Credit cards for foodies are the latest trend, with more and more rewards programs and additional card benefits catering to both dining in and eating out. Restaurant and grocery bonus categories are becoming commonplace â letting cardholders rack up a few extra points or cash back on those purchases.
But what about those who prefer to order delivery? If you like to take advantage of popular food delivery services like DoorDash or Uber Eats or simplify cooking with a meal kit subscription, there are plenty of credit card rewards and benefits you can leverage to save a little money.
Finding the best card for your favorite services
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Finding the best card for your favorite food delivery or meal kit service depends on a variety of factors, including the cardâs yearly credits, special perks or rewards rate. For example, many dining cards offer bonuses that are tailored to a specific delivery service, as a monthly Uber credit.
See related: Food delivery perks on luxury travel cards
For meal kit services, matching rewards is a little more complicated. You could opt for a rewarding grocery card, as many meal kit brands are now partnered with major supermarkets â so you can buy them in the store.
Alternatively, a card that earns rewards on dining or online shopping can help you get rewards on both food delivery and meal kits. Earning dining rewards can be complicated, as not all delivery services have a merchant category code that qualifies for a point or cash back bonus. You can test it by making a small charge to your card and seeing what rewards you earn.
Online shopping rewards, on the other hand, are much more flexible. They apply to both web and app purchases, so whether your order from your phone or computer, you can rack up bonus points or cash back.
Best cards by delivery service or meal kit subscription
With all this in mind, here are some of our favorite cards for some of the most popular food delivery and meal kit subscription services.
Delivery service
Card
Rewards rate
Why we like it
DoorDash
Chase Sapphire Reserve
10 points per dollar on Lyft purchases (through March 2022)
3 points per dollar on travel and restaurants (excluding purchases covered by $300 travel credit)
1 point per dollar on general purchases
Generous rate on dining purchases
Receive a yearly statement credit for DoorDash purchases ($60 in 2020 and $60 in 2021)
Get at least one free year of DashPass when you enroll with your card (activate by Dec. 31, 2021)
Uber Eats
The Platinum Card® from American Express
10 points per dollar on eligible purchases at U.S. gas stations and U.S. supermarkets, on up to $15,000 in combined purchases, during the first 6 months of card membership
5 points per dollar on flights booked directly with airlines or with American Express Travel (starting Jan. 1, 2021, earn 5X points on up to $500,000 on these purchases per calendar year)
5 points per dollar on eligible hotels booked with amextravel.com (starting Jan. 1, 2021, earn 5X points on up to $500,000 on these purchases per calendar year)
1 point per dollar on general purchases
Terms apply
Get up to $200 in Uber credits per year ($15 per month, plus an extra $20 in December), which can be applied to Uber Eats
Up to 12 months of complimentary Uber Eats Pass when you enroll before Dec. 31, 2021
Automatic Uber VIP membership (where available) without ride requirements
Instacart
Capital One Savor Cash Rewards Credit Card
8% cash back on Vivid Seats tickets (through January 2022)
4% cash back on dining and entertainment
2% cash back at grocery stores
1% cash back on all other purchases
Top-tier cash back on restaurant delivery, including most delivery services
Grocery bonus category includes eligible grocery delivery services, including Instacart
As a Mastercard, offers complimentary a 2-month Instacart Express membership if enrolled before March 31, 2021
Grubhub/Seamless/Boxed/Instacart/Uber Eats
American Express® Gold Card
4 points per dollar at restaurants worldwide, including Uber Eats orders
4 points per dollar at U.S. supermarkets (on up to $25,000 in purchases per year, then 1 point)
3 points per dollar on flights booked directly with airlines or amextravel.com
1 point per dollar on other purchases
Terms apply
Enroll to receive up to $10 in statement credits per month (up to $120 per year) to use at participating restaurants, including Grubhub, Seamless and Boxed
Up to $120 in Uber Cash per year ($10 per month), which can be applied to U.S. Uber Eats orders (Gold card must be added to the Uber app)
Up to 12 months of complimentary Uber Eats Pass when you enroll before Dec. 31, 2021 (Uber Eats Pass will auto-bill starting 12 months from initial enrollment in this offer, at then-current monthly rate)
Excellent rewards on grocery delivery services, such as Instacart
HelloFresh
Blue Cash Preferred® Card from American Express
6% cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1%)
6% cash back on select U.S. streaming subscriptions
3% cash back at U.S. gas stations and on transit purchases
1% cash back on general purchases
Terms apply
Generous rate on U.S. supermarket purchases (HelloFresh meal kits are sold in supermarkets such as H-E-B and Giant Food) and eligible grocery delivery services, such as Instacart
Unlimited 3% cash back on delivery purchases from ride-share services, like Uber and Lyft
Home Chef
Blue Cash Everyday® Card from American Express
3% cash back at U.S. supermarkets (up to $6,000 per year in purchases, then 1%)
2% cash back at U.S. gas stations and select U.S. department stores
1% cash back general purchases
Terms apply
Generous rate on U.S. supermarket purchases (Home Chef meal kits are sold in select Kroger locations)
Other delivery services
Bank of America® Cash Rewards credit card
3% cash back on a category of choice (gas, online shopping, dining, travel, drugstores or home improvements and furnishings)
2% cash back at grocery stores and wholesale clubs
$2,500 combined limit on 2% and 3% categories each quarter
1% cash back on other purchases
Generous rate on online shopping purchases (if you select it as your 3% category) and good rate at grocery stores
Can swap choice 3% category monthly to account for different delivery services. For instance, the dining category rewards Grubhub purchases and the travel category rewards ride share purchases from services like Uber
If you donât have a delivery service you prefer â or if you like to switch back and forth based on restaurant availability â a card with rewards on online shopping is your best bet.
