Which Credit Card Gives Me the Best Rewards?
You may think that because I am all about living within my means, I stay away from credit cards. That can’t be further from the truth. Actually, I use credit cards for everything.
Why? Because the rewards are great! Yes, I make sure to pay off the full amount of my balances every month, but I collect rewards for every single thing I purchase. I have spent years (literally) researching different credit cards and their rewards programs in order to find what I think are the best reward credit cards.
Although I have not tried every card in the book (that would take a lifetime), I did spend three years (2009-2011) using three specific big-name cards in order to figure out which rewards program I like the best. Here are my conclusions from my case-studies.
American Express TrueEarnings® Card Test
I originally used it only for Costco, but the membership wasn’t quite paying for itself. The TrueEarnings® offers 3% cashback for gas stations, 2% for restaurants and travel, and 1% for everything else.
I used it for everything for an entire year and earned around $100 cashback. This didn’t overly impress me. I’m not a big spender which may have had something to do with the low return.
Chase Freedom® Card Test
I realize that credit card rewards programs are changing constantly, but the year that I used the Chase Freedom® credit card for everything was the year that I earned the most cash back (about $130) out of all three years.
I now use Chase for my business as well, and I was also thoroughly impressed with their business account-open incentive for the Chase Ink Cash® card. Chase offers great account-opening incentives, as well as 5% cashback in specific categories every quarter, with no annual fee.
Capital One Card Test
Capital One claims to be hassle-free, everyone has seen the commercials. I can’t express enough how disappointed I was with this credit card.
I knew that over an entire year I had literally lost money by using this card over another reward-based credit card. I can’t remember the exact amount, but my cashback was somewhere around $30.
THIRTY DOLLARS. After an entire year of spending.
Not only that, but it was NOT hassle-free. I will never again use Capital One, nor will I ever recommend that anyone else use it either. Perhaps their new “double points on every purchase” was an effort to keep their customers. I will never personally find out if it works.
Which Credit Card do I Use Now?
I actually use a combination of credit cards now. I use my American Express for Costco, dining out, and sometimes travel (flights, hotels, etc.) which both get 2% cashback.
This year we bit the bullet and applied for the Chase MileagePlus Explorer card through United and earned about 50,000 bonus miles for that. This card has zero foreign transaction fees and also offers travel insurance and extra miles (if the flight is United) whenever flights or even rental cars are purchased on the card.
Therefore, when we travel abroad we use this card for transactions overseas, and we use it for flights if it makes more sense than using American Express. I use my Chase Ink card for business purchases as well as cell phone and TV services (5% cashback on those).
Related: How to Choose the Best Travel Credit Card
Finally, I use my Chase Freedom card for everything else. I still manage to earn an average of $130 per year with my Chase Freedom card, even with the combination of cards I use. I earn about $100 per year with my Chase Ink card (not counting the $200 cash I got after spending a certain amount in the first three months), and I earn around $80 per year with my American Express, which more than pays for my Costco membership.
It is a constant effort to keep up with which card offers more cashback in which categories, and I use the cards accordingly. It’s literally paying off.
I highly recommend Chase to anyone looking for a great new credit card. Spend wisely, earn wisely!
Also, consider a Charles Schwab bank account.