With so many different credit card options available, it’s difficult to navigate the financial world and choose the card that’s right for you. That’s why we’ve compiled an extensive list of frequently asked questions about rewards credit cards to help you make an educated decision. Call us out in the comments section below if we forgot anything!
General Questions About Rewards Credit Cards
What is a rewards credit card?
A rewards credit card is a credit card that lets cardholders rack up rewards for qualifying purchases. There are different types of rewards credit cards, including cash-back rewards cards, airline rewards cards, and hotel rewards cards.
Is a rewards credit card the same as a customer loyalty card?
Nope, but people often confuse the two. Both card types generally let customers earn rewards, but there are some notable differences:
- Customer loyalty cards do not offer a line of credit
- Rewards credit cards report payment history to the credit bureaus
- Rewards credit cards are often accepted by numerous retailers, but customer loyalty cards are only good at a specific store or chain
- Customer loyalty cards do not require a credit check
- You typically have to be at least 18 to get a rewards credit card, but loyalty cards are often available for shoppers as young as 13 (sometimes even younger!)
The good news is that you might not have to choose between a customer loyalty card and a rewards credit card. Your favorite retailer might accept both, and you might even be able to pair them with paper coupons and digital rebates.
Can I use a rewards credit card with a regular rewards card?
Unless the store forbids it, you can combine a rewards credit card with a customer loyalty card. Some gas stations and retailers encourage shoppers to pay with cash when they use their loyalty cards, so that might be a roadblock for you.
Rules may vary by location, so don’t get discouraged if one manager says no. You can try your cards at a different location or contact the corporate office to learn more about the policies regarding customer loyalty cards.
Do I need good credit to get a rewards credit card?
Usually, yes. Think of it like this: Good behavior gets rewarded in the financial world.
If you pay your bills on time, you get cards with low APRs and generous rewards. If your credit sucks, you get stuck with high interest rates and few, if any, reward options.
We’ve seen a couple cash-back credit cards (Credit One Cash Back Visa is a popular one) that don’t require good credit, but there simply aren’t many traditional rewards credit cards that approve folks with bad credit.
What is the best rewards credit card?
We’ve got seven favorites! You can find them in the review above, but we’ll also list the cards here:
- Chase AARP Visa
- Discover it Cashback Credit Card
- American Express Blue Cash Preferred
- BankAmericard Travel Rewards Credit Card
- Starwood Preferred Guest Credit Card by American Express
- Capital One Venture Rewards Credit Card
- Chase Sapphire Preferred Credit Card
The American Express Blue Cash Preferred is ideal for everyday purchases, while the Chase Sapphire Preferred Credit Card, and BankAmericard Travel Rewards Credit Card are excellent options for frequent travelers.
We encourage you to read our detailed review of each card above so you can figure out which one is best for your lifestyle.
Applying for Rewards Credit Cards
How do I apply for a rewards credit card?
All you need is a smartphone or a laptop! Just input some basic info about yourself, and you’ll have a decision in less than a minute if your application doesn’t require manual review.
Some credit card companies also let you apply over the phone, at a bank, or at a hotel or airline. It’s only necessary to submit one application, so don’t apply in person if you’ve already applied online.
How can I increase my chances of getting approved for a rewards credit card?
Clean up your credit report! Rewards credit cards typically require you to have good or excellent credit, but you might be able to squeak by with fair credit if your debts are all fairly old.
Also, make sure you don’t job hop or home hop. Credit card companies like stability!
When can I reapply if I get rejected for a credit card?
Whenever you want, but we recommend waiting a minimum of 6 months, preferably much longer. Many financial experts suggest waiting at least 12 to 18 months.
The length of time you should wait depends on the reason(s) you were rejected for a rewards credit card. Have you fixed the issues that caused your rejection? Has your FICO score significantly increased since your rejection?
If the answer is no to either of those questions, you aren’t ready to reapply. A credit card company needs to see a considerable change in circumstances - in a good way, not a bad way - before they’ll consider approving your card.
