Compare Rewards Credit Cards

There isn’t a set limit on the number of credit cards you can have.

You may have several credit cards for different purposes. For example, you may use a store credit card to earn points on your everyday shopping, plus a separate credit card for other purchases so you can earn air miles to put towards your next flight.

However, having many credit cards can make it difficult to keep track of your repayments, potentially making you more likely to miss one. Having multiple sources of credit could also encourage you to spend more than you can afford, increasing your risk of getting into debt.

Bear in mind that applying for a credit card will involve a hard credit check, so multiple applications within a short period will likely affect your credit score.

You may find it more difficult to get a rewards credit card if you have a poor credit score or no credit history.

If you have bad credit but you’re looking to take out a credit card, you may want to consider a credit builder credit card first. These cards can help you improve your credit score or build up a credit history if you don’t have one currently.

Building your credit score may improve your chances of being approved for a range of credit cards in the future.

» COMPARE: Credit cards for bad credit

If you want to apply for a rewards credit card, the first step is to find one that suits your circumstances.

Providers may offer an eligibility check before you actually apply. This is a soft credit check so it does not show up on your credit report, but it should give you an indication of whether you are likely to be accepted for your chosen card.

Some banks may require you to have another account with them before you can apply for one of their credit cards, so you should check if this applies to the card you’re looking at.

You can usually apply for a credit card online. You could hear back within minutes and, if approved, your new credit card could be sent to you within a few days.

» MORE: 6 steps to apply for a credit card

How you redeem your rewards will depend on the type of reward you are claiming.

Cashback is usually automatic, and will be paid into your credit card account either monthly or annually depending on the terms of the card. This means cashback can be used to pay off some of your balance, though it may not count toward your minimum monthly payment.

If you are building up rewards points with your credit card company, you can usually view your balance using its dedicated app. You’ll also need the app to pay with your points, donate their value to charity or convert them into cash or gift cards, depending on which redemption options your bank offers.

If you have an air miles credit card, your points should be added automatically to your linked airline account. You should be able to see your available point balance by logging into this account.

Store vouchers may be sent out throughout the year. If your credit card offers extra loyalty points at a specific store, these will be periodically transferred to your store loyalty card. You should check the terms of your card for more specific details.

Interest rates can vary between rewards credit cards. It is a good idea to shop around to compare interest rates and credit limits offered by different providers.

You should also bear in mind that factors such as your credit score could also affect the interest rate and credit limit you are offered.

Other types of credit card may not offer rewards but could have lower interest rates or a longer interest-free period. It is worth comparing a range of different credit cards to find one most suited to your circumstances.

» COMPARE: 0% interest purchase credit cards

Also known as black credit cards, premium credit cards are exclusive credit cards that offer rewards such as access to airport lounges, travel insurance and concierge services. Often, these rewards cards have a hefty annual fee.

It is possible to transfer your existing credit card balance to a rewards credit card. You will usually have to pay a fee to do so.

You will usually only earn rewards on new purchases you make, so if you transfer a balance over you’re unlikely to earn any additional points for doing so.

You may consider transferring your balance over to a rewards credit card if you want to minimise the number of credit cards you have. Some rewards cards may offer an introductory 0% interest rate on balance transfers. But you may face a higher interest rate later on.

If you're looking to transfer your existing credit card debt to a new card, you may want to consider a 0% balance transfer credit card instead. These may offer longer interest-free periods than rewards credit cards.

» COMPARE: 0% balance transfer credit cards

Cashback credit cards may allow you to earn cashback when you make a purchase. Usually, cashback is calculated as a percentage of each transaction you make.

Cashback is paid to you either annually or monthly. It will appear on your credit card statement and can be deducted from the overall balance on your card or paid to you in cash.

Some cards will only offer cashback on certain types of purchases, while others offer cashback on every purchase you make. You may find that the level of cashback varies by retailer or type of purchase.

» MORE: What are cashback credit cards?

Air miles credit cards let you earn points that you can put towards the cost of flights with certain airlines. Airlines such as British Airways and Virgin Atlantic accept air miles points as part or full payment.

Usually, the points you collect using an air miles credit card can only be used with certain operators. If you tend to fly with an airline that doesn’t accept points as payment, then this type of card may not offer the best reward for you.

Yes, purchases made with a rewards credit card may be protected under Section 75 of the Consumer Credit Act 1974.

If you make a purchase worth over £100 up to £30,000 on a credit card, it may be protected under Section 75 if:

• the goods or services you bought are faulty
• you do not receive the goods or services you paid for
• the products you receive are not what you were told they would be

You should address a claim to your credit card provider within six years of the purchase to claim money back under Section 75.

Some rewards credit cards come with annual fees.

You should consider whether the rewards you may earn are likely to be worth more than the fees charged. If it looks like you’ll pay out more than you’ll get back, then a rewards credit card might not be the right choice for you.

For example, let’s imagine your rewards credit card costs £100 a year and offers 2% cashback on every purchase. You would have to spend at least £5,000 a year on your credit card to earn back the cost of the annual fee in cashback. If you’re unlikely to spend that much on your card, then the fee may outweigh the reward. Another deal may be better suited to your spending habits.

Rewards credit cards may also come with additional fees for actions such as transfers and cash withdrawals. Paying late, missing a payment or exceeding your credit limit may also mean you incur a fee.

» MORE: Credit card fees explained

As with any credit card, you need to look out for the annual percentage rate (APR). The APR demonstrates how much you can expect to pay for borrowing a set amount, including any interest and additional charges.

Bear in mind that the representative APR shown when you view a credit card does not include fees for late payments or exceeding your credit limit. It is also only guaranteed to 51% of applicants, so you could be offered a worse deal with a higher interest rate.

You should also look at the rate at which you can earn rewards. There may be an introductory offer that changes after a set time, or you may only achieve the best cashback rate if you spend a certain amount on your card. You should be wary of promotions and only spend what you can afford to pay back.

To make the most of a rewards credit card, you may want to look for one that fits in with your usual shopping habits.

For example, if you fly regularly then it may be worth getting an air miles credit card so you can earn points to put towards flights. It could save you money in the long run, though you should make sure you can pay off your balance in full each month. Otherwise, the money you save on your flights could be outweighed by the interest you have to pay back.

Or if you buy a lot at a certain store, using one of their credit cards may get you more loyalty points that you can put towards paying for the weekly shop.

It is possible to use a rewards credit card to save money long-term if you use your rewards points to pay for things you would have bought anyway. However, it is important to stick to the terms of the card and pay off your balance in full each month to see any real benefit from the rewards on offer. If you don’t do this, you may end up paying back more in interest than you earn in rewards.

NerdWallet, in partnership with Freedom Finance, allows you to check your eligibility and compare rewards credit cards from a range of providers.

You can check your eligibility before you apply, so you can see which rewards credit cards you’re likely to be accepted for without affecting your credit score. This reduces the chances of applying for a card and having your application declined.

Once you have a good idea of what credit cards you qualify for, you can compare their features and their rewards to work out which card offers the best deal for your circumstances.