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The Best First-Time Rewards Credit Cards–By Spend-Level & Personality

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Best Rewards Credit Cards for Beginners

Have you ever been at a group dinner where everyone except you put down a Chase Sapphire card, and wondered: what do they know that I don’t?

Maybe you got your first credit card at your local bank, because you didn’t know other credit cards existed.

Or like me, you were a hapless college student walking downtown when a credit card rep stopped you and asked if you wanted a free T-shirt. Yes, obviously. I walked away with both a T-shirt and my first approved application for a credit card I knew nothing about.

Whatever the case, you’ve now got this whole ‘spending responsibly’ thing down, and you’re ready to make that work for you by strategically using credit card rewards.

But vetting credit cards is overwhelming. Good news for you–I spent days comparing and contrasting them all, and I’m happy to introduce a long-overdue post: my top rewards credit card picks for beginners. And I’ve included cards that I truly think are the best options, even if I don’t get a referral fee for them.

What I Considered

  • Beginner-friendly. I didn’t want this post to get too crazy, so I’m only including my picks for people who have no idea where to start. That means that some of the most lucrative options are missing, because they require advanced knowledge to maximize the rewards.
  • High enough rewards to offset annual fees. Some people can’t stand fees, but fee-cards often offer the best rewards, so I’ve included options where I think the fee is worth it. I also noted when a card should be canceled to avoid said fees.
  • Decent sign-up bonuses. Sign-up bonuses are the fastest way to earn rewards, so I’ve prioritized cards that offer bonuses versus those that don’t.
  • Various spending habits. I know that the spend minimums on premium cards (generally $3,000+ in three months) can be frustratingly out of reach for many people, so I’ve included cards for people who don’t typically spend more than $1,000 per month.
  • Different goals. Not everyone wants to travel, or has the money to travel, so you’ll find cash-back options, as well.
  • Long-term potential. I’m thinking about credit cards as a long-term strategy, instead of quick-hit sign-up bonus cards that you’ll just cancel after a year. Those definitely have a place, too, but if you’re new to credit cards, the goal is to start with a solid card as a base.

What I Didn’t Consider

I didn’t consider interest rates, credit card limits, balance transfer fees, or required credit scores. Interest rates shouldn’t be a factor if you’re paying your credit card statements in full every month. For everyone else, cash is king.

As for required credit scores, for most of the cards I chose you need a good-to-excellent credit score, no lower than 700. If yours is lower, keep paying your credit card bills on time and it will naturally rise in due time.

I also didn’t include cards that not everyone can access: military cards from issuers like USAA or Penfield, or ones tied to an account at specific credit unions or banks.

And I can’t properly vet non-US cards, so I’m only familiar with options available where I live.

TL;DR

In true Luxe fashion, this post got out of control, so I included handy links below so you can jump down to a scenario that best matches yours.

*Affiliate links below*

Best All-Around Starter Credit Card

Chase Freedom

Annual fee: $0
Sign-up bonus: $200 bonus (20,000 points) after you spend $500 on purchases in your first 3 months from account opening.
How else you earn points: Earn 5X points per dollar on up to $1,500 in combined purchases in bonus categories each quarter you activate. Earn 1X points on everything else.
Who it’s for: You want to redeem for travel rewards eventually, but right now you don’t spend enough money to qualify for the better sign-up bonuses. At some point you plan on getting a premium Chase travel card, like the Preferred or Reserve. You’re willing to do a little optimization (like going to Best Buy to buy gift cards) to maximize rewards.

I’ve had the Chase Freedom card for over 10 years, so clearly it’s a must in my book. I’ve signed up for a lot of credit cards with a high sign-up bonus…but end up canceling after a year. That’s because after collecting the sign-up bonus, the amount of points I can earn through spend alone is nominal. With the Chase Freedom card I’ve been able to consistently earn a decent number of points year after year.

There are three areas where the Freedom card really shines:

1. It’s super versatile.

The Chase Freedom card is a general rewards card. In a couple clicks on their website and you can redeem points for cash back, shop at Amazon, buy gift cards, book travel, OR combine them with other Chase cards (more on this below). You’re not tied to only spending the points on travel. And this isn’t one of those airline miles cards where you need to qualify as a brain surgeon to find flights to use the points on.

2. The 5X points rotating bonus categories.

You earn 1 point per dollar on all purchases, but you can super-size the rewards by taking advantage of the quarterly bonus categories. To all my shopping people, you’re going to want to pay attention now, especially as the holidays are in full swing:

From October through December 2019 you can earn 5X points on Department Stores. Stores like Saks and Bloomingdale’s, just to name a few. So on top of store sales, you can earn an extra 5X points just by using the right credit card.

