The Best Credit Cards (and Credit Card Rewards)!

these are my current credit card recommendations

here’s the best I know of right now for cash back:

Credit Cards: Use Them To Your Advantage

Using a credit card correctly can earn you free money and free travel. Today I’ll dive into how you can use credit cards to your advantage and not get taken advantage of in the process!

Advertiser Disclosure: Frugalwoods partners with CardRatings for coverage of credit card products. Frugalwoods and CardRatings may receive a commission from card issuers at no extra cost to you. Here’s a boring (but important) explanation of how Frugalwoods makes money

Here’s why I like using credit cards:

1) Credit cards make it easy to track your spending. While I use and recommend the free expense tracker from Personal Capital, purchasing with credit cards makes it even easier for me to keep track of where my money goes every month.

2) Credit card usage makes it easy to spot fraud. Since I comb through my monthly credit card statements, it’s easy for me to spot fraudulent activity. If I find something fishy, I have protections offered by my credit card companies. I’ve had a few fraudulent charges over the years and I’ve always been reimbursed for them by my credit card company.

3) Credit card usage builds your credit. Since my husband and I don’t carry any debt other than our mortgages, having several credit cards open for many years (which are fully paid off every month) has greatly helped our credit scores.

4) Credit card usage can equal REWARDS!! Woot. This is perhaps the most significant reason to use credit cards since all of the above can be accomplished through other means. But credit card rewards can only come from credit card usage.

There are different types of credit cards and today I’ll address the big three:

Cash back cards: you earn cash back, which is a percentage back on your total purchases each month
Travel rewards cards: you earn hotel points and/or airline miles
Small business cards come in both flavors: cash back and travel!

How Do Rewards Credit Cards Work?

With all three types of cards, you earn points (also called rewards) for every dollar you spend on the credit card. The big difference between these three categories of cards is how points are earned and redeemed.

Cash Back Credit Cards

Cash back credit cards are the no-brainer winners of the credit card world. If you can use a credit card responsibly (more on that in a moment) and pay it off in full every month, there’s no reason not to have a cash-back card…. because:

You’re always earning points. Cash-back cards give you money back on every dollar you spend. I especially like category-free cash-back cards because they give you cash back with no restrictions!
- With a category-free card, you can spend money anywhere and qualify for cash back. Cards with category restrictions only give you cash back on certain types of purchases (such as restaurants or gasoline).
You always redeem the “points” you earn because… they’re cash! You don’t have to wait until you book a flight to Portland or need a hotel room in Shanghai, you get your cash back—in cash—every month.
You aren’t paying an annual fee. The best cash-back cards are fee-free. That means you don’t pay anything to use the cards and they give you money back. This is a win all around.

Using a debit card (or cash) doesn’t do any of this for you: you don’t earn rewards and you don’t build your credit.

If you want a simple cash back credit card, here are two good options, neither of which have annual fees:

Blue Cash Everyday® Card from American Express offers a hierarchy of cash back percentages:
- 3% Cash Back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%)
- 2% Cash Back at U.S. gas stations and at select U.S. department stores
- 1% Cash Back on other purchases
- Earn 20% back on Amazon.com purchases in the first 6 months of card membership (up to $150 back)
- Earn $100 back if you spend $2,000 within the first 6 months of card membership
The Capital One Quicksilver Cash Rewards Credit Card is great because it offers a flat 1.5% cash back on all purchases:
- There are no categories to keep track of, you just get a straightforward 1.5% cash back on everything you buy. Nice, easy, fee-free!
- What this means is that if you spend, for example, $2,000 on this card in a month, you’ll get $30 back. This, folks, is free money.
- One-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening.
- There’s no limit to the amount of cash back you can earn.
The Chase Freedom Unlimited also offers a flat 1.5% cash back on all purchases:
- There are no categories to keep track of, you just get a straightforward 1.5% cash back on everything you buy. Nice, easy, fee-free!
- What this means is that if you spend, for example, $2,000 on this card in a month, you’ll get $30 back. This, folks, is free money.
- If you spend $500 on this card in the first three months after opening it, you’ll get a $200 cash bonus.
- There’s no minimum amount required to redeem your cash back.
Capital One SavorOne Cash Rewards Credit Card:
- 3% cash back on dining and entertainment
- 3% cash back at grocery stores (excluding superstores like Walmart® and Target®)
- 1% on all other purchases
- Cash back won’t expire for the life of the account; no limit to how much you can earn
- Earn a one-time $200 cash bonus after you spend $1,000 on purchases within the first 3 months from account opening.

