One of the most frequent questions we get from friends and family at RewardsGuru.com is what cards are the best for starting out and earning rewards. If you aren’t a frequent business traveler or a big spender on your credit cards it’s hard to know where to get started earning rewards that will be worth something.
When I think about credit cards, I judge them in a few specific ways:
- What are the points/miles/rewards really worth
- How easy is it to earn rewards
- Is there an annual fee and how does it weigh against the rewards
- How valuable the sign-up bonus is
- Any other meaningful benefits (no foreign transaction fees, purchase protection, rental car coverage, etc)
What are rewards really worth?
Not all miles / points / rewards are the same. Here’s a quick overview on what these rewards are actually worth in dollars and cents:
| Rewards Program | Value ($0.00) |
| American Express Rewards | $0.02 |
| Barclaycard Miles | $0.005 to $0.01 |
| Capital One Rewards | $0.01 |
| Chase Ultimate Rewards | $0.021 |
| Citi ThankYou | $0.016 |
| United | $0.015 |
| Southwest | $0.013 |
| Virgin America | $0.015 to $0.023 |
| Virgin Atlantic | $0.015 |
| Hilton | $0.005 |
| Hyatt | $0.018 |
| Starwood | $0.024 |
How easy is it to earn rewards?
It’s an important to pick a rewards card that actually generates rewards at a reasonable rate. Unless there is a specific sign-up bonus or other reason (affinity for a specific hotel, airline, etc) don’t pick a card that earns rewards at a rate less than 1.5%.
What does the annual fee really mean?
Don’t be scared off by annual fees. Many cards with an annual fee have a materially higher rewards rate than those without an annual fee. These cards also often have better sign-up bonuses.
How valuable is the sign-up bonus?
Some cards have sign-up bonuses worth $500 or more.
Are there any other benefits that are material?
If you frequently travel overseas it’s essential to have a credit card with no foreign transaction fees. Coverage for rental damage or collision included with your card is also a big plus. Extended warranties for items you buy is also a valuable benefit.