Bottom line
Ordering food can be expensive, but using the right rewards card can help you alleviate some of that cost by racking up points or cash back. With some cards, you might even get a few extras that cover your next couple of meals.
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The average credit card interest rate is 16.12%
The national average credit card APR rose again this week, according to the CreditCards.com Weekly Credit Card Rate Report.
The average APR for brand-new cards ticked up to 16.12% after the retailer L.L. Bean increased the minimum APR on its co-branded card, the L.L. Bean Mastercard, by a full percentage point. The lowest rate that outdoor recreation enthusiasts can get on L.L. Beanâs retail rewards card is now 14.99%.
L.L. Bean also increased the cardâs maximum APR by four percentage points, causing the range of possible APRs that L.L. Bean fans can expect to substantially expand. For example, qualifying applicants with the lowest credit scores may be assigned an APR as high as 23.99%, which is nine points higher than the cardâs minimum rate. Previously, the difference between the L.L. Bean cardâs lowest possible rate and its highest rate was just six percentage points.
L.L. Beanâs rate hike also caused the average maximum card APR to rise this week. According to CreditCards.comâs latest rate calculation, for example, the average U.S. credit card now advertises a maximum APR of 23.62%, up from an average of 23.58% last week.
Every week, CreditCards.com tracks APR advertisements for a representative sample of 100 U.S. credit cards.
To calculate the national average credit card APR, we only consider a cardâs lowest possible interest rate. However, most U.S. credit cards advertise a wide range of possible rates, including maximum interest rates that are often 5 to 10 points higher than a cardâs minimum rate.
Credit card lenders donât typically advertise how many of their applicants qualify for a cardâs lowest rate. But generally, lenders typically reserve their lowest rates for just a small fraction of applicants. Meanwhile, others are assigned APRs that are far higher than the advertised minimum.
For example, credit card applicants may be assigned a cardâs lowest advertised rate or its highest. Or they may be assigned an APR that falls somewhere in the middle of a cardâs lowest and highest interest rates. As a result, even cardholders with good to excellent credit may be assigned an APR that is several points higher than the national average.
According to CreditCards.comâs data, for example, the average median card APR â which is the middle rate that many new cardholders are assigned â is currently 19.87%. Thatâs nearly four points higher than the average minimum credit card APR.
Despite rate hikes, average card APRs are still near a three-year low
Average rates on new card offers are higher now than they have been in months. However, compared to a year ago, average card APRs are still unusually low â particularly compared to the past three years.
The average minimum credit card APR, for example, is currently down by 1.19 percentage points compared to a year ago when the average new card offer advertised a 17.31% interest rate. In February 2018, the average new card APR advertised a 16.41% interest rate.
The last time average minimum card APRs hovered closer to 16% was in 2017.
This yearâs lower interest rates are largely due to rate cuts by the Federal Reserve. When the Federal Reserve revises its benchmark interest rate, the federal funds rate, most credit card issuers eventually match the Fedâs rate change by revising new card APRs by the same amount.
In March 2020, the Fed slashed its benchmark interest rate, the federal funds rate, to near zero effectively erasing several years of gradual rate increases that the Fed had implemented between 2015 and 2016. As a result, the national average card APR tumbled dramatically last spring as the majority of lenders tracked by CreditCards.com matched the Fedâs rate cuts.
Since then, average card APRs have remained near a three-year low, staying within rounding distance of 16% for 10 straight months.
See related:Â How do credit card APRs work?
CreditCards.com’s Weekly Rate Report
Avg. APR
Last week
6 months ago
National average
16.12%
16.11%
16.03%
Low interest
12.90%
12.88%
12.83%
Cash back
15.94%
15.91%
16.09%
Balance transfer
13.93%
13.93%
13.93%
Business
14.22%
14.22%
13.91%
Student
16.12%
16.12%
16.12%
Airline
15.56%
15.56%
15.48%
Rewards
15.81%
15.80%
15.82%
Instant approval
18.47%
18.47%
18.65%
Bad credit
25.30%
25.30%
24.43%
Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)
Source: CreditCards.com
Updated: February 3, 2021
Historic interest rates by card type
Some credit cards charge even higher rates, on average. The type of rate you get will depend in part on the category of credit card you own. For example, even the best travel credit cards often charge higher rates than basic, low interest credit cards.
