Choosing a rewards credit card can be a daunting decision for a young professional. You can spend hours researching your options, and only find yourself more overwhelmed. There are tons of websites, blogs and opinions about the ‘best’ option for you. There are sadly just too many options out there, and not a good way to compare apples to apples! I thought I’d give my two sense on the issue, and provide some advice for choosing the right card!

Let me just come out and say it: the best credit for you is the one that helps you meet your goals the best. I think a lot of people get flustered, confused and overwhelmed and end up choosing a credit card that isn’t right for them. Why earn airline miles if you don’t really like to travel? Why pay $99/year for an annual fee if all want is some cash back? Let’s break down the various types of credit cards that you’ll encounter and for whom they might be the best for:

Branded Credit Cards:

Hotels (i.e. Marriott or Hilton), Airlines (i.e. American, Delta or Southwest). Credit cards like these are sadly not as easy to redeem your points for free flights or stays as the advertisements make them out to be. Sure you’ll likely get a nice sign-up bonus that could get you some free stuff, but after that, it’s maybe a 1% cash back rewards ratio. On top of that, you’re looking at reduced availability aka “blackouts” as well as being stuck essentially playing their game. You spend all this time accruing points, only to find redeeming them frustrating. These cards are best for frequent travelers that are more interested in perks (i.e. elite status) than free stays/flights. These cards often come with benefits that travelers will enjoy: more elite points/nights for faster elite status accrual, free checked bags, free night on card annual renewal, or even airport lounge access! These cards can come with a steep annual fee ($85-$495) as well, so be careful and weigh the options carefully!

Non-branded points/miles cards:

The second batch of credit cards is a non-airline/hotel affiliated credit card that offers points/miles that you can redeem on a multitude of flights or hotels. Cards like these are like the Chase Sapphire or the Capital One Venture card. The beauty of cards like these is the fact that you have a lot more freedom when it comes to redeeming your rewards. Unlike option #1, you can actually redeem your points on more than an American flight, or a Hilton hotel. Often times, having the ability to be flexible with your travel plans will yield the best value (i.e. cheapest price or required points). To further break things, down, there are two sub-categories within this section: point redemption vs cash value redemption. Chase Sapphire is a good example of a point redemption card. You’ll still earn at the 1x or 2x (or whatever rotating category it might be) rate, but when it comes time to redeem your points, you’ll transfer your Chase points into Southwest points or Marriott points for example, and then use those points to book your flight/redeem for a hotel stay. I’m not as big of a fan of these types of cards, for the simple reason that you’re playing the airlines/hotel’s game when redeeming points. Redeeming points now requires you to hunt around for the best deal, be subject to blackouts, and possible be faced with arbitrary fees or point differentials. Sometimes you’ll win at the game, other times you won’t. American Express cards also utilize this redemption strategy. The other category, which is my recommendation for people that like to travel, is the cash value redemption. The two solid options are the Capital One Venture Card and the Barclaycard Arrival Card. The Barclaycard has a slightly higher redemption rate (2.1% vs 2%) but carries a higher annual fee ($89 vs $59). These cards are awesome, because I can redeem my points (or ‘miles) on ANY travel related purchase. I simply make the purchase using my card (which also allows me to accumulate more airline/hotel points since it’s a cash purchase and not a point redemption) and then choose to ‘erase’ the purchase using my points. It’s a phenomenal system that allows me to have an absolute variety of options. On a recent search for flights to Europe, paying with cash allowed me to make a direct flight, while paying with miles only let me take layovers. Interesting!

Ultimately, run some scenarios for the type of travel you’re looking for. Pull up the flight itinerary for the next trip you’d like to take, and compare how many miles it would take to redeem, vs. how much it costs. Then, back into how much you’d have to spend using the various types of options. Hopefully this will shed some light on the best method to earn and redeem your points.

Straight cash back:

Why play a game and jump through hoops if all you want is cash back? Honestly, if travel isn’t your thing, I’d recommend going with a cash back card. Just earn as much as you can back from your credit card, and then spend it however you want (including travel!). The nice thing about these credit cards, is that they often come with no annual fees. You spend, earn cash back, and then spend however you want! There are a number of solid options, with most banks offering a nice 1% cash back card. Bank of America probably has one of the more popular ones (“1…2…3%”). Fun fact, with Bank of America’s card, you earn 3% back on gas, 2% on groceries and 1% back on everything else. I took my 2014 spending report, ran through and categorized each purchase into those categories, and found my effective percentage to only be 1.1%. Yikes! The best cash back card in my opinion is the Capital One Quiksilver card, which gives 1.5% cash back on all purchases. No silly rotating categories or outrageous redemption policies, just straight 1.5% cash back. Spend $100, earn $1.50 back in your account. If you’re not into travel, or just are looking for a pretty decent bang for your buck, I’d recommend going with a cash back card.

Final disclaimer, credit cards are a powerful tool, but with great power comes great responsibility. The only way to use credit cards is to pay them off in full each month, therefore avoiding interest charges. Most of these fancy cards carry a steep interest rate. No sense in getting into debt to earn a free airline flight!

When used responsibly, credit cards can be a powerful tool that will allow you to rack up hundreds of dollars each year in free travel or cash back. The best card for you is the one the helps you meet your goals the best. Figure out what you want out of a credit card, choose the right card and then start putting purchases on them!

Still curious about reward credit cards? Check out my article on How I earn $900 annually with a rewards credit card or 5 rules to win with credit cards.