A year after the COVID crunch led credit card issuers to cut down on deals, sweet introductory offers are back on the table. If you’re looking to grab some cash rewards or burn a balance, you need not stick with your old cards.
You can maximize rewards by using several cards and dedicating each to its best purposes. How many cards? Three or four at most. You don’t want so many that you lose track of the bills; forgetting just one payment can unleash enough penalties and interest to wipe out a year of rewards.
And don’t even think about playing the rewards-card game if you carry a balance from month to month. Chasing after 2 percent cash back is a losing proposition if you’re paying 16 percent interest on past purchases. Instead, focus on getting your balance to zero. With that out of the way, here are some appealing cards for different types of users. (Note that offers like sign-up bonuses and balance transfer deals can change at any time.)
If you pay off your cards every month, use one that earns rewards, says Sara Rathner, a credit card specialist at the personal finance site NerdWallet: “Otherwise, you are leaving money on the table.” One of her current favorites? The American Express Blue Cash Preferred Card offers 6 percent cash rewards on groceries (up to $6,000 in annual spending), 3 percent on gas or transit, 6 percent on streaming services and 1 percent on everything else. The $95 annual fee is waived in the first year. You get a $350 bonus if you spend $3,000 in the first six months.
For a one-size-fits-all approach, Matt Schulz, chief credit analyst with LendingTree, recommends the Wells Fargo Active Cash Card, which has no annual fee, offers 2 percent back on all purchases and has a $200 bonus if you spend $1,000 in the first three months.
I’m not a huge fan of travel rewards cards, because their point systems can be confusing and the rewards can shift as the underlying airline or hotel programs change terms. “A lot of the time, the better choice is a cash-back card,” concedes Schulz. But he carries rewards cards for the hotels and airlines he uses most, in part to get priority boarding. A good travel rewards card will also offer fee-free currency conversions on purchases made abroad.
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What about cards for certain retailers or purchases? I like them. My Citi Costco Anywhere Visa Card returns up to 4 percent on gas and 2 percent at Costco; my Capital One Savor Rewards Card gets me 4 percent on dining and entertainment, 3 percent at the grocer and 1 percent elsewhere.
The Savor card has an annual fee, but like many other rewards cards, it has a fee-free version with lesser rewards. And if you regularly use your card and pay your bills, those fees can often be cut. “People have more power than they realize to negotiate these terms,” Rathner says.
If you love one store above all, you can get its branded card. You might get special coupons and discounts on your purchases there.
If you’re carrying a balance, you can speed up repayment with sign-up bonuses and zero percent balance transfer offers, though you’ll usually pay an upfront balance transfer fee. The BankAmericard has a zero percent interest rate for the first 18 months.
The Wells Fargo Reflect Card offers up to 21 months of zero percent interest if you make minimum monthly payments during the introductory period.
Want one card with a little bit of everything? The Chase Freedom Flex Mastercard offers a $200 bonus for spending $500 in the first three months, 15 months of zero percent interest, 5 percent cash rewards on travel booked through Chase, and a variety of other 3 percent and 1 percent cash-back offers. It may be at the sweet spot for anybody who wants to squeeze the most out of the least number of cards.
The AARP Essential Rewards Mastercard from Barclays offers 3 percent cash back on gas station and drugstore purchases (excluding Target and Walmart), 2 percent on medical expenses and 1 percent on all other purchases. There’s no annual fee. Spend $500 in the first three months and get a cash-back bonus.
Linda Stern, former Wall Street editor for Reuters, has been covering personal finance since the 1980s.