If you think you were unfairly rejected, contact the credit card company ASAP and ask for the reconsideration line. All of the major credit card companies have one, and speaking with a customer service agent who specializes in reconsideration might just help you score the card you want. If your phone skills aren’t the best, mail a detailed letter describing why you feel you’re a good candidate for the card you want.
Why does the company need 7 to 10 days to review my application?
There are lots of reasons this happens, but it basically boils down to this: The computer that evaluates applications can’t figure out what to do with yours. There might be a typo that’s throwing off the computer when it compares your app to your credit report, or you might have inputted data that set off a red flag.
When a credit card company requests additional time to evaluate an application, it simply means they’re handing it over to a human for processing.
Can I apply for more than one rewards credit card?
Yes, you can apply for an unlimited number of cards (but we don’t recommend it). Consider your credit history and your current financial situation before you apply, and make sure you only choose cards that you’ll use often.
Some rewards cards offer very specific rewards, plus they have annual fees. It might be tricky to justify the annual fee if you’re spreading out purchases across multiple credit cards.
Credit Card Reward Types and Redemption Options
What are the different types of credit card rewards?
There are several different types of credit card rewards, including:
- Cash-back rewards
- Hotel rewards
- Airline rewards
- Gas rewards
- Retail rewards
- General rewards
Apply for a cash-back credit card if you like getting rewarded for everyday purchases and/or if you don’t travel often. Cards that offer hotel rewards and airline rewards are great for frequent travelers, and so are cards with gas rewards.
Some cards offer more than one reward type. If you’re not sure which type of rewards you like best, consider test-driving a card that waives the annual fee for one year.
How do I earn credit card rewards?
It depends on the card, but you usually earn rewards simply by using your card to pay for qualifying goods or services. You can do this online or in a store.
Some cards, including the Discover it Credit Card, have rotating rewards. Make sure you’re shopping in the right category if you want to maximize your rewards.
How do I redeem credit card rewards?
Some credit card rewards are automatically disbursed in the form of an account credit. Other times, you have to wait until you earn a specific amount to cash out your rewards. You can also apply some rewards to purchases, like if you’re buying airline tickets online with a travel rewards card.
Cash rewards are often distributed via direct deposit or paper checks, but sometimes you can convert them to gift cards or travel-related rewards.
Do credit card rewards expire?
Sometimes, but it depends on the card. We’ve seen many cards that let you rack up rewards with no expiration date.
If you have an expiration date, expect your rewards to last at least a year or two. Credit card companies generally give you plenty of time to redeem your rewards.
Can I earn unlimited credit card rewards?
Yes, if you choose a card that offers unlimited cash back. The Chase Freedom Unlimited Credit Card offers unlimited cash-back rewards.
Some cards put a cap on rewards, but the company should clearly outline restrictions in your cardholder agreement.
Can I transfer credit card rewards?
Possibly. Some credit card companies let you transfer rewards from card to card. You might also have the option to transfer your credit card rewards to a different rewards program, such as a hotel or airline loyalty program.
Keep in mind that transfers aren’t always point-for-point or dollar-for-dollar transfers. In other words, you might lose some of your rewards during the transfer.
Rates and Fees
How is my APR determined?
Your credit history determines your APR, so clean up your credit as much as possible before you apply for a new card. The higher your FICO score, the lower your APR will probably be for the card.
It’s important to remember that APR ranges drastically. Someone with excellent credit might pay as low as 10% or 12% interest, while someone with bad credit might pay anywhere from 24% to 30% interest.
Do I have to pay an annual fee for my rewards card?
You might have to, but it depends on which card you choose. As a general rule, a high annual fee equals excellent rewards. The exception is if you have bad credit and get a card geared toward people with unfavorable credit histories.
Not a fan of fees? Look for a card that offers an introductory period for new cardholders. You’ll typically get to try the card for 12 months without paying a fee, and you might even enjoy a 0% APR and no balance transfer fees during your promotional period.
What if I can’t afford to pay my annual fee?
