And if you found one of those fantastic international redemptions in business or first class, you could get $1,000 for those points.

  Being able to maximize the value of your points can make a huge difference.

• Aspect #3: Bonus Categories for Purchases

  Almost as important as how you can redeem points is how quickly you can earn them. There are three types of purchase bonuses offered by cards: fixed rate, rotating categories and fixed categories. One isn’t necessarily better than the other, though you may consider getting a few different types of cards to maximize your earnings.

  Fixed-rate cards earn a consistent number of points per dollar spent for all purchases. Whatever you buy, and wherever you buy it, you’ll typically get either 1.5 or 2 points per dollar. These are easy-to-use, no-hassle cards because you don’t have to think about what you’re buying, if you’ve hit an earning cap or anything else. Every purchase earns a solid bonus.

  You can earn much more than two points per dollar with cards that offer rotating bonus categories. These types of cards give cardholders the chance to earn up to five points per dollar for purchases in certain categories, such as wholesale stores, groceries, gas, restaurants and more. The trick is that the bonus categories change every quarter, and they typically have a maximum amount of spending that earns that bonus.

  If a purchase doesn’t fall into the current bonus category, or if you’ve already reached the earning cap, then you’ll get just one point per dollar. So with these cards you have to pay strict attention to where you’re shopping, what you’re buying, what the current bonus category is and how much you’ve spent. That might sound like a lot of work, but you can earn a lot of points fast with one of these cards.

  The two Chase Freedom cards are good examples of these earning schemes. The standard Chase Freedom® has rotating bonus categories that earn five points per dollar on up to $1,500 in purchases per quarter. Chase Freedom Unlimited®, on the other hand, earns a fixed 1 points per dollar for all purchases, with no limit.

  One great strategy for maximizing points is to use a card with rotating categories only when it earns bonus points, and then use a fixed-rate card for all other purchases. That way every purchase earns a bonus and some will get an impressive five points per dollar.

  The final type of card earns bonus points for purchases in certain categories that do not change. These fixed-category cards sometimes put limits on the amount of earning you can do at the bonus rate, but others don’t. The advantage to this type earning scheme is that you can get a card that offers a bonus for whatever you spend the most on. You can also dovetail cards that have complimentary bonus categories.

  For instance, let’s say you already have the Citi Premier Card. Maybe you fly a lot, and it offers three points per dollar spent on travel, plus double points on dining out and entertainment. But perhaps you also spend a lot on groceries every month. You might want to add Amex EveryDay® Credit Card. It has no annual fee, so it’s free to hold, and it earns a solid two points per dollar for groceries.

  A quick word about store and retail cards before moving on: If one of these cards offers rewards, and it can be used outside of the store its branded with, then it may also offer bonus points in a variety of categories. This may make the store card sound more flexible and appealing.

  The Sears MasterCard®, for instance, offers double points at Sears and Kmart, but also triple points at grocery stores and restaurants and an impressive five points at grocery stores. It’s one of the better store-branded cards available, but you’re still tied to redeeming at Sears. If you really like Sears, this might work for you. But with all of the great rewards cards on the market, there’s really no reason to be tied to one store.

• Aspect #4: Sign-Up Bonus

  Sign-up bonuses are still the easiest and quickest way to rack up a lot of points. Not every card comes with one, and sometimes issuers have temporary promotions with bigger bonuses. Depending on the card, it might be worth waiting a few months to see if a bigger bonus comes along.

  At one time it was possible to get huge bonuses in the 100,000-point range. Though it’s still possible—Chase Sapphire Reserve® had that bonus when it was first released—it’s very rarely offered anymore. If you’re looking for a quick infusion of points, anything around 50,000 points is a great haul. Even 15,000 to 20,000 points is nothing to scoff at. You’re getting at least $150 in value out of that deal.

  The cards that offer the bigger bonuses are typically from the bigger issuers, like Chase, Citi and American Express, and are part of a major rewards program. U.S. Bank and Bank of America are also worth taking a look at, as are some co-branded hotel cards, like the Starwood Preferred Guest® Credit Card from American Express.