Travel Rewards Credit Cards

Travel rewards cards, sometimes called flight or hotel or mileage cards, give you points that you can redeem for travel-related things. Unlike cash-back cards, which are all basically the same in that they all give you a percentage of cash back, travel rewards cards vary. Some cards are affiliated with particular airlines or hotel chains, while other cards deliver points that are transferrable.

Due to this, I consider travel rewards cards to be the next level up of credit card-ing. You’ll need to do a bit more research and consider your own travel habits (and schedule) before selecting an effective travel card. If that sounds like too much work, or if you rarely travel, then a cash-back card will likely make more sense for you. But if you do travel a lot, a travel rewards card could be your ticket to free hotel and airfare!

Here are two of the most popular–and most rewarding–travel cards:

1. Chase Sapphire Preferred:

With this card, you earn 1 point for every purchase, and two points for travel and restaurant purchases worldwide. For example: if you spend $50 on groceries with this card, you get 50 points. If you spend $50 at a restaurant with this card, you get 100 points.
- Note: one point does not equal one dollar. Unlike with cash back cards, the calculation is more complicated for most travel rewards cards.
Winter sunrises defy earthly beauty

You can redeem points for travel or for cash. However, the reason this is a “travel” card is that the points are worth 25% more if they’re redeemed for travel than if they’re redeemed for cash.
This is why a lot of people (including me) have both a cash back card and a travel card:
- If you redeem your points for cash, they’re worth one cent per point. If you redeem your points for travel (through Chase Ultimate Rewards), each point is worth $.0125
Also, you can earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $1,250 when you redeem through Chase Ultimate Rewards®!
This card defines travel as, “airline tickets, hotel accommodations, car rentals, activities and cruises through the program.”
This is all awesome, but remember that this card has a $95 annual fee and so it only makes sense if you’re going to redeem the points for travel.

2. Capital One Venture Rewards Credit Card:

You earn 2 miles for every dollar you spend with this card. Unlike with the Chase Sapphire Preferred, this card has no spending categories, so you earn two miles for any purchase made anywhere.
Enjoy a one-time bonus of 75,000 miles once you spend $4,000 on purchases within 3 months from account opening
This card is pretty flexible in terms of travel rewards because you can redeem the miles for any airline or any hotel and there are no blackout dates. Also, you can transfer miles to more than a dozen different travel loyalty programs.
Annual fee is $95.

Small Business Credit Cards

You will feel victorious, like this sunrise, if you earn credit card rewards

If you’re a freelancer, consultant, or own your own small business, you might find it useful to have a small business credit card. This is particularly true if you try to separate personal expenses from business expenses (usually a good accounting decision).

Small business cards come in both flavors: cash back and travel. Here are three cards that fall under those two categories:

Chase Ink Business Cash (this is a cash back card for small businesses):

If you spend $7,500 on this card in the first three months after opening it, you earn a $750 bonus.
You can earn 5% cash back on the first $25,000 you spend in combined purchases at office supply stores and on internet, cable and phone services (this is available for every year that you have the account open).
You can earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants (this is available for every year that you have the account open).
You earn 1% cash back on all other purchases with no limit.
They’ll give you employee cards at no additional cost.
There’s no annual fee.

