Rewards Credit Cards
A CFA Special Report
The cards listed on this page have won praise at pro-consumer
sites such as BankRate.com and
You can earn up to 6% cash back on purchases at supermarkets, gas stations and drug stores,
amounting to hundreds of dollars per year.
The Consumer Freedom Alliance conducted an intensive search to
find the best rewards cards available:
The Best Rewards Cards We've Seen|
(Updated May 29, 2007)
|1. Cash back cards.
The Citi Driver's Edge Card is the best choice for most people. For the first year, you'll earn a full 6% rebate on
purchases at gas stations, drug stores and grocery stores. For example, let's say you already
spend $5,000 this year at those places: you'll receive
$300 for that. In later years you'll receive a full
3% rebate at those places (all other purchases earn
1% each year). So even if you don't often drive it's still an
excellent rewards card.|
With the Driver's Edge Card, every year you'll also earn
$1 for every 100 miles you drive. For example if you drive
10,000 miles per year, you'll earn $100 per year. And it's
environmentally friendly because the more fuel-efficiently you drive,
the more you'll save. For example if your car gets 30 miles per gallon, you'll save 30
cents for every gallon of gas you buy. It's the best rewards
card we've seen, so consider applying for it or reading the
full scoop on this card. An offer this generous
could be taken down at any time, so don't miss out or you'll probably be kicking
Cash® Card from American Express® also pays you cash back on everyday purchases
(groceries, drugstores and gasoline) but there's a catch. Your first $6,500 of purchases
gains only a 1% rebate on "everyday purchases" and 0.5% on all other purchases; afterwards
you'll receive a 5% rebate on everyday purchases and 1.5% on all other purchases. So if you
charge $13,000 in one year, with half of that amount spent on everyday purchases, your rebate will
average out to 3% on everyday purchases and 1% on all other purchases.
for most people is to get the Driver's Edge Card this year and if you charge huge amounts of money yearly,
consider getting the Blue Cash Card after the 6% introductory rate on your Driver's Edge Card has expired.
|2. Gas rewards cards.
The Discover Open Road Card (sometimes called the
Discover Gas Card) pays you a full 5% cash
back on gas purchases and auto repair expenses, and 1%
cash back everywhere else. It pays you only for the
first $1,200 of these auto expenses, so you'll save $60 per year
The Shell Card and BP Card
are also good choices, paying 5% credit on gas (but only at Shell or BP stations respectively.) The
BP Card doubles it to 10% in the first two billing cycles.
|3. Travel rewards cards
||The Travelocity Rewards MasterCard is a good
new miles card for people who travel a lot and who like to save
money by using Travelocity to compare ticket prices. You
start with 5,000 points and you receive an additional 1
point per dollar you spend using this card. Each 100
points is worth about one dollar in free travel. There are
no "blackout dates" and no seat restrictions, and there's a 0%
intro APR on balance transfers. The $29 annual fee is
waived for the first year.|
One No Hassle Miles card for people with excellent credit is
also good, paying 1.25 points per dollar spent on
purchases. This card normally doesn't require a membership
fee; if you get their $39 annual
fee Miles Card you'll receive 2 points per dollar
spent instead of 1.25 points.
Surprisingly, the Citi Driver's Edge Card is the most rewarding
airline miles card. In addition to the benefits we've already mentioned,
you can redeem your rewards through Citi's ThankYou
Network at their generous "fixed flights" rates. Can you believe a round-trip
ticket to anywhere in America (except Hawaii) costs
only $250!? Their terms state "You can count on getting a ticket for the date you want to fly.
For example, only 25,000 points are needed for flights anywhere in the continental U.S. and Alaska, any time of year,
with no black-out dates; simply book 14 days in advance and plan for a Saturday overnight stay." All this
might sound hard to believe, but the buzz we've seen on the blogs is the purring of happy customers.
|4. Various store cards.
||Keep your eyes open for cards that reward your
preferred spending patterns, that also reward you with
significant credit. For example:|
- GM Card: You'll get 5% credit
to use on GM car purchases (Buick, Cadillac, Chevy, GMC, Hummer,
Pontiac, Saab, Saturn).
- Target Card: You receive one point
for every two dollars you spend (doubled when you spend money at
Target). Every time you reach 1,000 points, you'll
get a 10% discount on everything you buy at Target for one
- Home Improvement Rewards Card:
Receive three points per dollar you spend on home
improvement, at stores like Home Depot, Best Buy, Bed Bath &
Beyond, and Circuit City. That's equivalent to 3% cash
back (you'll receive one point per dollar spent for other
Two good sites to search for cards are CreditCards.com and
ConsumerCardReport.com specializes in providing insightful guidance to consumers. CreditCards.com
lists the most offers, but none of the extra cards seemed worth recommending.
Next Page: Driver's Edge -- The Full Scoop
There are a few fairly simple precautions that consumers should
take when using rewards cards:
While the best ways to save money will always involve old fashioned cost-cutting,
obtaining a rewards credit card is still a good way to give yourself a virtual
- Pay it off each month. The interest rate on rewards cards
is usually higher than on other credit cards, so make sure you
pay the balance in full every month.
- Avoid late fees. These can be as high as
$39, so make it a habit to pay the credit card bill soon after
receiving it -- don't procrastinate.
- Don't overuse it. Some people are tempted
to buy more stuff with their rewards card in order to increase their rebate, which can pile
up unnecessary expenses. If you don't think you can control
your spending, don't get the card! Some rewards cards will
pay you a higher percentage as you spend more money, for example
a card may pay 0.5% for the first $5,000 you spend and 1.5%
afterwards. This encourages excessive credit card spending,
which is why we don't recommend such cards to most people.
- Make few applications. If you apply for
one credit card your credit score will be fine, but as you apply for
more cards lenders become more concerned that you may be having
money problems. So the more cards you have applied
for in the previous six months, the more your credit score
will be decreased. After six months, your credit score returns
to normal. Our recommendation for most consumers is
to make no more than two card applications; but if you plan to
get a mortgage or major loan in the next six months, make only
Be aware that the number of credit cards you actually
possess won't harm your credit score. More cards may
even improve your credit score by increasing your credit-to-debt
ratio. In particular, it's wise to maintain your card
balances at less than half of your spending limits for those
- Check the terms. The most reliable description
of a card's terms are listed alongside the card application.
Although terms can sometimes change, major changes are usually