CreditCards.com has been calculating average rates for a wide variety of credit card categories, including student cards, balance transfer cards, cash back cards and more, since 2007.
How to get a low credit card interest rate
Your odds of getting approved for a cardâs lowest rate will increase the more you improve your credit score. Some factors that influence your credit card APR will be out of your control, such as the length of time youâve been handling credit.
However, even if youâre new to credit or are rebuilding your score, there are steps you can take to ensure a lower APR. For example:
Pay your bills on time. The single most important factor influencing your credit score â and your ability to win a lower rate â is your track record of making on-time payments. Lenders are more likely to trust you with a competitive APR â and other positive terms, such as a big credit limit â if you have a lengthy history of paying your bills on time.
Keep your balances low. Lenders also want to see that you are responsible with your credit and donât overcharge. As a result, credit scores take into account the amount of credit youâre using, compared to how much credit youâve been given. This is known as your credit utilization ratio. Typically, the lower your ratio, the better. For example, personal finance experts often recommend that you keep your balances well below 30% of your total credit limit.
Build a lengthy and diverse credit history. Lenders also like to see that youâve been successfully using credit for a long time and have experience with different types of credit, including revolving credit and installment loans. As a result, credit scores, such as the FICO score and VantageScore, factor in the average length of your credit history and the types of loans youâve handled (which is known as your credit mix). To keep your credit history as long as possible, continue to use your oldest credit card so your lender doesnât close it.
Call your lender. If youâve successfully owned a credit card for a long time, you may be able to convince your lender to lower your interest rate â especially if you have excellent credit. Reach out to your lender and ask if theyâd be willing to negotiate a lower APR.
Monitor your credit report. Check your credit reports regularly to make sure youâre being accurately scored. The last thing you want is for a mistake or unauthorized account to drag down your credit score. You have the right to check your credit reports from each major credit bureau (Equifax, Experian and TransUnion) once per year for free through AnnualCreditReport.com.
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A 2019 poll of favorite credit card features by CreditCards.com found that Americaâs favorite credit card reward is 3% cash back on all purchases â and those results were across all age groups, income brackets, Census regions and education levels.
The appeal of cash back cards is that instead of continuously calculating the value of your points and miles to be sure youâre getting the most at the redemption counter, getting cash back is straightforward.
You simply use the card to buy things and the issuer returns a percentage of the charges, and you can spend that money, save it or use it to pay down a bill.
Here are the fundamentals of cash back cards, and how a few cardholders are using them to augment their income.
Some are reaping thousands, but even when the cash is seemingly small, every dollar counts.
See related: 7 ways to get the most from rewards credit cards
How cash back cards work
With a cash back credit card, the issuer returns a percentage of your spending to you.
Generally speaking, cash back cards come as one of two types:
Flat-rate cash back cards â These cards offer a standard percentage youâll earn across all purchases. Itâs often a low rate, but there are plenty of great 1.5% cash back cards and a few options that reward a coveted 2% on all purchases.
Bonus category cash back cards â With a bonus category card, youâll earn a higher percentage when spending in predetermined categories, such as dining out, supermarket purchases and travel. The bonus rates can be fixed to one or more categories for the entirety of your time as a cardholder or rotate on a quarterly basis.
Itâs important to know the fine print of how your cash back card works. With a bonus category card, the amount you can earn may be unlimited, but often, the high percentage categories have a spending cap and revert to a lower rate once you reach it. You may have to activate bonus categories if your card operates on a rotating schedule.
Youâll likely be able to receive the cash as a statement credit, direct deposit or in the form of a check. Sometimes, you’ll have to reach a minimum amount of cash back, such as $25, before you can redeem your cash back.
Many cash back cards also offer a signup bonus of $150 or more for opening the account, which youâll receive after meeting a minimum spending requirement within a specific time frame.
Clearly, there is money to be made with these cards, yet how much hinges on a few things.
It starts with finding a card that matches your lifestyle. Make sure the rewards categories fit your spending habits and that the cash back redemption process is simple.
Hereâs how some cash back cardholders have found cards that fit their lifestyle and in turn, padded their wallets.
Thousands in cash back boosts a small businessâs bottom line
Denver resident Katie DeCicco is the founder and CEO of Celebration Saunas, an online retailer that supplies infrared saunas to hospitals, spas and individuals.
Before launching, she was oblivious to the cash back rewards on her credit cards, but when she started buying costly inventory and advertising, she found out how much she could bring in.
