/The best rewards cards can save you more than $1,000

The best rewards cards can save you more than $1,000

Rewards cards are meant to be enticing, yet they also often come with a catch. For those inundated with offers, it can be hard to tell the good from the bad.

Over the past few years, card issuers have upped the ante with better rewards and sign-up bonuses to attract customers.

However, rewards cards, which dole out points when you make purchases at airlines, gas stations and restaurants, generally have higher-than-average interest rates to compensate issuers for the additional perks. So for starters, the benefits of using a fancy card are quickly negated if you carry a monthly balance.

And depending on how much you spend each month, signup bonuses and other rewards don’t always offset the cost of an annual fee, which can be as much as $ 450 depending on the card, according to WalletHub’s 2017 Credit Card Rewards Report. (Don’t rule out a card entirely because of the fee, either. Often these cards have better initial bonuses and higher earning rates than cards without a fee.)

For big spenders, it is easier to rack up enough charges to reap the benefits of a rewards card and offset the fee.

On the other hand, if you don’t spend that much each month, then most of these cards do not make sense, according to Roman Shetyn, CEO and co-founder of reward-comparison site RewardExpert. On average, it can take most of the year for cardholders to break even.

“If you’re only charging a couple hundred dollars to your card per month, a high-fee luxury card is probably not the best bet for you as it’ll likely take a year or more for you to start netting rewards,” Shetyn said.

With so many rewards cards to choose from, and conditions to watch out for, the best credit card isn’t always so obvious. To that end, WalletHub compared rewards cards from the 20 largest issuers based on eligibility requirements, rewards earning and redemption policies and expected rewards value.

Overall, the financial site found that the best rewards card can yield over $ 1,000 more than the worst rewards card over the first two years.

In addition, travel rewards are still the best deal, WalletHub said, because they have more redemption value than merchandise, like a coffee maker or luggage, which is the worst option. (Gift cards were the second best option, followed by cashback.)

Among WalletHub’s top picks: Capital One Venture Rewards had the best credit card rewards program, overall, with an annual fee of $ 59, which is waived the first year, but no foreign transaction fees, no earnings limits and rewards that never expire.

Other contenders included Barclaycard Arrival Plus, BankAmericard Travel Rewards, Discover It, Citi Double Cash and the popular the Chase Sapphire Preferred, which comes with a 50,000 point rewards bonus — if you spend at least $ 4,000 within the first three months of opening your account.

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