Example: last quarter was 5X categories were gas stations, Lyft and Walgreens. I spent $1,200 on some Amazon gift cards at Walgreens to pay for some upcoming travel, and earned 6,000 points. If I used a flat 2% cash back card, I would have had to spend $3,000 to earn the same amount. So, if you take advantage of the rotating categories, you can earn more points by spending LESS money. Now that’s what I call #strategy.

Chase is good about e-mailing you when the categories rotate, so as long as you read your e-mails, you shouldn’t really have to stay on top of this yourself.

3. You can combine the points with certain Chase cards.

The currency system that the Chase Freedom card uses is Ultimate Rewards points. Lo and behold, other Chase cards like the Sapphire Preferred, Business Ink, and Reserve cards use the same system. If you hold a Chase premium card, that means you can transfer your Freedom points to that card and take advantage of better redemption options. For example, with the Sapphire cards you can transfer points to select airlines and turn the points into miles. Converting points to miles is often the most valuable way to use your rewards.

This is what I see when I log into the Chase Ultimate Rewards points site. I can move points among the three credit cards.

Runner-up: If you value simplicity and don’t want to stay on top of rotating categories, you can get a flat 1.5% return with the Chase Freedom Unlimited.

Again, I chose these cards from a long-term view, under the assumption that once you get your feet wet, you’ll want to apply for a more premium card in the Chase family, like the Preferred or Reserve.

Best Starter Travel Credit Card if You’re Spendy

Chase Sapphire Preferred

Annual fee: $0 intro annual fee for the first year, after that $95
Sign-up bonus: 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening–that’s $750 toward travel when redeemed through Chase Ultimate Rewards website.
How else you earn points: 2X points on travel and dining at restaurants–from airfare and hotels to fine dining and cafés. Earn 1 point per dollar spent on all other purchases.
Who it’s for: You can spend the $4,000 in the first 3 months, want to redeem for flights and hotels, and want to get into the intricacies of the miles game.

The Chase Sapphire Preferred is my top travel pick, if you can swing it. Like the Chase Freedom Card, there are multiple ways to redeem points with the Chase Sapphire Preferred, which makes it a great option for someone who wants to start earning points, but doesn’t have a set plan yet for how to use them.

The $95 annual fee is waived for the first year, but the value of the points you earn usually eclipses the fee, so I think this is a solid long-term card. I would do whatever I could to try to meet the minimum spend on this card. In addition to the 60,000 points sign-up bonus, you earn 2 points per dollar for travel and dining. So yeah, that’s why your friends are using this card to pay for dinners 🙂

Other noteworthy perks include primary car rental insurance and no foreign transaction fees. This is the perfect card to bring with you on trips.

The simplest way to use Preferred points is to book travel through their Ultimate Rewards portal, which will net you 25% more value. Each point is now worth 1.25 cent instead of the standard 1 cent, so that means the 50,000 points will pay for $625 worth of travel.

The more complicated, yet often more valuable way to redeem points, is by transferring them to airline and hotel partners. This is how you can get premium experiences like business-class seats on nice airlines without paying cash for them.

Here you can see the redemption options are similar to the Chase Freedom ones, but there are now two extra buttons: Experiences and Transfer to Travel Partners.

Here are the partner airline programs:

  • Aer Lingus
  • British Airways
  • AIR FRANCE KLM
  • Iberia
  • JetBlue
  • Singapore Airlines
  • Southwest Airlines
  • United
  • Virgin Atlantic

And partner hotel chains, too:

  • IHG
  • Marriott
  • The Ritz-Carlton
  • Hyatt

To give you an idea of the value you can get, there’s a Hyatt hotel in NYC that costs $1,000 per night. But the Hyatt points to redeem one night is only 30,000 points. So you could transfer the 30,000 Chase Sapphire Preferred points over to your Hyatt account and enjoy over $1,000 worth of value. When you think about it that way, paying $95 to get over $1,000 in value makes a lot of sense.

Best Starter Travel Credit Card if You’re Frugal

Bank of America Travel Rewards

Annual fee: $0
Sign-up bonus: 25,000 online bonus points if you make at least $1,000 in purchases in the first 90 days of account opening–that can be a $250 statement credit toward travel purchases.
How else you earn points: 1.5 points per $1 spent on all purchases
Who it’s for: You hate annual fees, don’t spend a lot of money, but still want to earn enough rewards to cover a domestic flight here and there.

Not everyone can drop $4,000 in three months for the Chase Sapphire Preferred card. Especially if you’re single and your expenses are naturally low. If your spending is a little more modest, but more than $334 per month, then the Bank of America Travel Rewards card may be for you.