Her current annual average in cash back rewards is $6,000.
âI spend about $600,000 on the saunas and another $50,000 on advertising each year,â DeCicco said, âand I usually use my credit cards that give cash back on purchases, like my Discover it® Cash Back card and Wells Fargo Visa Signature Card*.â
Since DeCicco doesnât carry over any debt, the thousands of dollars the credit card issuers return to her is pure profit, which she deposits into her personal bank accounts.
And as a dedicated small business owner, she works hard, so she uses the cash back funds to treat herself and her family.
âMostly itâs for pleasure and fun stuff,â says DeCicco said.
âThe money I get from cash back pays for my daughterâs violin and her classes. This year I bought a new, expensive tent so we can go camping. I also spend it on improv classes, too, because they keep me laughing. Essentially, I use my cash back to invest in experiences.â
A funnyman rakes in $1,000 every year
Show business is not a financial win for everyone in the field, but a savvy entertainer can capitalize on the lifestyle.
Shaun Eli of Scarsdale, New York, for example, makes at least $1,000 from his cash back credit cards annually.
âIâm a stand-up comedian, so I tour in addition to vacation travel,â Eli said. As a result, he makes the most of his expenses while heâs away from home.
âThe Citi® Double Cash Card gives 2% on everything,â Eli said, âand I use this when there isnât a better option.âThis card gives 1% back on the cardholderâs general purchases and then adds in another 1% when the bill is paid on time.
Eli also has Citi, Chase and Discover cash back cards because they offer substantially higher percentages on categories that rotate throughout the year.
Eli also breaks out his Costco Anywhere Visa® Card by Citi often for 4% cash back on eligible gas (for the first $7,000 per year and then 1%) and the 3% on eligible travel and restaurants when higher percentages arenât available on his other cards.
âI put a Post-It note on each card for what that quarterâs spending category is. That way, I donât have to remember which card covers which,â he noted. Tricks like this can be the key to avoiding cash back credit card mistakes.
A young couple stockpiles cash back to fund their âwantsâ
Rochester, New York-based Kelan Kline and his wife Brittany run the personal finance blog The Savvy Couple. They, too, come out ahead with their cash back cards.
âIn college, we always used credit card rewards to our advantage,â Kline said.
âIt was great getting money back on expenses we had to pay for anyway.â
They used their Discover it® Cash Back card to earn 5% cash back on items in rotating categories (on up to $1,500 in purchases quarterly, after activating, then 1%), and 1% on things they bought at other times.
In the beginning, the couple used the cash back earnings to help pay for what they charged, since it reduced the burden of the bill.
After graduating, their finances improved â they became homeowners, and soon built up enough cash on their card to splurge on a BBQ grill and an entertainment center.
âItâs always so rewarding to save up your cash back and purchase something worth hundreds of dollars for free,â Kline said.
âOverall, we earned well over $1,000 in cash back rewards during our college and young adult lives.â
As one of the top flexible cash back options, you may want to see how the coupleâs Discover it Cash Back compares to the Chase Freedom Flexâ .
See related: 6 worst ways to redeem your credit card rewards
Cash back can pad a fixed income
When living on a fixed income, every penny counts. San Diego resident Bobbie Klein has been using her Bank of America® Cash Rewards credit card to bump up her bottom line.
She received a $150 initial cash bonus soon after getting the card, and now earns at least 1% on all purchases. It increases to 2% for grocery store and wholesale club items, and 3% on what she charges on gas (on up to $2,500 in combined category purchases each quarter).
âI have to be mindful with what I spend,â Klein said.
âWhat I get from my card is helpful. I like to do nice things for my grandkids, like buy them things at Costco. The money I get from my credit card is extra. I would say I probably make about $300 in total from my credit card in a year, maybe more.â
Klein says she doesnât do anything special to get the most out of her cash back card.
âWhy would I?â she asks.
âIf I have to buy something, I buy it, and if I donât, I donât. I donât make it complicated. All I know is that when I use my credit card, I will get a little money back at the end of the month and thatâs great for me.â
Klein doesnât make it complicated â she said all she knows is that when she uses her credit card, she gets a little money back at the end of the month and thatâs great for her.
First make your money, then protect it
According to Dr. Mary Ann Campbell, a consumer credit expert and certified financial planner from Little Rock, Arkansas, the most crucial consideration regarding cash back card usage is to always pay off your entire balance when the bill is due.
âOtherwise, you lose the value of your earned cash, and very quickly,â she noted.
âMy best advice is to have your total payment automatically drafted from your checking account every month. It will guarantee your profit.â
And although Campbell believes itâs wise to know which times of the year you can earn a higher percentage on different spending categories (if thatâs the type of card you have), you will come out ahead by simply shopping as normal.
Campbell said she likes her Samâs Club Mastercard because she gets 5% back at the pump â and she shops at Samâs Club anyway.
