Credit card companies will offer rewards when you raise your credit score to at least 670, which is considered “good” on the FICO scoring model.
In this issue, Credit Fundamentals will focus on “in-between” rewards cards, which are decent but not the cream of the crop in terms of credit cards.
These cards offer respectable cash back at a normal rate and are perfect to pick up when you’re ready to graduate from student cards.
Fixed rate cards, also known as “fixed rate cards”, offer the same cashback rate on purchases, regardless of what is purchased. They are great for people who can’t worry about keeping up with rotating cashback categories.
The Chase Freedom Unlimited card is an example of a fixed rate card. This has a 1.5% cash back pay rate on all purchases.
There are also cards with higher payout rates, such as the Citi Double Cash Card. This won 1% cash back on initial purchase and another 1% cash back when you pay off your balance, giving a total of 2% cash back.
Although this category of cashback cards doesn’t give you the most rewards, it’s the most consistent option. You will never have to strategize to maximize your points.
Tiered Reward Cards are for strategists who have particular shopping habits and like to plan their spending. With these types of cashback cards, you will get a high cashback rate compared to a fixed rate card.
For example, the American Express Gold Card won 4% cash back on restaurants and supermarkets. If you’re a “foodie” and love UberEats credits, this card is for you.
If you prefer groceries to takeout, opt for the American Express Blue Cash Preferred card, which won 6% back on the first $6,000 spent on groceries in a year.
There are also options, such as the Apple Card, which won 3% cash back when shopping at Apple Inc. – sorry, Android users. Another option is the Amazon Prime Rewards Visa Card, which won 5% cash back on purchases made on Amazon.com Inc. with Prime Membership.
There are many tiered rewards cards meant to be used for specific purchases, and some people may hold multiple cards to try and maximize the value of their daily spending.
These cards are for adventurers who love surprises. A rotating category card will generally change the retailers from which it offers a cashback bonus during each fiscal quarter or three months.
A popular rotating card is the Discover It, which currently offers 5% cash back on purchases at restaurants and through PayPal Holding Inc.’s services. This is powerful because restaurants offer delivery services through platforms like UberEats, and many merchants offer PayPal as a payment option.
Another popular option is the Chase Freedom Flex, which has categories for 5% cash back this quarter. These categories include gas stations, car rental companies, cinemas and some live entertainment.
By combining these two cards, you have a wide range of categories with which you will earn more for your money. They also tend to change with seasonal consumer habits, so expect to be rewarded for shopping at big-box retailers in the last quarter of the year.
These cards are great to pick up once your credit score permits, but there is an even higher tier of credit cards. Learn about the elusive, high-profile travel credit cards in the next issue.