Are Credit Card Rewards Worth It? Here’s What to Know Before You Sign Up
Rewards credit cards offer an appealing proposition: get money back, points, or miles for purchases you’d make anyway. These perks can help offset costs or even fund your next getaway. But before jumping in, it’s important to weigh the pros and cons — and determine whether a rewards card aligns with your financial habits.
The Short Answer: Yes, If Used Wisely
When used responsibly, rewards cards can absolutely be worth it. Every time you swipe or tap your card, you could earn cash back, travel rewards, or points that add up to meaningful value. But rewards don’t come without trade-offs — such as higher interest rates or annual fees — so they’re not the best fit for everyone.
Key Questions to Ask Before Applying
✅ Do You Have Good to Excellent Credit?
Most rewards cards require a FICO score of 690 or higher. If your score is below that threshold, you may need to build your credit first. This means paying bills on time and keeping your credit utilization low.
However, there are some rewards cards for fair credit. For example, the Capital One QuicksilverOne Cash Rewards Credit Card offers 1.5% cash back and is accessible to those with scores in the low 600s.
💡 Tip: If your score is on the edge, consider a prequalification tool that doesn’t hurt your credit.
✅ Do You Pay Off Your Balance in Full Each Month?
One of the biggest advantages of using a rewards card is earning without paying interest — but only if you pay off your balance in full each month. Most rewards cards come with higher APRs, so if you carry a balance, the interest charges can quickly erase any rewards you earn.
If you carry a balance month to month, consider a low-interest card or a balance transfer offer instead.
What to Look for in a Rewards Card
Not all rewards cards are created equal. Here are some factors to consider:
💳 Does the Value Exceed the Annual Fee?
Some top-tier rewards cards charge annual fees. The Chase Sapphire Preferred® Card, for example, charges $95 annually, while the Chase Sapphire Reserve® costs $550 per year.
But these fees often come with added benefits — such as travel credits, insurance protections, airport lounge access, or bonus earning categories — that can outweigh the cost if you take full advantage.
🧮 Run the math: If the benefits exceed what you’re paying, the card could be well worth it.
🧐 Are There Any Fine-Print Limitations?
Reward programs often come with terms that affect how much value you actually get. Here are common pitfalls:
- Earning caps: Some cards limit rewards — like 5% back on up to $1,500 in quarterly spending.
- Expiring points or miles: Not all rewards last forever. Watch for expiration windows.
- Redemption thresholds: You may need to hit a certain amount (like $25 in rewards) before you can cash out.
✨ Be sure to read the terms and conditions so you’re not surprised later.
Types of Rewards to Consider
- Cash-back cards: Simple and flexible — great for everyday savings.
- Travel cards: Offer miles or points for flights, hotels, and more. Best for frequent travelers.
- Rotating category cards: Earn more in specific spending categories that change every quarter (like groceries, gas, or dining).
Final Thoughts: Is a Rewards Card Right for You?
If you’re disciplined about paying off your balance and understand the card’s terms, a rewards credit card can be a valuable financial tool. From offsetting everyday expenses to helping fund your next trip, the right card could give your spending extra power.
But if you tend to carry a balance or struggle with credit, it’s worth focusing on building financial stability first. A secured credit card or low-interest card might be a better fit until you’re ready to fully benefit from rewards.