It seems like a lot of things in life are getting more complicated, and your credit card rewards are no different.
First, a little history: The first credit card rewards program was officially launched in 1984 by the Diner's Club. The original Diner's Club card launched in the 1950s as a charge card, which means you had to pay the balance off in full, every month. It was only accepted at restaurants.
By the 1980s, the card was accepted at all sorts of retailers, restaurants and destinations worldwide. It was acquired by Citibank, it became a credit card, and users could earn points that they could redeem for gift cards, merchandise or travel.
(By the way, the Diner's Club card is still around, but it's not accepting new enrollees at this time in the United States.)
Now, almost every credit card comes with some sort of a rewards system where you can earn points, miles (which can be used for travel or other rewards) or straight cash-back, sometimes as a bill credit. Some cards offer you a low rate in addition to other rewards.
How do you choose which card is right for you?
You have a pretty simple choice to make when you're choosing a credit card: Do you want rewards or do you want to save money? If you want both, which is more important to you?
If you pay your balance in full every month, it's probably best to focus on a rewards-based card. These sometimes come with a higher interest rate, but if you pay off the bill every month, you can really maximize your rewards.
If you're more interested in saving money on interest, you might choose a card that has a lower interest rate and fewer rewards.
You should also ask yourself how good you are about using rewards? Sometimes we all forget that we had a coupon for a grocery store item or we forget about using rewards we've accumulated. But if you're really on top of that, maximizing your rewards can be a big financial benefit.
How do you choose which rewards are best?
The rewards system you use will depend in part on your lifestyle. If you travel a lot, you'll want to get a card that has great travel-specific benefits, which may include discounts on airfare, hotels and more.
If you tend to stay home more, you might consider a rewards system that allows you to save money on everyday expenses like groceries, gas and your Amazon (or other) orders. If you want lots of flexibility, you might choose a card that offers you cash back instead of points or miles.
How do I find a card?
The first thing to do when searching for a new credit card is to check your credit score. Some cards are only available to people with credit scores above a certain amount. (If you need help raising your credit score, we're here for you with budget help, counseling and lots of tips and advice. Just call, send us a message, stop by a branch, or start by exploring our financial education resources.)
Then, identify your main goal: Save money, earn points or miles, or get cash back. Rank those in order of importance.
Then, compare the key terms and fees between cards. (This might require a spreadsheet.) Be sure to check each card's annual fee, APR (interest rate), welcome bonuses and any other fees like those for foreign transactions.
Is there an online tool?
If you're searching for a new card, you can use some online tools to help you narrow the options. However, beware: Some of those tools are paid by credit card companies to recommend their cards. That means you'll want to search multiple different tools to make sure you're getting all the information you need.
Available tools include: Nerdwallet's Credit Card Quiz, WalletHub Credit Card Comparison Tool, or the CardRatings CardFinder tool.
What do we recommend?
Of course, we recommend that you include CommonWealth One VISA® cards in your search. Our rewards cards points don't expire for 5 years. The Signature Rewards card in particular has a great offer right now: Get 10,000 bonus rewards points when you spend $1,500 in retail purchases within the first 90 days of opening your account.
No matter what you choose, we're here for you! If you have any questions about credit, credit scores, budgeting or best practices for your money, let us know. We're happy to sit down with you and make it all less confusing.