Rewards credit cards offer an appealing opportunity to earn rewards on purchases you’re going to make anyways. But there’s no overall best rewards credit card. What’s best for you depends on which cards you qualify for, the types of purchases you make, and how much effort you want to put into managing the rewards program.
All Discover credit cards offer rewards, but each card also has unique benefits that may fit your needs better than others. This guide explores the different types of rewards cards, how they work, and the application process, ultimately helping you determine which card may be best for you.
Best Rewards Credit Cards
Last Updated: September 12, 2023
9 min read
Key points about: rewards credit cards
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Rewards credit cards let you earn rewards that are a percentage of the amount you spend on purchases.
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Credit card rewards usually come in the form of cash back or miles.
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When choosing a rewards credit card, consider whether the rewards are worth more than any fees you might owe, such as annual or foreign transaction fees.
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What is a rewards credit card?
A rewards credit card is any credit card that gives you rewards when you use the card for purchases. Think of rewards as an incentive to entice you to use the card. You can earn cash back or miles depending on which card you’re using. The reward redemption options can also vary depending on the card and program.
Sometimes a card that offers rewards also has a different feature that defines the card. For example, the Discover it® Student Cash Back credit card is a student card, but it’s also a rewards card.
Learning about the different types of rewards cards can help ensure you don’t needlessly spend money on fees or miss out on rewards and benefits.
Types of rewards credit cards
Often, rewards cards fall into subcategories depending on the type of rewards you’ll earn and the card’s reward-earning structure. Credit card companies typically offer three common ways for consumers to earn rewards, each with its pros and cons.
Fixed-rate rewards
Fixed-rate or flat-rate rewards credit cards offer the same rewards rate on all purchases. For example, with the Discover it® Miles card, you earn 1.5x Miles on every purchase.
These cards can be easy to use and might be a good option if you don’t want to spend much time or effort managing your card’s rewards program. However, you might not earn as many rewards as you could with cards that have bonus rewards categories.
Tiered rewards
Credit cards with tiered rewards give you different rewards rates depending on where you use the card. Often, tiered-rewards cards offer bonus rewards on select purchases and lower fixed-rate rewards on other purchases.
For example, with the Discover it® Chrome Gas & Restaurant Credit Card, you earn 2% Cashback Bonus® at Gas stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases.1
Tiered rewards cards can offer more potential rewards if the bonus categories align with your usual spending habits. Otherwise, you might be better off with a fixed-rate card. Some people choose to open several rewards cards to maximize the different perks they offer. For example, you might use the tiered-rewards card when you’re able to earn bonus rewards and use a flat-rate rewards card elsewhere.
Rotating rewards
Some cards have a tiered rewards structure with bonus rewards categories that change throughout the year. These cards can require a little extra thought, as you’ll need to remember which bonus categories are relevant at certain times of the year. One major advantage is that they may also offer some of the highest bonus rewards rates.
The Discover it® Cash Back Credit Card is an example of a rotating rewards card. It allows you to earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.
Some rotating rewards cards require you to activate or choose the bonus categories. With a Discover Card, you’re able to activate your 5% cash back each quarter.
Types of credit card rewards
In addition to offering different types of rewards-earning structures, credit cards may offer cash back, miles, or points. Many retailers offer their own store-related rewards credit cards, too.
Cash back rewards
Cash back rewards are easy to understand and use. You’ll earn a percentage of your purchase amount as cash back rewards, which can make calculating the value of your rewards fairly easy.
Generally, you can redeem your cash back rewards for a statement credit, a gift card, or a donation. Some card issuers also let you transfer your cash reward into your bank account, regardless of the financial institution.
Travel miles
With some airline or miles credit cards, you can earn miles when you make any purchase and then decide the best redemption option, like cash or a credit for travel purchases. Other travel cards are branded airline and hotel credit cards, which may only offer redemption options at its specific airline or hotel. For travel cards, check to see if there are certain travel restrictions, blackout dates, or seat restrictions. Some may also have an expiration date on the credit card rewards.
