The Keys to Getting the Best Reward Credit Card for You

Most of you know that I'm a big fan of the Blue Cash from American Express card (it earned me almost $500 last year) and use it as my main cash back credit card. But there are a lot of reward cards out there and I thought some of you might like to have some guidelines on how to find the best one for you. Here are my thoughts on the issue:

1. Decide what is most important to you. Everyone's different. Some people like cash (like me), others travel a lot and want airline points, and others have special interests in one area or another. This GREATLY impacts what reward credit card will be the best for you. So start the process of searching for your card by thinking through what reward you'd like to get.

2. Consider how you spend money. What you charge on your card can make a big difference in the reward you get. For instance, some cards give bigger rewards for spending at gas stations or grocery stores. If you charge very little at gas stations or grocery stores, it's likely these cards aren't for you. Review your budget or Quicken file and take note of the major purchases you charge to your current card.

3. Decide how much time and effort you're willing to put into maximizing your reward. It's highly likely that your absolute maximum reward will come from using a strategy that requires using multiple cards. But do you really want to deal with the hassle of getting, carrying and using a boatload of cards? Personally, I don't, so I carry two -- a main card and a back-up used in certain situations. You may be willing to deal with the hassle of using many cards, but you certainly need to consider the "hassle factor" before you decide on your strategy.

4. Be sure to minimize fees. In almost all cases, your best reward card will have no annual fee. There are exceptions, but if you have to pay for a card, you have to have some really, really, really great benefits from it to make it the best reward card for you.

5. Pay off the card each month. This should go without saying, but if you get a card and carry any sort of balance, it can quickly wipe out any rewards you earn. It's usually better not to have a card and forfeit the rewards than to use the card and carry a balance.

6. Consider where the card can be used. Some cards are accepted in more places than others. Visa and MasterCard can be used almost everywhere and American Express is used in most places (including Costco -- the only card they take), but others (Discover for instance) are accepted in far fewer locations.

7. Think of the ease of redemption. How you get your rewards can make a big difference. Some companies make the process seamless and simple (for instance, my card simply credits my account for the reward amount once a year) while others seem to be designed to make it difficult to get your reward (you earn "points" and have to go through 10 steps to actually redeem them.) No matter how much you earn, if it's a hassle (or impossible!) to get the reward, it just may not be worth the effort.

8. Charge all you can on the card. Once you have the above figured out and decide which card or cards are best for you, make the most of it (them) by charging all you can. Look at all your big purchases and see if there's a way to put them on your card. Look at regular, on-going purchases and see if you can pay these (with no cost) via credit card. Especially look at all those purchases that give you extra rewards (such as the gas and grocery store extras noted above) and be certain to get as many of those charged as possible.