âI make about $90 a year on cash back just from that,â she reported.
Whatever you earn will be a positive net gain.
If the experiences of successful cash back card holders are motivating you to apply for one, Campbell said to do your homework first.
See related: Best flat rate cash back credit cards
Tips for maximizing cash back earnings
As we traverse the new cash back trends of 2021, itâs important to know the keys to maximizing the value of your cash back card:
Find a card that fits your spending. Take a look at your spending habits. If thereâs a particular category or two where youâre paying extra every month, find a cash back option that provides heightened rewards in those fields. If your spending is spread all over the place, a flat-rate cash back card might be your best bet.
Set reminders for yourself. If you carry a rotating category card that requires quarterly activation, this is an essential step to be sure youâre earning the bonus rewards you deserve. This is also useful to ensure youâre making on-time payments, thus protecting your credit and status as an eligible rewards-earner.
Hit your sign-up bonus. It may seem simple (as cash back earning often is), but making sure you cash in on the bonus your provider offers is a must.
Spend strategically. If youâre someone who carries multiple cards or uses a rotating category cash back option, keeping close watch over what, when and where youâre swiping will be a lift to maximize your credit cardâs value. For those with a few choices, be sure to use the most-rewarded option on every purchase and potentially look into scheduling out large buys in advance. Pay attention to any earnings caps, special limited-time spending incentives and your budget to avoid overspending.
Final thoughts
CardMatch to find out which cards you can qualify for and bear in mind that some cards come with annual fees, so calculate how much you can come out ahead after subtracting that charge.
âYou have to research your options and then use the card smartly. If you do, youâll make money,â Campbell said.
Will you become a cash back millionaire?
No, but netting a grand or two can be enough to cover the cost of a pretty sweet backyard grill.
*All information about the Wells Fargo Visa Signature Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. These cards are no longer available on our site.
Ten months into the COVID-19 pandemic, many consumers have settled into new routines and developed new spending patterns. One of the spending categories that hasnât lost its popularity is groceries, as many people are cooking more at home and eating out less frequently.
See related: Grocery shopping and COVID-19: Whatâs changed and how to save money
Credit card issuers are adapting to these new patterns as well.
On Oct. 20, 2020, Chase announced it would be temporarily adding grocery rewards to the Chase Sapphire Preferred® Card* and Chase Sapphire Reserve®. This comes on top of other limited time offers the issuer has recently added, such as limited time redemption options through Pay Yourself Back and gas and grocery store purchases counting toward the Reserve cardâs $300 travel credit.
See related: Guide to Chase Pay Yourself Back
âThroughout this very unique year, weâve provided our cardmembers flexibility and options to get the most out of their cards ⦠ as well as limited time opportunities to earn more points on certain spending,â Chase said in a statement. âWe want to continue to give our cardmembers ways to maximize value where they are spending today.â
On top of that, on Jan. 28, 2021, Chase added an offer for new Chase Sapphire Preferred cardholders: a one-time automatic $50 statement credit on grocery store purchases.
How the limited time grocery rewards work
Starting Nov. 1, 2020 and running through April 30, 2021, Sapphire Reserve cardmembers will earn 3 points per dollar on grocery store purchases, and Preferred cardmembers will earn 2 points per dollar, up to $1,000 in purchases per month. According to Chase, this will be automatic for existing and new cardmembers.
See related: Best credit cards for grocery shopping
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This provides cardholders with an excellent opportunity to earn some of the most valuable travel points while travel is still limited.
The new offer also makes Sapphire cards more competitive when compared with the recently updated Chase Freedom card suite. In August, the issuer replaced the Chase Freedom with the Chase Freedom Flex and added three new valuable rewards categories to both the Freedom Flex and Chase Freedom Unlimited, namely bonus cash back on travel purchased through Chase Ultimate Rewards and on dining and drugstore purchases.
Considering neither Freedom card charges an annual fee and both earn Chase Ultimate Rewards points, some cardholders may be wondering if the Chase Sapphire Reserve is worth keeping during a time when most of its premium travel perks might go unused.
Fortunately, all the limited time offers coupled with temporary grocery rewards make it much easier to get value of these popular travel cards â even when youâre not traveling.
How the grocery statement credit works
Another incentive to apply for the Chase Sapphire Preferred card now is the new one-time $50 statement credit on grocery purchases.
New cardmembers will get access to the statement credit automatically and be able to use it for 12 months from the time of account opening. Eligible purchases include purchases made at merchants coded as grocery stores. Warehouse club purchases wonât qualify.
Chase hasnât announced the offerâs expiration date yet.