  I’d generally stay away from store cards since their bonuses, if they offer one at all, are usually in the form of small discounts or maybe a $50 gift certificate. You can do much better with other cards.

• Aspect #5: Annual Fee

  Some cards charge nothing to hold, while others can soar up to $550 a year. There are even a few super-exclusive cards, like the Amex Black, that cost even more. But the question remains: why would you pay anything for a credit card if you can get one for free?

  There are few reasons it might make sense. To start with, you could be able to earn more with a card that charges a fee. These cards often come with the biggest sign-up bonuses and the best earning potential.

  Take the previously mentioned Amex EveryDay® Credit Card. It’s free and earns two points per dollar for groceries. Amex EveryDay® Preferred Credit Card, on the other hand, costs $95 a year and earns three points per dollar at supermarkets.

  If you value American Express Membership Rewards points at just 1.5 cents each, which is a conservative estimate, you’d have to earn an extra 6,334 points a year to cover the annual fee. Let’s assume you can max out the grocery bonus category, which caps at $6,000 a year or $500 a month. That would earn 12,000 points with the EveryDay card and 18,000 with the EveryDay Preferred, for a difference of 6,000 points.

  That alone is not quite enough to justify the annual fee since you’ll be short 334 points. The Preferred card, though, also offers double points at gas stations. If you spend $100 a month on gas, you’d get 1,200 points with the EveryDay and 2,400 with the Preferred. So now the difference is an extra 866 points in your pocket.

  That’s not much added value, and it might not justify taking the chance on an annual fee. However, the Preferred card also comes with 5,000 more points as part of its sign-up bonus and the ability to earn extra points if you make enough transactions in a month. The EveryDay card gives you 20 percent bonus points if you make 20 transactions a month, whereas the Preferred offers a 50 percent bonus if you make 30 transactions.

  That can make a big difference. Again, if you max out the grocery bonus, you’d get 12,000 points with the EveryDay. If you earn the 20 percent bonus every month, you’d net another 2,400 points, for a total of 14,400.

  With the EveryDay Preferred, you’d start with 18,000 points for groceries, which would turn into 27,000 points with the 50 percent bonus. That’s a difference of 12,600 points, which is worth about $189. That more than covers the annual fee and doesn’t include any other spending on the card.

  That’s complicated, I know, but it shows how important the value of the points, bonus categories and your spending habits can be when deciding on the best card. Spending a little extra on an annual fee can actually net you hundreds of dollars a year.

• Aspect #6: Perks and Benefits

  Another consideration when choosing a new rewards card are its perks and benefits. While earning extra points for certain purchases is certainly a benefit, what I’m referring to here are the perks not related to earning, such as elite status and lounge access.

  You’ll get the most perks with cards that have the biggest annual fees. Premium cards, which typically cost around $450 a year, come with premium benefits. While you might not earn $450 worth of points with these cards, you can get a lot of value out of these perks if you use them.

  These cards are designed for frequent travelers. The primary perk with most of these cards is complimentary access to airport lounges. Priority Pass membership, which gets you into over 1,000 lounges around the world, is the standard benefit, though some cards, like The Platinum Card® from American Express, give you access to other lounges as well. With Amex you’ll also get into the swanky Centurion lounges, International American Express lounges and Delta Sky Club. Most lounges cost $50 a day, so this benefit can be quite valuable if you use it.

  These cards also typically offer some sort of airline credit worth a few hundred dollars. Depending on the card, it can be used to pay for incidental fees, such as baggage and change fees, and in-flight food and beverages. A few cards, such as the Sapphire Reserve, will allow you to use that fee toward any travel purchases, including everything from airfare to taxi rides.

  You’ll also get credits toward various other travel-related expenses. These credits vary by card, but may cover TSA PreCheck or Global Entry fees, in-flight and other Wi-Fi access, Uber rides and more. Some include elite status with car rental agencies and hotels, while others offer special perks at certain hotels and discounts for travel purchased through their rewards program.

  If you travel a lot, it’s worth your time to investigate these cards to see if they’re worth investing in. Making your travel experience more pleasant can be priceless.