Before discussing my picks for the best credit card rewards lineup, it is important to underscore that use of any credit card rewards program makes sense only if the cardholder is able to pay off the full card balance each and every month. A disturbing recent report on Bloomberg.com shows growing numbers of consumers are using credit cards to pay for basic necessities, not to earn rewards, but to keep pace with rising food and fuel prices as incomes fall.
Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food…That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem….Rising costs of food and gasoline are leaving Americans less money to spend discretionary items, slowing the pace of the recovery…Household spending accounts for about 70 percent of the world’s largest economy.
Responsible use of credit cards starts with paying the full balance each month. A “credit” card should be viewed as a form of payment, not as a way to borrow more. If you are able to self-discipline spending habits, use credit cards wisely and payoff the balance each month, there are a host of valuable benefits savvy credit card use will provide including ((Of course benefits vary by credit card and not all cards carry the benefits outlined here. Consumers need to read and understand the terms of any credit card being considered)):
- enhanced protections against fraud and theft
- better buyer protections in the event of a dispute with a vendor
- easier merchandise returns
- free insurance coverage for car rentals or travel
- better record keeping and tracking of expenses
- reward earnings that can add-up and give a healthy boost to your finances
To maximize my credit card rewards and other benefits, I use three separate cards for different parts of my financial life:
Fidelity 529 Rewards
PenFed Platinum Cashback
2% on all purchases
5% on gas paid at the pump; 1% on other purchases
3% on gas, restaurants, & certain other categories; 1% on other purchases
|How I use|
Groceries, utilities, household expenses, etc.Basically, everything I can put on a credit card other than gas and business expenses
All gas purchases: three family vehicles, car rentals, etc.
All expenses related to part-time business
|Avg. Monthly Earned Rewards|
Automatically invested into a Fidelity 529 college savings plan
Applied as monthly statement credit
Redeemable as gift card or statement credit once balance reaches $50
- Fidelity 529 Rewards – Socking away savings for college is the number one financial priority in our household. I’ve used this card since 2004 and have nearly $10,000 in accumulated rewards and earnings in the linked Fidelity 529 account. I’ve not had to pay a penny in interest charges or fees, so this really gets pretty close to qualifying as a free lunch. A couple of years ago, significant changes were made to the program for new cardholders, including moving from a MasterCard to an American Express card. I doubt I’d be as satisfied with an Amex card since it accepted in far fewer places than Visa or MasterCard. Thankfully there are some other very reputable 2% reward cards that are similar in design that could easily replace this card.
- PenFed Platinum Cashback – In a previous article I wrote about the many good reasons to use a credit card at gas pump. The 5% cash reward that this card provides for gasoline purchases anywhere is a huge benefit. I’ve used this card since 2008 and estimate it saves me about $360 per year in rewards credits alone. It is also a good card for me to have since it is a Visa and my others are both MasterCard. This comes in handy. For example, the electric utility in my area accepts Visa without charge but imposes a convenience fee to pay with a MasterCard.
- Chase Business Ink – Cash rewards are a secondary concern when it comes to the credit card I use for my small (but not uncomplicated) business. I use the Chase Ink credit card mostly because of its record-keeping and reporting features – specifically the new Jot app for the iPhone. I’ve used the Chase ink credit card for almost a year and am very satisfied.
So, that is my selection for best credit card rewards lineup. This lineup works well for me because each rewards card fits a niche in financial life. But mostly it works because I remain focused on always paying the credit card statement balance in full every month.