There’s a 25,000 sign-up bonus (or $250 worth of travel), which is decent for a no annual fee card. Plus, you’ll earn 1.5 points for every dollar you spend, which is slightly elevated over the run-of-the-mill 1 point per dollar.

Redeeming points is simple–you book flights, hotels, car rentals, trains, taxis, etc. the way you normally would, wait for those transactions to hit your credit card statement, then use points to “erase” those expenses.

All in all, this card is a good entry-level option if you only travel once in a while and can’t make the minimum spends for higher-end cards.

Best Starter Travel Credit Card if the Word ‘Points’ Makes Your Eyes Glaze Over

Capital One Venture Rewards

Annual fee: $95
Sign-up bonus: 50,000 bonus miles once you spend $3,000 on purchases within the first 3 months from account opening
How else you earn points: Unlimited 2X miles per dollar on every purchase, every day
Who it’s for: You can make high minimum spends to earn sign-up bonuses, but you value your time and the idea of playing the points game sounds like too much work. Also, you might travel for work and book a lot of hotels.

If you read my description for the Chase Sapphire Preferred card and thought, “UGH, sounds complicated,” then the Capital One Venture Rewards card might be up your alley.

There’s currently a 50,000 miles sign-up bonus, which, at 1 cent per mile, will yield $500 worth of travel. You’ll also earn 2 miles per dollar…for any transaction. You don’t have to remember rotating bonus categories–simply swipe and earn.

The Chase Sapphire Preferred card has seven ways to redeem points; the Capital One Venture has just one, which can be a lot less overwhelming for someone new to travel rewards.

Miles are redeemed as statement credits for JUST travel expenses. You pay for the travel expenses out of pocket, wait for the transactions to hit your credit card statement, then go onto the website and apply the points to the desired travel transactions. Easy!

But ease has a cost. $500 in value isn’t going to get you premium-class flight experiences. This card is much better suited to cover out-of-pocket costs for cheaper plane tickets, car rentals, train tickets, etc.

The $95 annual fee is not waived the first year, so I’d plan to use the miles and then cancel the card in the first year.

Best Starter Cash Back Card if You’re Spendy

Wells Fargo Propel American Express Card

Annual fee: $0
Sign-up bonus: 20,000 bonus points when you spend $1,000 in purchases in the first 3 months–a $200 cash redemption value
How else you earn points: Earn 3x points on:
Eating out and ordering in;
Gas, rideshares, and transit;
Flights, hotels, homestays, and car rentals;
Popular streaming services.

Earn 1x points on everything else.
Who it’s for: You typically charge $1,000+ per month, aren’t interested in travel, don’t like annual fees, but still want a decent sign-up bonus.

The Wells Fargo Propel card is newer to the market, but is worth a mention as a premium cash-back card. You earn a sizable sign-up bonus and 3X points per dollar on actually-useful categories like dining, travel and gas. There’s also a cell phone protection policy, a benefit I haven’t seen with other cards.

All of these premium-esque benefits for an unheard-of $0 annual fee!

I also like that it’s an American Express card, which offers benefits that other cards don’t, like extended warranties and Return Protection.

This is a card worth considering if you’re looking for a premium cash-back card without an annual fee.

Best Starter Cash Back Card if You Value Simplicity

Citi Double Cash

Annual fee: $0
Sign-up bonus: None
How else you earn points: Earn 2% cash back on purchases by earning 1% when you buy plus 1% as you pay
Who it’s for: You don’t care about travel and want a simple flat-rate cash back card you can keep for years.

If travel points aren’t important to you, the Citi Double Cash card is a solid, long-term option for earning rewards without having to think about bonus categories. Sadly, there’s no sign-up bonus with the Citi Double Cash, so if you’re looking to fast-track rewards in the first year, the Chase Freedom Unlimited‘s $200 sign-up bonus might work better for you.

You’ll earn 2% cash back, but note that the first 1% is earned when you buy and you earn the second 1% when you pay the balance. So, pay those bills on time!

Best Starter Cash Back Card if You Only Buy Groceries and Gas

American Express Blue Cash Preferred

Annual fee: $95
Sign-up bonus: $200 back after you spend $1,000 in purchases on your new card in your first 3 months.
How else you earn points: Earn 6% cash back at US supermarkets, on up to $6,000 per year in purchases (then 1%); 3% at US gas stations; 1% on all other purchases
Who it’s for: Frugal households who don’t spend on many categories except for groceries and gas. People who don’t mind an annual fee to earn outsized rewards.

