How to Find the Best Rewards Credit Card for You

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In the right hands a frugal and disciplined shopper can use rewards credit cards to save on every purchase. Finding the best cash-back or rewards credit card to leverage your shopping habits can be tricky, though. Each card comes with slightly different rules, unique rewards programs, and fees that can reach several hundred dollars a year. Luckily, consumers can turn to several resources to find the right card.

Sites such as CardHub and NerdWallet offer filters that narrow the hundreds of credit card options to the few that best fit your situation. Your credit score is one factor that affects which cards or interest rates are available to you and is used by CardMatch, part of the CreditCards.com site. This tool asks for your name, address, and last four digits of your Social Security number and then returns a list of cards you qualify for. If you want a card with the most benefits and lowest fees, these sites can help.

The next step in choosing a card is deciding what type of rewards program you want. There are three common options: cash back, miles for air travel, and points for hotels and consumer products. With any of the above, you will receive up to 5 percent of the amount you spend each month as a reward. Cash back is the most versatile, although the miles and points programs generally return greater value.

One of the better deals currently circulating is the Ultimate Rewards program, which covers consumers holding a variety of Chase cards. Shoppers with the no-fee Chase Freedom card earn 1 percent cash back on every purchase plus an additional 4 percent (up to $1,500 every quarter) on select categories that rotate throughout the year, such as movie theaters and groceries. The reward is stored as points to be redeemed for cash, gift cards, or consumer products. Holders of Chase Sapphire Preferred ($95 annual fee) earn two points for each $1 spent on dining and travel that can be transferred to airline, hotel, or rental car programs; travel booked through the Chase travel portal entitles lets cardholders give up 20 percent fewer points. Consumers holding both Chase cards can transfer the Freedom points to the Sapphire Preferred program to take advantage of the discounted travel option.

Similarly flexible arrangements are available with products offered by American Express, Citibank, Barclays, and Capital One.

Savvy spenders use credit cards to earn thousands of dollars worth of rewards every year and know how to work around paying fees. But not everyone has the time or interest to track down all the information and execute the plays. Any credit card screener worth its salt, including the three mentioned above, let you sort credit cards based on the annual fee. Sometimes it's worth signing up for a card that waives the annual fee for the first year and then canceling the card or downgrading to a no-fee version before the second year begins.

Another type of rewards card is the store-specific credit card; think J.C. Penney, Macy's, Target, and other brand-name credit cards. Some offer benefits such as coupons, free shipping, or extended return periods. Several incorporate generous rewards programs. Frequent shoppers at Target, for example, get 5 percent off all Target purchases when using the company's REDcard. Ace Hardware and Sony reward cardholders with 1 percent cash back on all purchases, 2 to 3 percent back for purchases from select categories, and a 5 percent cash reward for items purchased at the chains' stores.

With any reward or cash-back credit card -- even the best -- avoid the temptation to spend what you don't have. Clearly there's a strong incentive to buy because you'll get as much as 5 percent back, but if you don't or can't pay the full bill on time you'll end up paying more in interest costs than you earn in rewards.

Indeed, anyone who doesn't pay off the balance every month might find rewards cards, well, unrewarding. If this is you, shop for a credit card with a low annual percentage rate (APR) on unpaid balances. Rewards cards often charge high interest rates, some on the order of 25 percent, making it costly to accrue debt. In the event you're saddled with a high APR on a credit card balance, consider transferring the balance to a new card. Chase's Slate card has no annual fee, offers free balance transfers for the first 60 days, and a 0 percent APR for 15 months. Heads up, though: The interest rate can skyrocket afterwards, so pay down your balance during the interest-free period.