How to Choose the Best Rewards Credit Card

At O1ne Mortgage, we understand the importance of making informed financial decisions. Whether you’re looking to buy a home or simply manage your finances better, choosing the right rewards credit card can be a game-changer. In this blog, we’ll guide you through the process of selecting the best rewards card for your needs. And remember, for any mortgage service needs, feel free to call us at 213-732-3074.

Check Your Credit Score

Before diving into the world of rewards credit cards, it’s crucial to know where you stand. Your credit score will largely determine the types of cards you can qualify for. You can check your credit score for free through various services. Having a good to excellent credit score opens up more options, but there are also cards available for those with fair or poor credit.

Choose a Type of Rewards

Next, decide what type of rewards you want. There are three common types:

Cash Back

Cash back rewards are straightforward. You earn a percentage of your purchases back as cash. This can be redeemed as a statement credit, check, or transfer to a bank account. Cash back rates typically range from 1% to 2%, but some cards offer higher rates for specific categories.

General Credit Card Rewards Programs

Many issuers have their own rewards programs, offering flexibility in how you can redeem your points. Options may include cash back, travel bookings, or transfers to hotel and airline loyalty programs. While these programs can offer high-value redemptions, they also come with low-value options, so it’s essential to understand how to maximize your rewards.

Hotel and Airline Miles or Points

If you frequently travel with a specific hotel or airline, a cobranded card might be the best option. These cards often come with brand-specific benefits like free checked bags or annual vouchers for free hotel stays. However, redemption options may be limited compared to general rewards programs.

Consider Bonus Rewards Types and Categories

Credit cards use different systems to determine the rewards you earn:

• Flat-rate cards: Offer the same rewards rate on every purchase.
• Tiered rewards cards: Offer bonus rewards in specific categories like travel or dining.
• Rotating rewards cards: Change bonus reward categories every three months.
• Dynamic rewards cards: Allow you to change bonus reward categories or automatically adjust based on your spending.

Consider where and how you plan to use the card. If you have other rewards cards, look for one that complements your existing rewards structures and bonus categories.

Review the Common Credit Card Fees

Be aware of common credit card fees, such as:

• Annual fees: Some cards charge an annual fee, which may be waived for the first year.
• Balance transfer fees: Fees for transferring balances, usually 3% to 5% of the amount transferred.
• Cash advance fees: Fees for cash advances, which often come with higher interest rates.
• Foreign transaction fees: Fees for using the card outside the U.S. or for foreign currency purchases.

Choose a card that aligns with your spending habits and financial goals. For example, if you travel abroad frequently, look for a card without foreign transaction fees.

Get Prequalified

Once you have a few specifics in mind, try to get prequalified for credit cards that fit your criteria. Many issuers offer prequalification tools that let you see which cards you might qualify for without impacting your credit score. Use these tools to narrow down your options.

Compare Intro Bonuses

Many credit cards offer introductory bonuses to new cardholders. Compare the intro offers from your top choices to see which one stands out. Also, consider if the card had higher intro bonuses in the past, as this might indicate a better offer could return in the future.

Apply for the Best Rewards Card

After narrowing down your options, apply for the card that best fits your needs. If you’re not approved right away, contact the issuer to see if there’s anything you can do to change their decision. If you’re still not approved, move on to the next card on your list.

Monitor Your Credit Score and Credit Card Offers

Using your new credit card responsibly can help improve your credit score. Monitor your score regularly and keep an eye on new credit card offers. As your credit score increases, you may qualify for even better rewards cards.

Choosing the right rewards credit card can significantly enhance your financial strategy. At O1ne Mortgage, we’re here to help you make the best decisions for your financial future. For any mortgage service needs, call us at 213-732-3074. We’re committed to providing you with the best service and advice.