Chase Sapphire cards value at a glance
Chase Sapphire Reserve®
Chase Sapphire Preferred® Card
Newly added limited-time benefits
Cardmembers earn more on grocery store purchases: Nov. 1, 2020 â April 30, 2021
3 points per $1 spent
Up to $1,000 in grocery store spend per month
Gas and grocery purchases count toward Sapphire Reserve $300 travel credit:Â
Gas and groceries have been added as qualifying purchases, through June 30, 2021
New cardmembers receive an automatic statement credit:
One-time $50 statement credit on eligible grocery store purchases available for 12 months from the account opening
Cardmembers earn more on grocery store purchases: Nov. 1, 2020 â April 30, 2021
2 points per $1 spent
Up to $1,000 in grocery store spend per month
Existing benefits
3 points per dollar on dining purchases with restaurants â including delivery and pick-up
3 points per dollar on travel â including tolls and parking
Complimentary DashPass Subscription from DoorDash, valued at over $100 per year
Up to $120 in statement credits on DoorDash purchases â $60 in statement credits through 2020 and another $60 in statement credits through 2021
10 points per dollar on Lyft rides
Complimentary Lyft Pink membership, worth a minimum of $199 in value when you activate by March 21, 2022
Pay Yourself Back:Â Points are worth 50% more now through April 20, 2021 when redeemed for purchases in current categories of grocery, dining, home improvement and contributions to select charities
Chase Dining:Â Points are worth 50% more when redeemed through the new Chase Dining hub in Ultimate Rewards, now through April 30, 2021
2 points per dollar on dining purchases with restaurants â including delivery and pick-up
2 points per dollar on travel â including tolls and parking
Complimentary DashPass Subscription from DoorDash, valued at over $100 per year
5 points on per dollar on Lyft rides
Pay Yourself Back: Points are worth 25% more now through April 20, 2021 when redeemed for purchases in current categories of grocery, dining, home improvement and contributions to select charities
Chase Dining: Points are worth 25% more when redeemed through the new Chase Dining hub in Ultimate Rewards, now through April 30, 2021
Â
Bottom line
While travel isnât the most lucrative rewards category at the moment, your Chase Sapphire card can still bring you plenty of value, especially given the temporary rewards categories and other limited time offers.
*All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This offer is no longer available on our site.
Sending cash to friends and family? Before you reach for that credit card, grab a calculator. It’s time to do a little math.
With most everything you purchase online or through apps, credit cards have the edge. With plastic, you have chargeback rights. If you’re overcharged or receive the wrong item, broken merchandise or nothing at all, your card issuer will make it right. And if you use a rewards card, you collect points or miles, too. Win-win.
But it’s different story when you’re sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), don’t allow consumers to use a credit card to send cash.
Others (like Cash App, PayPal and Venmo), allow credit cards but also charge a fee for the privilege – often about 3%.
See related: How to choose a P2P payment service
The hidden costs of using credit cards to send money
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Choose a credit card to send money and you might also end up paying additional fees to your card issuer. That’s because the combination of some peer-to-peer apps with certain cards are coded as cash advances, rather than purchases.
For many cards, that cash advance code triggers a higher interest rate that kicks in the moment you make the transaction, as well as a separate cash advance fee that’s often $10 or 5% of the transaction – whichever is higher. (Currently, the average interest rate for cash advances is 24.8%, while the average APR for purchases is 16.05%.)
So the combination of peer-to-peer service fees, credit card cash advance fees and that higher interest rate (with no grace period) could make sending a few hundred dollars a bit more costly than you’d planned.
No chargeback rights with credit cards
The real kicker: Unlike other venues, you don’t have chargeback rights when you use credit cards to make peer-to-peer money transfers.
When you present your credit card in an online or brick-and-mortar store, there’s a merchant involved – and the law provides chargeback rights for your protection in case you don’t get what you were promised in the deal. But in a peer-to-peer money transfer, there’s no merchant, so currently the laws don’t give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.
“The chargeback right requires a merchant,” says Tetreault. “One of the hoops a consumer has to jump through is to try and work it out with the merchant.”
If you use a peer-to-peer service and send the wrong amount or send the money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And that’s often the same whether you use a credit card, debit card, bank account or funded account on the platform.
“Be doubly sure when you’re sending the money that you’re putting in the correct information,” says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. “It’s still a buyer beware world when it comes to peer-to-peer.”
The solution
If you’re sending money and want to use a credit card, it pays to do a little sleuthing first. Check out the peer-to-peer site. Does it allow users to send money with a credit card? If so what, if any, fees does it charge?
On some platforms (PayPal is one), you could see similar fees for using a debit card – while sending from a bank account or funded account on the platform is free.
The good news is that many peer-to-peer platforms clearly disclose it when there’s an extra charge to use a credit card, says Tetreault. With Venmo, for example, you’ll get a pop-up message.
Harder to decipher: Will credit card transactions on the platform be treated as a cash advance? If your preferred platform doesn’t post this information, you might need to contact customer service. (And how quickly and easily you get an answer can tell you a lot, too.)