So you don’t spend a lot on discretionary goods. That’s cool–you can still get rewarded for the expenses that most people have: groceries and gas. The American Express Blue Cash Preferred gives you 6% cash back on groceries, which is the highest earn rate I’ve seen for that category. Plus, 3% for gas. If those are your main expenses, doesn’t it make sense to go all in for cashback on those categories?

The 6% cash back on groceries only applies to the first $6,000 per year, but if you typically spend $500+ per month on groceries, you’ll earn at least $360 in cash back per year, which is pretty good.

The $95 annual fee is not waived the first year, but if you spend $400+ per month on groceries, I think the fee is worth it.

Best Credit Card for Students

Discover It Student Cash Back

Annual fee: $0
Sign-up bonus: Discover will match ALL the cash back you’ve earned at the end of your first year, automatically.
How else you earn points: Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more, up to the quarterly maximum, each time you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.
Who it’s for: Students who want rewards, but can’t get approved for the Chase Freedom cards.

If you’re in college, you probably don’t spend a lot of money. I remember my monthly credit card statements were at most about $85. Oh, to have adorable college bills again.

For students, I still recommend the Chase Freedom cards if you can make the minimum spends. But if you can’t meet them, or can’t get approved, Discover it is a nice fall back.

For a true starter card, the 5% rotating bonus categories are generous, and college students who don’t spend much can earn a fair amount of points.

This card is also most lucrative in the first year, since Discover will DOUBLE the cash back you’ve earned that year.

And as icing on the cake, students can also get $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years.

If You Want to Earn a Flight Award ASAP

OK, OK, I know I said this post was focusing on long-term value, but sometimes you need a quick, easy win to convince yourself that something is worth doing. For example, my first rewards card was a crappy Delta one, and I used those points to cover a plane ticket to Japan.

Was it the most valuable redemption ever? No.

But it made me see that travel hacking wasn’t just a vague concept.

If you need to instant gratification, here’s a quick way to earn a significant amount of airline miles without spending a ton of money.

Step 1. Behold the AAdvantage Aviator Red World Elite Mastercard.

AAdvantage Aviator Red World Elite Mastercard

Here’s the requirement for netting 60,000 American Airlines AAdvantage miles on this card:

MAKE ONE PURCHASE.

Yes, that’s right. You could buy a pack of gum for 50 cents and earn 60,000 AA miles.

The catch is you have pay a $95 annual fee, but the flight award should more than cover that fee. Plus, you can cancel after the miles hit your AAdvantage frequent flyer account, and before the next annual fee kicks in. If you already have an AAdvantage account, you shouldn’t lose the points just by canceling the card.

OK, so the money question is:
What can you actually do with those miles?

60,000 American Airlines miles is enough for 2 round-trip award tickets to Mexico, Caribbean, or Central America during off-peak dates (September 7 to November 14, and April 27 to May 20).

I also happen to have 11,000 AA miles right now from flying AA on a couple of past trips. If I got this card, I’d have 76,000, which is enough for a one-way business class trip to Tokyo or Hong Kong!

Two caveats:

  • Make sure you can actually use the miles. Go on to the American Airlines website and play with a couple routings to make sure there are real flight awards from where you live.
  • This card is issued by Barclays, and they’re definitely pickier about who they approve.

Extra credit: In case 60,000 points wasn’t enough, you can apply for a second card that will earn you another 40,000 AA miles.

Citi / AAdvantage Platinum Select World Elite™ Mastercard


The Citi AAdvantage Platinum Select Mastercard can earn you 50,000 AAdvantage miles after making $2,500 in purchases in first 3 months. Plus, 10,000 after making a total of $6,000 in purchases in first 12 months of account opening.

If you get both of these cards in a span of a couple months, that’s 110,000 miles. That’s enough for:

  • A round-trip economy flight to Japan, plus a domestic US economy flight
  • A one-way business class flight to Japan, with the return in economy

Here’s a primer for how to use American Airlines miles.

Watch-Outs

  • Don’t apply for more than one card at a time. If you don’t get approved, call the credit card company and ask them why. Work on improving the “deficiency” and try again at a later time.
  • Don’t apply for credit cards if you are shopping for a loan soon, like a mortgage, etc. Applying for credit cards results in a temporary ding in your credit score, which can affect the loan interest rate you’ll receive. Your score should go up by itself though, if you continue paying the cards responsibly.

Summary

If you want to get the most value out of your credit card, you can’t go wrong with one from Chase. But ultimately the right starter rewards card depends on your existing spending habits, what you value, and how willing you are to optimize rewards.

I know I have some seriously savvy readers, so I’d love for you to weigh in. Which rewards credit cards would you recommend for people who are just starting out?

Feature Image: The Luxe Strategist

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