With the value of credit card rewards at record highs and the busy summer travel season almost here, WalletHub today released its report on 2021’s Best Credit Card Rewards Programs, along with a nationally representative consumer survey, and editors’ picks for the Best Rewards Credit Cards for Summer 2021.
Please find key takeaways below, along with commentary from WalletHub experts (audio files included).
- Post-Pandemic Rewards Mentality. 28% of Americans say COVID-19 changed the way they view credit cards rewards.
- Overcomplicated Rewards? Almost 1 in 4 people think that credit cards rewards programs are hard to use.
- Worth the Hassle? Low-income households are 3X more likely than high-income households to think that credit cards rewards are not worth the hassle.
- Annual Fees Scare People. More than 50% of people would never apply for a credit card with annual fees.
- Earning Potential: The best rewards cards can yield up to $1,285 more than the worst rewards cards over the first two years.
- Best Issuer: Capital One has the best credit card rewards program for the sixth year in a row, earning an average WalletHub score of 92%.
Q&A with WalletHub
Do you think COVID-19 changed the way people view credit card rewards?
“Yes, 28% of people say COVID-19 changed the way they view credit card rewards, according to a new WalletHub survey. In a lot of cases, people simply did not pay much attention to credit card rewards pre-pandemic,” said Jill Gonzalez, WalletHub analyst. “The pandemic emphasized the importance of getting rewards tailored to your current spending habits, which for months meant less of a focus on travel and more interest in rewards for dining and online shopping. Travel rewards are now poised for a comeback.”
Should people pass on a credit card just because it has an annual fee?
“More than 50% of people say they would never apply for a credit card with annual fees, according to WalletHub’s 2021 Credit Card Rewards Survey, but shunning annual fees is the wrong approach. It’s best to focus on net value when comparing credit cards with rewards and then apply for whichever card enables you to save the most money, after subtracting annual fees,” said Jill Gonzalez, WalletHub analyst. “Some of the best rewards credit cards overall actually do charge annual fees.”
What is the best rewards currency: points, miles or cash back?
“Around 76% of people say that cash back is the best credit card rewards currency, according to a new WalletHub survey, and cash rewards do have a lot of advantages. Cash back is the most straightforward type of credit card rewards. It’s clear how much cash back credit card rewards are worth. And credit card companies can’t devalue cash back by raising prices on redemption, like they can with points and miles,” said Jill Gonzalez, WalletHub analyst. “Points and miles aren’t as flexible as cash back, which can be used to pay for anything, but the best credit cards with points or miles typically offer a lot more rewards value than the best cash back credit cards.”
Are credit card rewards hard to use?
“Although nearly 1 in 4 people think that credit card rewards are hard to use, it’s actually easier than ever to earn and redeem rewards, thanks to online account management tools, mobile apps and credit cards offering record-high rewards value,” said Jill Gonzalez, WalletHub analyst. “The keys to making credit card rewards as easy-to-use as possible are to choose a card with straightforward rewards-earning rates, familiarize yourself with the issuer’s rewards-redemption rules, and then use the rewards that you earn on a regular basis. Plus, you should make an informed decision about how many credit card accounts you can comfortably manage.”
Should people go out of their way to spend money with companies that give them extra credit card rewards?
“Roughly 56% of people go out of their way to spend money with companies that give them extra credit card rewards, according to a new WalletHub survey, but it should be the other way around. You should get credit cards that will reward you the most at the places where you spend the most money naturally,” said Jill Gonzalez, WalletHub analyst. “By using the Island Approach and designating different credit cards for specific types of transactions, you won’t have to go out of your way to maximize your rewards.”