Forgive us for being blunt, but don’t get a card that charges an annual fee if you can’t afford to pay it. You should never get a credit card that you can’t afford.
Also, it’s difficult to bail out on the annual fee since every card we know of adds it directly to your statement. Try to avoid maxing out your card so you don’t end up over your credit limit when the annual fee hits. You may want to mark down the date in your planner so you can prepare for it; many companies don’t warn you that it’s almost time to pay your yearly fee.
Can I pay my annual fee with cash-back credit card rewards?
Possibly. You can’t call the company and specifically request to pay your fee with rewards, but you can use cash-back rewards to pay your credit card bill. You can use cash-back rewards to pay for anything you want (as long as your purchase doesn’t break the law) if you’re getting paid via direct deposit or check.
Is my APR for my rewards card always the same?
Not necessarily. Many cards charge a higher APR for cash advances than they do for goods and services. You’ll probably also pay a higher APR on cash advances from an ATM.
If you’re a new cardholder, you might have a promotional APR (usually 0%) for anywhere from a few months to 1.5 years. After the promotional period ends, you’ll get charged the regular rate for all of your purchases.
After establishing a lengthy history of paying your credit card bill on time, you can contact the company and request that they lower your APR. If they deny your request, you can transfer your balance to a new credit card with a lower interest rate.
Issues and Concerns Related to Rewards Credit Cards
Can a credit card company freeze my rewards?
Yes, so make sure you play by the rules! Follow all of the requirements in your credit card agreement, and make sure you always pay your bill on time. Here are a few reasons why a company might freeze your rewards:
- Delinquency on multiple payments
- Prohibited use, such as using your card to purchase illegal items
- Excessive spending that puts you over your credit card limit (even if you’re current on payments)
A credit card company might also freeze your rewards to protect you, like if your card is lost or stolen. This is just a temporary freeze that should be lifted shortly after the issue that caused the freeze gets addressed.
Can a credit card company refuse to honor my rewards?
Yes, but this generally only happens if you break the rules. When you receive a new card, it generally comes with a cardholder agreement. This agreement specifies exactly what you can buy with your card, and you won’t be rewarded for purchases that violate it.
For example, you might be prohibited from buying firearms or gambling at a casino with your credit card. If you ignore these guidelines and use the card anyway, the credit card company does not have to honor your rewards.
A company might also refuse to honor your rewards if you’re behind in payments or if you are currently going through a bankruptcy.
What if I have an emergency situation that prevents me from using rewards before they expire?
Talk to your credit card company as soon as you can. They may extend your redemption deadline if you explain what’s going on, especially if you can provide proof of your situation. Here are some emergency situations that may qualify:
- An extended hospital stay
- Military commitments
- Natural disasters that cause significant damage
This is not a full list of potential emergencies. If you think you’ve got a valid excuse for not redeeming your rewards in time, talk to your credit card company.
What if I forget to pay my credit card bill on time?
Uh oh! Make a payment as soon as possible so that you don’t damage your credit. Many credit card companies don’t report delinquent payments until you are at least 30 days late, so you should be okay if you’re only a day or two behind.
If you know your bill is going to be late, call the company and give them a heads up about your situation. Some cards offer an extension, especially if you have a good payment history. You may also be able to get late fees waived.
Why did my credit score drop after I got a rewards credit card?
This is a common complaint from cardholders, so we totally get your frustration. There are several reasons why your credit score might drop when you add a new card, so it’s difficult to give you a specific answer without knowing much about your credit history.
Here are a few reasons why your credit score might drop when you get a new card:
- The company performed a hard pull rather than a soft pull (a soft pull doesn’t affect your credit score, but a hard pull does)
- You used your credit card right away, so you already had a balance by the time the company reported your new account
- Your score dropped for reasons unrelated to your new account that happened to occur around the same time you got a new card (examples are having an account sent to collections or increasing your overall card utilization ratio)
Pay the bill for your new card (and other bills!) on time for at least 3 to 6 months, and your score should slowly increase.