Chase Ink Business Unlimited (another cash back card for small businesses):

If you spend $7,500 on this card in the first three months after opening it, you earn a $750 bonus.
You get unlimited 1.5% cash back on every purchase made for your business.
They’ll give you employee cards at no additional cost.
There’s no annual fee.

Chase Ink Business Preferred (this is a travel rewards card for small businesses):

You can earn 100k bonus points if you spend $15,000 on purchases in the first 3 months from account opening. That’s $1,000 cash back or $1,250 toward travel when redeemed through Chase Ultimate Rewards®!
You then earn 3 points per $1 spent (up to the first $150,000) on travel and select business categories (this is available for every year that you have the account open).
You’ll earn 1 point per dollar spent on all other purchases (with no limit to the amount you can earn).
These points are worth 25% more when you redeem them for travel through Chase Ultimate Rewards.
They’ll give you employee cards at no additional cost.
There’s a $95 annual fee.

How To Use Credit Cards Responsibly (and maximize the rewards!)

All of this free cash and free hotels and free airline tickets sound fabulous! And they are! The catch is that in order to benefit from a credit card, you must use it responsibly. Luckily, this is pretty easy to do:

You must commit to only buying things you can afford.
- A credit card is not “free money,” it’s quite the opposite.
- Only charge things you were going to buy anyway and that you have the cash to cover because…
You must pay your credit card bill IN FULL every month.
- This does NOT mean paying the “minimum balance due,” it means paying the entire bill every month.
- In other words, your account should be at zero after you pay your bill. By doing this, you ensure that you never go into credit card debt.
The unbelievable shimmer of ice in sunshine

The thing I love about credit cards is how easy it is to follow the rules.
- If you pay your full balance every month, you won’t owe more than you spent. And, if you have a rewards credit card, you’ll earn free stuff!
Carrying a balance on a credit card is not a good thing.
- It doesn’t build your credit and it only means that you owe a debt to the credit card company.
- I automate my credit card payments to pay the full amount every month so that I don’t even have to think about it.
- Don’t give yourself the option of carrying a balance on a card–pay it off every month!

If you don’t have debt impulses and you can pay your bill in full every month, a cash back card is a total no-brainer. If you travel a lot–and especially if you travel for work and can use your own card and get reimbursed—travel rewards cards can be super lucrative. If you work for yourself, or own a small business, a small business credit card can be a great option. There’s something for everyone! I love it when that happens.

What Can I Do With Credit Card Rewards?

Lots of things! Depending on what type of rewards you’re earning (cash back or travel), you can redeem them for cash, you can book free hotels and airfare, or you can cash them in for purchases at specific stores (such as Amazon).

Here’s more about how I use cash back rewards: The Frugalwoods Guide to a Simple, Yet Rewarding, Credit Card Experience.

Are Credit Card Rewards Worth It?

Yes!!! As long as you’re earning rewards that you will use, they are basically free money! If you are buying stuff you were going to buy anyway, and if you’re paying your card(s) off in full every month, and you’re accruing rewards you’ll actually use, then credit card rewards are an all around win. You can also earn and use different types of rewards for different types of purchases. I recently had a free hotel stay thanks to the travel rewards card we’ve had for years. More on that here: Travel Rewards, Flying With Two Toddlers, And A Free Hotel Stay.

Summary

Responsible use of a rewards credit card is a fabulous–and easy–way to earn free stuff by buying things you were going to buy anyway.

Before getting a credit card, consider the following:

Can I trust myself to only buy what I can afford with a credit card?
Will I remember to pay my cards off IN FULL every single month?
What type of credit card rewards am I most likely to use: travel points or cash back?

Once you’ve identified your spending habits and what type of rewards card will make the most sense for your lifestyle, you can search for–and find links to apply for–all sorts of different cards on the website CardRatings, which is the source I use.

Happy credit carding!

Advertiser Disclosure: Frugalwoods partners with CardRatings for coverage of credit card products. Frugalwoods and CardRatings may receive a commission from card issuers at no extra cost to you.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.