Points rewards
Points-based rewards programs can be a little more complex to navigate than a cash back rewards credit card because the value of your rewards can vary greatly. Generally, these cards either offer rewards in the card issuer’s loyalty rewards program, or in the loyalty program of an associated retailer or brand.
How do credit card rewards work?
Rewards credit cards all work a little differently depending on the specific card and program. But here’s an overview of what you need to know and should look out for when using a rewards card.
Earning credit card rewards
You’ll usually only earn rewards on eligible purchases that you make with your credit card. That doesn’t include any interest charges that may accrue. Other types of transactions, including balance transfers and cash advances, generally don’t count, either. You also might not earn rewards on cash-like purchases, such as money orders, gift cards, and lottery tickets.
With some cards, you won’t earn bonus rewards unless you actively opt into the bonus rewards offers.
Redeeming credit card rewards
Review the card’s terms and program rules to learn about redeeming rewards.
With a cash back card, your rewards may always be worth the same amount. But some cards require you to accumulate a minimum rewards balance before redeeming. Any Discover credit card lets you redeem rewards for cash in any amount to pay your bill.2 Finding good travel redemption options can be complex, particularly with travel cards that offer points in the issuer’s program.
Did you know
With the Discover it® Miles travel card, 100 Miles = $1 to spend.3 If you’re registered for the Account Center, you can review all of the rewards you have available to redeem on your Discover® Card.
Which is the best rewards credit card for you?
When comparing rewards credit cards, consider which type of rewards structure you want to use and the type of rewards you want to earn.
If you keep a budget, checking your previous purchase records can be helpful. Where and when you tend to use credit cards, and how much you spend in different categories can help you compare the best rewards credit card for you.
Another thing to consider is any upcoming large purchases you’ll need to make in the near future. Will you need a new washing machine or refrigerator soon? Using a rewards card to buy an expensive item could be a good way to get some return on that investment, whether that be cash back or travel miles.
After narrowing in on the type of card you want and how it may fit your needs, consider some of the card’s features, fees, benefits, and drawbacks. In particular, you could look at:
Ultimately, no rewards credit card is the perfect fit for everyone. But comparing rewards cards can help you narrow down which card might be the best credit card for you. In some cases, using several rewards credit cards that offer different rewards rates or bonuses can be a good idea if you want to earn rewards in different categories. For instance, if you buy gas for your car and dine out frequently, you might apply for the Discover it® Chrome card. If you also want to earn travel rewards, you might also apply for the Discover it® Miles card to get rewards on a travel purchase or other types of purchases.
Applying for a rewards credit card
Ideally, you’ll be able to qualify for the rewards credit card—or cards—that you want. But keep in mind that applying for multiple credit cards during a short period may hurt your credit score. Even if your application is denied, the hard inquiries from each application could negatively impact your credit.
Discover lets you see if you’re pre-approved with no harm to your credit score.7 You’ll still need to complete a full application before a final decision is made, but getting pre-approved first can give you a good sense of which Discover cards you may qualify for.
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You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.
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Rewards never expire. We reserve the right to determine the method to disburse your rewards balance. We will credit your Account or send you a check with your rewards balance if your Account is closed or if you have not used it within 18 months.
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$1 Cash Back = $1 to Redeem: You earn rewards, called Miles, which are stored in your rewards balance and must be redeemed in order to spend. Miles can be redeemed via travel credit, statement credit, electronic deposit to a linked account, or paying at select merchants.
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Cashback Match: We’ll match all the cash back rewards you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You’ve earned cash back rewards only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.
- Discover Match®: We'll match all the Miles rewards you've earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You've earned Miles rewards only when they're processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.
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Build/Rebuild Credit History (Secured Card): Discover reports your credit history to the three major credit bureaus so it can help build/rebuild your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your ability to build/rebuild credit.
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There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.
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Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.