The credit card industry is extremely competitive and offers many incentives to encourage new customers to sign up…
These incentives include things like free airline miles, free hotel rooms, a percentage of cash back from all purchases, and sign up bonuses. These rewards are a major selling point for customers, and many times the main reason for choosing one card over another. Unfortunately, many of these incentives come with restrictions and fine print make them not worth the application form they are printed on.
Here is an unbiased list of the top reward cards:
Cash Back Cards
Credit cards that reward cash, typically have “2 major problems”. The circumstances in which a customer will receive cash back, are usually very limited. And secondly, the amount of cash back monthly is usually “capped”. These two things will limit the benefits you can receive from this type of card.
Many cards advertise as much as 5% cash back, but these are only for limited types of purchases such as groceries or gas.
One card was particularly confusing, offering 5% cash back, but capping it at 75$ per quarter! Another card made similar promises, but capped the return at only $40. This is a blatant attempt to trick customers.
The American Express Plum Card
Fortunately there are some great cash back cards, without the caps and with the restrictions. The American Express Plum card gives 1 1/2% (formerly 2%) back on all purchases, with NO cap. This card is particularly good for businesses, as its use to pay for costs such as advertising, office supplies, and other business expenses, allows for a significant buildup of funds each month. This card also allows businesses to defer payment for up to 2 months, without penalty. Which is great for businesses that can sometimes run into cash flow problems. In order to be eligible for cash back with the plum card, a customer has to pay within 10 days. This is extremely easy to do as American Express has a very good system for online and over-the-phone bill payment.
The customer service for this card (and American Express in general) is excellent. Compared to the customer service of many other credit card companies, the service representatives were very helpful, available 24 hours a day, and all spoke very good english. With some card companies, this can be a major problem. Being connected with a representative that is fully fluent in english or helpful, is not typical with many other major credit card companies. Online payment is a very simple and painless process. The card also comes with free roadside assistance, extended warranty, and purchase protection.
The annual fee for the Plum Card is a little high at $185, but with a high monthly spend, you will most likely make that and more back.
Airline and Hotel Rewards
Free airline miles and hotel stays are usually the most popular type of reward that credit card companies can offer. One of the best cards for frequent flyers and travelers is the Starwood American Express Card. This cards allows customers to earn 1 point for every dollar that is spent.
Most cards that allow customers accumulate airline miles have blackout dates, restrictions, and caps. The Starwood card is one of the best in this area and allows for points can be redeemed and used by 30 major airlines. the restrictions are minimal, so customers aren’t getting tricked into thinking they are getting a better deal than they actually are.
The Starwood Card comes with great customer service that American Express is well-known for. It does have an annual fee, but it is pretty minimal at $65. It’s APR is average at around 15%. But, if you’ve never carried a balance, this won’t be a huge factor in your decision.
Sign up Bonuses
Some cards offer cash sign up bonuses, or free airline points simply for signing up. They do often require you to spend a certain amount in a limited time to qualify for these points. As far as free bonus incentives, the Starwood Amex is among the best. It allowed customers to instantly receive over 30,000 point once they spent over $4500 with the card. These point have very little restrictions and can be used with most major airlines and hotels. If you tend to travel often, for work or fun, this is a card, you should look at closely.
If you are looking strictly for a cash back card, with sign up incentive the Chase Freedom Visa may be a good choice. It gives a $200 sign up bonus, once the user spends $500 in the first six months. After that it allows 1% cash-back on all purchases. This might be a good choice for customers that don’t qualify for the 1 1/2% cash back Plum Card.
For travel rewards, The American Express Premier Rewards card gives over 15,000 points to new customers, once they have spent over $1000. These points can be redeemed for cash or used for airline miles. This is a charge card, so there is no APR, but there is a late payment penalty. Certain types of purchases can earn you 3 times the normal amount of points (which is $1 spent = 1 point). One negative to this card is the annual fee is is higher than typical, at $175 per year.
Watch Out For Fine Print
The are many rewards cards, but many are very restrictive and have fine print that can easily negate their benefits. Before you sign up for any card, read all the terms and conditions you will need to follow to redeem them. Rewards and points are meaningless if they aren’t easily redeemable.