Ask your card issuer the same question: Are peer-to-peer money transfers on the platform you’ve chosen treated as a cash advance? If they are, what’s the interest rate, and what’s the cash advance fee?
“What I would suggest is to ask that question, via email, of your financial institution,” says Tetreault. “It may be in their FAQs. And you want to save that email. If you have it in writing, if there’s an issue later, you’re better positioned to contest that fee.”
But “the hard truth is you may not be able to find out ahead of time,” she says.
Another solution: Opt to use a credit card issued by a credit union.
“With credit unions, the APR is usually the same” for purchases and cash advances, says John Bratsakis, president and CEO of the Maryland and District of Columbia Credit Union Association.
Likewise, with American Express cards you pay your regular interest rate and no cash advance fees on peer-to-peer transfers, says Elizabeth Crosta, vice president of public affairs for American Express.
And credit cards from U.S. Bank register peer-to-peer money transfers as regular purchases – with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.
See related: How do credit card APRs work?
What’s your reason for using a credit card?
Take a good look at the reason you’re using a credit card, too. If you want chargeback rights, that’s not an option. If you’re doing it for the rewards, will the value of those points or miles be eaten up by extra fees or a higher interest rate you have to pay to use the card?
And if you’re using a card because you don’t have the cash, that might be a good reason to rethink the idea of sending money in the first place.
That’s a huge red flag, says Bruce McClary, vice president of public relations at the National Foundation for Credit Counseling.
“The need to convert credit into cash is what really gets my attention – because that hints at a lack of savings,” he said. “It’s a reality a lot of people are facing, especially now.”
Cash advances aren’t as expensive or risky as payday loans and car title loans, but they should be among your last resorts. If you’re looking for short-term relief, you could ask your credit card issuer for help, or find out if you qualify for a personal loan. You could also borrow from a family member or trusted friend, but be wary of the potential relationship toll if you can’t pay them back.
Getting cash from credit cards
Fifty-two percent of Americans report that the pandemic has damaged their finances, according to a recent survey by the NFCC. More than a fifth of those had to tap savings for everyday expenses, while 16% increased their credit card spending.
And that’s a sign of financial stress, says McClary. “It means that, in some situations, they have run out of savings.”
There are ways you can use your card to get cash, though.
Cashing in rewards
Some rewards cards from issuers such as Chase, Bank of America and US Bank let you deposit cash-back rewards directly to your bank account.
And Wells Fargo also will let you deposit its Go Far Rewards directly into another Wells Fargo customer’s account, says Sarah DuBois, spokesperson for the bank.
Gift cards
Many credit cards let you convert rewards into retail gift cards. So a pile of points can help a friend or family member buy much-needed groceries or a few holiday presents.
Or simply “buy a gift card for someone,” says Bratsakis.
Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees – meaning every dollar you spend goes toward your gift.
Convenience checks
While you can get a cash advance or use convenience checks from your card issuer, both those options often come with fees and higher interest rates. Not a smart money move, especially in the current economy.
While some lenders may offer convenience checks with deferred interest, that’s not the same as “no interest,” says Bratsakis. Also, if you don’t pay the loan in full, will you owe the full interest retroactively?
“That’s where consumers have to be careful,” he says. With a convenience check or even a cash advance, “that’s usually where consumers can get themselves into trouble if they can’t pay it off and get hit with deferred interest.”
See related: What is deferred interest?
Bottom line
When it comes to peer-to-peer payments, cash really is king. You can then put it into a funded account with the money transfer platform or your bank account. And most peer-to-peer platforms let you do this for free.
“The safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesn’t go to the wrong person,” says Tetreault.
Only send to people you trust and know in real life, she says. “And before sending money make sure you understand what, if any, fees you might incur.”
The Chase Freedom Flexâ , or the Chase Freedom Unlimited®? The card names sound the same, and at a glance the rewards are similar.
Not so fast: Though the cards have a lot in common, there are a few key differences to keep in mind when deciding which is the best fit for you.
Both the Chase Freedom Flex and Chase Freedom Unlimited offer hefty sign-up bonuses, along with bonus cash back on dining and drugstore purchases, as well as travel purchased through Chase Ultimate Rewards. The difference is their rewards structures: The Freedom Flex card offers 5% cash back on rotating quarterly categories, while the Chase Freedom Unlimited offers a flat-rate 1.5% cash back on everything.
Read on to get a rundown on the pros and cons of each card, as well as which card is best suited for you, based on your spending habits.
