These are the best rewards credit cards today. They have the best cash back credit card rewards and the highest sign-up bonuses. I used to receive a ton of credit card solicitations in the mail until I finally put my address on the do not spam list.
Some of the credit card rewards offers really tried to suck people in, such as 6% cash back on groceries, or 3% on gas.
Gas and groceries are the two unavoidable expenses for almost everyone. So it is brilliant for credit card companies to target these two items for credit card rewards.
Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Read The Fine Print On Credit Card Rewards
Even though I have a small monthly grocery bill and only drive about 6,500 miles a year, I was tempted to sign up. The “spend more save more” mentality started taking hold! Then I read the fine print about the 29.99% APR, the limitation on how much I could get back, and the late penalty fee and decided not to sign up. The credit card rewards program didn’t match my lifestyle.
If you are a family of five who spends $1,000+ a month on grocery and commutes 50 miles to work everyday, you probably will benefit the most from a 6% cash back on groceries, 3% on gas rewards credit card vs. a single city dweller with no dependents. You just have to look at the fine print and see what COSTS are associated with the card.
The Biggest Dangers Of A Rewards Credit Card
Wasting Money Due To Hoarding
A mother who normally spends $300 on groceries spends $500 on groceries to get 6% cash back ($12 on $200 more). Meanwhile, because they spent 65% more than normal, $100 worth of the food goes bad, netting them a $88 loss! Food is perishable folks, unless all you’re eating is frozen TV dinners and hashbrowns.
A father who normally spends $200 on groceries starts going goo goo eyed at all the sales in the store because he also has a rewards credit card. He’s now getting double savings on all sale items and therefore he must buy more!
His spending goes from $200 to $300 so he can get an extra $6 cash back. Meanwhile, his weight balloons from 160 lbs to 185 lbs after a year because he’s eating so much! Oh, and after a year, he’s spent $1,128 more than he needed to ($1,200 – $78 in credit card rewards).
More Financial Headaches
A young man who always uses public transportation or bikes/walks on the weekends decides to start driving more thanks to a 3% cash back on gas rewards card.
As a result, his monthly gasoline bill goes from $150 to $350 because he’s now driving 1.5 hours north to Napa Valley every other weekend and no longer taking the bus into the city.
He gets $6 in cash back for spending $200 more on gas. Meanwhile, he ends up spending $2,400 more a year on gas and another $1,000 for maintenance. Oh yeah, he also gets an extra $150 traffic ticket a year, completely wiping out his $74 cash back in credit card rewards!
Unhealthy Debt Increase
A lady who already has an proclivity to shop online gets an Amazon Rewards Card. Because all purchases on her card lead to a 3% credit towards any Amazon item, she increases her birthday and holiday gift buying from $50 on average per person to $100.
She’s already $6,000 in credit card debt with only a couple thousand dollars in savings, but she just can’t pass up getting a whopping 3% back! Over a year, her credit card debt rises to $10,000 as she pays just $1,000 off a month.
Meanwhile, the credit card company is making 20% off her debt, happily giving her 3% cash back forever!
Seeing The World For More
Who doesn’t love airline rewards miles? A person spends so much money to get one free RT ticket for 35,000 miles only to have their airlines raise the cost of the ticket to 60,000 miles!
All the money that could have been spent on more productive things. What’s worse, it might take so long to accumulate so many miles that they might expire before he can get there!
Related: How Much Should I Have Saved By Age?
You Must Get Out Of The “Spend More Save More Mentality”
Please folks, don’t get in the habit of justifying your spending because of a rewards program. You must spend within your means! Spending $100 you normally wouldn’t to get $3-$6 back is dumb.
On the other hand, spending $100 that you normally would spend and getting $3-$6 back is fantastic! Know your spending habits and don’t let credit card rewards draw you in and change your habits.
Here’s a great post on how to control your spending and boost savings. If the amount of money you are saving each paycheck or each month doesn’t hurt a little, you are not saving enough! After 10+ years of diligent savings you will build your net worth greater than you can ever imagine.
Get A $200 Sign Up Bonus With The Best Credit Card Rewards Program
Now you know how not to let a credit card rewards program change your spending habits. If you plan to spend $500 or more in the next 3 months (easy to do with food and gas alone), check out the Chase Freedom Unlimited credit card.
- Sign up bonus: Get a $200 bonus after you spend $500 in the first 3 months
- Great cash back percentage: Earn unlimited 1.5% cash back on all purchases
- Annual fee: $0
- Bonus cash back categories
- 5% cash back on travel purchased in the Chase Ultimate Rewards® portal
- 3% cash back dining at restaurants and eligible delivery/takeout
- 3% cash back on eligible drugstore purchases.
- Rewards expiration: None as long as your account is open.
- 0% APR for the first 15 months
- Credit score needed: good to excellent
- No minimums to redeem for cash back
Manage Your Money In One Place
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After you link all your accounts, use their brand new Retirement Planning Calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.
Updated for 2021 and beyond.
Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.