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The thrill of a credit card rewards program is so fleeting.
Yes, it's wonderful to get free stuff -- travel, cash back, money for college -- just by using your credit card.
But with so many rewards programs out there, it's hard not to second-guess your choice. Have you got the best card? Are you using it to its best advantage? Could you get more from a different one?
I could comfort you by repeating the usual advice that there is no single best card for everyone, that the right card for you depends on the kind of rewards you want and how much you charge, yadda yadda yadda.
But the fact is that some rewards programs are better -- much better -- than others.
To sniff out the best ones, I asked five credit card industry experts -- Curtis Arnold of CardRatings.com, Bill Hardekopf of LowCards.com, Ron Lieber of FiLife, Justin McHenry of IndexCreditCards.com and Ben Woolsey of CreditCards.com -- and frequent-flier guru Randy Petersen of WebFlyer to nominate their favorite plastic in three rewards categories:
- Travel programs. These generally offer the richest returns but only if you get the right card and know how to use it. If you're an infrequent traveler or not looking for upgrades, a different card might be a better fit.
- Cash-back programs. These are a good, simple choice for many, and the best rebate 1.5% or more of your purchases.
- Savings programs. This category encompasses a variety of cards that help you put aside money in an investment plan, pay down your mortgage or get discounts on major purchases such as cars.
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I also asked the experts to reveal which cards they use for their own spending. Interestingly, two of the six were taking advantage of special offers not widely available to the public -- as if you needed anything more to fuel your paranoia that you weren't getting the best deals. More on that here.
I broke the results down into winners, runners-up and worthy alternatives. In each case, the winner and the runner-up are almost interchangeable; either choice will put you in good stead. The alternatives aren't exactly also-rans, but they typically trail the best in the ease of earning or redeeming rewards.
And the winners are:
Travel
The winner: Starwood American Express.The runner-up: Diners Club MasterCard.
Worthy alternatives: American Airlines AAdvantage MasterCard, United Mileage Plus Visa, Choice Privileges Visa, Citi PremierPass Elite MasterCard.
Starwood is a hotel company that runs the Sheraton, W and Westin chains, among others, but its branded credit card gives you a lot more options for redeeming points than just hotel stays. That array of options, plus a better-than-average "earn" rate, is what propels it to the top of the heap.
What travelers love about the Starwood card is that you can dump your rewards into most airlines' frequent-flier plans and do so at a good exchange rate. That means you're not tied to one airline for free tickets and upgrades, or stuck with the weird routes, lack of upgrades and limits on ticket value that come with some non-airline travel-rewards programs.
You earn one "Starpoint" for each dollar spent (and you get 10,000 points for signing up). The $45 annual fee is waived for the first year. Every time you convert 20,000 points into airline miles, you get a 5,000-point bonus, "which means you're really earning 1.25 miles per dollar on most every carrier, better earning than any other card," WebFlyer's Petersen said.
You can, of course, redeem your points for Starwood hotel rooms across the globe, with a redemption rate that typically translates into 2 to 4 cents per point, an enviable exchange rate for any rewards program.
There are two main drawbacks to the card:
- This is not the card to use for flying United. That airline requires you to give up two Starpoints for every frequent-flier mile, which makes the airline's own co-branded card a better bet for dedicated United fliers.
- This is not a card that's accepted everywhere. Visa and MasterCard are accepted by more than 6 million merchants each, American Express by about 4 million.
If you want a flexible travel program without the acceptance issue, pick Diners Club. Now that the card has partnered with MasterCard, it's accepted virtually everywhere you can use a credit card.
With Diners Club, you earn one point per dollar spent, and each point translates into one frequent-flier mile that can be used in any of 21 airline programs. Or you can choose to allocate your points to one of seven hotel frequent-guest programs, including those run by Hilton, Marriott and Starwood. You also can use your points to pay for travel expenses, including flights on any airline or rooms in any hotel, that have been charged to your Diners Club card.
The real kicker, for Petersen anyway, is that Diners Club offers primary insurance coverage on rental cars. Most other cards give you coverage that kicks in only after your own insurance carrier has paid most of the bill; with Diners Club, your insurer doesn't even have to know if you've had an accident. The annual fee is $95, steep for today's rewards cards, but one that's generally offset by sign-up bonuses and the richness of the program.
Continued: Cash-back and savings cards
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