Ask an Expert: What’s the Best Reward Card If You Don’t Carry a Balance?

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If you pay your balance in full, you deserve some great rewards.

A Money Talks News reader recently wrote me with this question:

I was wondering if you could give me a rundown on the best reward cards for those who pay their balance every month.  I currently have a Chase card that earns 1% on all purchases plus a few bonuses that I don’t really keep track of.  It carries no annual fee. 

Are there any better deals out there I should know about?  I also have a Capital One account that earns travel miles that I almost never use because I find Capital One to be unresponsive to my requests (such as don’t send me offers in the mail… they continue to inundate me with junk mail).  I’ve considered closing it, but was afraid that would negatively affect my credit score.


My response

When cardholders pay their credit card balances in full each month, they should maximize rewards. It sounds like Tami is using the Chase Freedom card, which earns 1 percent cash back on most purchases and 5 percent on eligible merchants within categories that change each quarter.

This is a good card, but there are many others out there that offer better rewards. For example, I recently wrote about the incredible line of Ink cards that Chase offers.  I like these cards because their bonus categories are fixed throughout the year. You earn 5x rewards on telephone, television, and Internet bills as well as purchases from office supply stores. Double points are earned from gas stations.

Another similar card is Chase’s Sapphire Preferred. Cardholders earn Ultimate Rewards points for all their spending, plus double points from restaurants and on all travel expenses. In fact, if you book your travel through Chase, the Sapphire Preferred gives you triple points.

As for your Capital One card, it’s too bad they’re not living up to their “No Hassles” pledge, but you should still try to redeem your miles for statement credits toward travel expenditures.

And when it comes to closing an account, I wouldn’t worry about your credit score. You don’t want to close down many accounts at once, but if you are dissatisfied with the card issuer, it won’t hurt your score to close a single account, especially if you plan on opening another one with a different provider. Carrying little debt and paying your bills on time will always be the most important factors in your FICO score.

It’s great that Tami always pays her balances in full each month, so now is the time for her to leverage her great credit into more valuable rewards.

Thanks for the question, Tami!

(Note: While we attempt to be completely objective when reporting on credit cards, this site may be compensated by issuers when a reader applies for a credit card through the links within credit card stories or on our credit card search page.)

Stacy Johnson

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