Evaluating Rewards Credit Cards in 5 Steps
credit cards spread out

5 Steps to Evaluate Rewards Credit Cards

Have you ever felt the inclination to Google a phrase as generic as “best rewards credit card?” If so, I’m guessing you were pretty disappointed with the results. That’s because, contrary to whatever you may read elsewhere, there’s really no such thing as a “best rewards card” for everyone. Instead, it’s up to each consumer to weigh the pros and cons of various options while also considering their specific needs.

To help you with this process, here are five basic steps for assessing whether a card is right for you.

What to Considering When Evaluating a Rewards Credit Card

stack of credit cards

Annual fee

First up, you’ll want to know upfront whether a card charges an annual fee. While there are plenty of great no-annual-fee cards available as well as other cards that are well worth their (even occasionally steep) annual costs, there are also several cards that are simply subpar in both categories. Therefore, you’ll want to look at what the annual fee is so that you can factor it into your calculation.

There are also a couple of other important notes regarding annual fees. For one, you may encounter cards that may waive the annual fee for the first year but will then charge it for each subsequent year. Because of this, you’ll want to pay close attention to any future fees. Similarly, keep in mind that annual fees are subject to change (actually, the same is true for just about everything on this list), so also keep an eye out for updates to your card, including the fee.

Welcome bonus

Spoiler alert: a big part of assessing a rewards card is whether you’ll get positive value from it in the first year and beyond. Well, any welcome bonus you might get for opening a new card will likely do a lot of the heavy lifting in terms of bringing you past that positive threshold for your initial cardholder year.

Welcome bonuses — or sign-up bonuses, initial spending bonuses, etc. — are offers that credit card issuers promote as a way to not only get customers to open new cards but also get into the habit of using them. More often than not, these take the form of “spend $X within Y timeframe to earn Z points/miles/dollars.” For example, a pretty standard bonus is something like $300 back when you spend $1,000 in your first three months. Lately, there have been more variations on this, such as extending the standard three-month timeframe to six months or offering tiered bonuses — e.g. earning 20,000 points for $3,000 in spending in your first three months but an additional 30,000 points for a total of $10,000 in spending during your first year.

Since welcome bonuses can be so lucrative and make a huge impact in terms of the value you get from a card, you’ll want to be sure that you can actually earn the bonus. In other words, carefully consider whether you can easily hit the minimum spending requirement. If it’s going to be a stretch or you’re going to have to make purchases you wouldn’t otherwise, it may not be worth it. But, if you naturally spend that much on a monthly basis or you happen to have some large purchases coming up, then these bonuses may present a great opportunity.

Credits and perks

Before we even get to the rewards part of rewards cards, let’s talk about perks. These days, it’s quite common for various cards to offer a collection of monthly/quarterly/semi-annual/annual credits in addition to other benefits. This is especially the case with cards that carry an annual fee — and even more popular among premium travel cards such as the American Express Platinum Card.

On paper, these credits may even exceed that card’s fee. But there’s a catch: these credits only have value if you can actually use them. For example, the Amex Gold Card offers a $10-a-month dining credit that can only be used at a short list of restaurants and services. So, if you don’t live near any of the participating restaurants or use any of the services on a monthly basis, then this “$10 value” may be worth much closer to $0. On that note, the way that these credits are divided up may also present a challenge as you may end up having to spend a significant amount just to earn a few dollars back — and then do it again one, three, or six months later.

looking at a credit card while working on a computer

In addition to credits, rewards cards may also offer a number of perks and benefits. Some common examples come from airline or hotel cards, which may entitle cardholders to free checked bags and priority boarding or room upgrades and loyalty status respectively. Although these benefits can be useful, unfortunately, they can also be more difficult to quantify than the credits — especially in the case of “status” since it’s hard to know just what that will include.

Overall, credits and perks can make for a truly great card. But, the trick is to be realistic about how much you value each one of these benefits. Just make sure that you can use as many of these credits/perks as naturally as possible and you’ll be well on your way.

Rewards categories

Yes, we’re just not getting to the actual rewards — but this isn’t to say that they’re not important! In fact, for no-annal-fee cards that tend to have fewer credits and perks, the spending rewards will be your main source of value after the welcome bonus has worn off.

To be honest, a deep dive on the types of credit card reward structures could be its own article. But, in short, you’ll want to look at what spending categories a card emphasizes via enhanced earning rates. Specifically, you’ll want to pay attention to the categories that offer more than 2x or 2% back. That’s because there are no-annual-fee cards that include 2x back on everything, so many consumers may be better served getting one of those cards and then adding others that focus on some of their most-used spending categories.

Incidentally, there’s likely no reason to just guess how much you spend in a certain category. Instead, you can look back at past statements and plug your average monthly or annual category spending into a calculator to see how much in rewards you can expect to earn with a given card.

Again, rewards categories are subject to change. Additionally, you may want to dive into the terms to take a close look at what a stated category actually includes.

Value of rewards

Last but not least, it’s important to point out that not all rewards are created equal. While cashback cards are pretty easy to understand as 2% back means 2% back, cards that earn points or miles can complicate things. Take, for example, the Bilt Mastercard, which has redemptions that range from 0.55¢ per point to 1.5¢. Obviously, this discrepancy can have a huge impact on your calculations.

For this variable, you’ll want to research redemption options for the card you’re looking at. Then, consider which option you’re most likely to use. In the event that you’re using what’s considered a travel card to earn cashback, there’s a good chance that you won’t be getting the best value, whereas someone willing to navigate the world of points and miles may be able to see enhanced value versus cash. Again, it all comes down to your personal plans and goals — so be sure to know what options are available.


With so many rewards credit cards currently on or hitting the market all the time, finding the perfect card can be a bit treacherous. But, rather than running away or being lured purely by hype, taking the time to evaluate a card and its offerings can prove to be a lucrative endeavor. By completing these five steps, you’ll have a much better idea about whether a card makes sense for you and whether you can expect to get value from it going forward. From there, you can repeat the process and continue to build out a rewards card portfolio that will be truly, well, rewarding!

Author

Kyle Burbank

Head Writer ~ Fioney
Kyle is the head writer for Fioney. He is a personal finance nerd, constantly looking for new apps and services to test and incorporate into his own financial game plan. In addition to his role at Fioney, he's written for other publications including Born2Invest, Lifehack, and Laughing Place, as well as his own site Money@30. He also creates personal finance and travel-related videos for Fioney's YouTube channel, which has garnered more than 2 million views. Currently, Kyle resides in Springfield, Missouri with his wife of 10 years. Together, they enjoy traveling (including visiting Disney Parks around the world), dining, and playing with their dog Rigby.

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