Chase Freedom Flex versus Chase Freedom Unlimited
Chase Freedom Flexâ
Chase Freedom Unlimited®
Rewards rate
5% rotating quarterly categories (upon enrollment, on up to $1,500 in spending per quarter, then 1%)
5% cash back on travel purchased through Chase Ultimate Rewards
3% cash back on dining
3% cash back on drugstore purchases
1% cash back on other purchases
5% cash back on travel purchased through Chase Ultimate Rewards
3% cash back on dining
3% cash back on drugstore purchases
1.5% cash back on all other purchases
Sign-up bonus
$200 if you spend $500 in first 3 months
$200 if you spend $500 in first 3 months
Annual fee
$0
$0
Estimated yearly rewards value ($1,325 monthly spend, including sign-up bonus)
$532
$405
Pros
No annual fee
High rewards rate on both specific categories year-round and on rotating categories
Large sign-up bonus
Can transfer rewards to other Chase cards
No annual fee
High general rewards rate
Large sign-up bonus
Can transfer rewards to other Chase cards
Cons
Requires some maintenance
Can be difficult to max out rotating categories (may not always align with spending)
Low cash back rate on general purchases
Not the highest rate available on general purchases
Who should get this card?
Rewards maximizers
People who want to collect Ultimate Rewards points
People who like cash back variety
People who want to earn Ultimate Rewards points without paying an annual fee
People who want to keep it simple
People who want to earn bonus cash back in both specific categories and general purchases
People who want to earn Ultimate Rewards points without paying an annual fee
Chase Freedom Flex overview
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The Chase Freedom Flex card offers a combination of year-round and quarterly-rotating bonus cash back categories. Each quarter, you can enroll in a new bonus category from the Chase cash back calendar and earn 5% back on the first $1,500 you spend in that category (then 1% back after you reach the $1,500 threshold). Throughout the year, you’ll also get 5% back on all travel booked through the Chase Ultimate Rewards portal, 3% back on dining and drugstore purchases and 1% back on all other purchases.
Upsides:Â The opportunity to earn bonus cash back in select categories year-round and in a variety of categories each quarter.
Downsides:Â The complex rewards program. To get the most out of the card, cardholders must track their spending, since the 5% rate only applies to certain categories that rotate frequently and is limited to $1,500 per quarter.
Furthermore, cardholders must log in to their Chase account and activate their rewards category by the deadline each quarter to earn the 5% rate. For example, to earn 5% cash back during the first quarter of 2021 (on select streaming services, phone, cable and internet services and at wholesale clubs), you must activate the category by March 14, 2021.
Chase 5% cash back calendar 2021
Winter
Spring
Summer
Holiday
January â March
April â June
July â September
October â December
Select streaming services
Phone, cable and internet services
Wholesale clubs
TBA
TBA
TBA
Chase Freedom Unlimited overview
Like the Freedom Flex, the Freedom Unlimited earns bonus cash back on Ultimate Rewards travel (5% back) and dining and drugstore purchases (3% back). However, instead of rotating cash back categories, the Freedom Unlimited offers 1.5% cash back on general purchases. Thereâs also no annual fee, and no interest on purchases for 15 months from account opening (after which a variable APR of 14.99% to 23.74% applies). The card is currently offering a $200 bonus for spending $500 in the first three months.
Upsides:Â The Freedom Unlimited card offers a straightforward rewards program that allows cardholders to earn at least 1.5% on every purchase they make â with no earning caps or rotating categories.
Downsides:Â Although 1.5% cash back is a substantial amount to earn on general purchases, it’s not the highest rate out there.
trio of Ultimate Rewards cards.
See related: Chase Ultimate Rewards guide: The best ways to earn and use Ultimate Rewards points
*All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer.Â
The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we do receive compensation when you click on links to products from our partners. Learn more about our advertising policy
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In response to the coronavirus pandemic, major credit card issuers are offering relief to their customers.
Even though many places around the country are open, the pandemic continues to impact the U.S. economy. Workers are still at risk of being laid off or facing reduced hours or pay.
“This is a rapidly evolving situation and we want our customers to know we are here to provide assistance should they need it,â Anand Selva, chief executive officer of Citiâs consumer bank, said in a statement in Spring 2020.
At the same time, scammers are now trying to take advantage of coronavirus concerns by sending out fake emails about the virus that are designed to steal consumersâ personal and financial information or to infect their computers with malware.
Financial strategies if you’re self-employed
How to manage your credit cards during the coronavirus outbreak
Coronavirus: What to do if youâre unemployed and have credit card debt
What to do if youâre struggling to pay your credit card bills
Many credit card issuers are allowing customers to opt into financial relief programs online. These programs are a convenient way to access short-term relief. But it could come with a long-term cost as many cardholders will continue to see interest accrue. With the average credit card interest rate sitting at 16.05%, cardholders might find more cost-effective relief through other options.
Here’s what issuers are currently offering:
American Express
Cardholders who are having difficulties can get assistance through American Express’s financial hardship program. Eligible cardholders have the option to enroll in a short-term payment plan, which provides relief for 12 months, or a long-term plan, which can provide relief for either 36 or 60 months.
Under both options, you will receive lower interest rates, plus waived late payment fees and annual fees. But you might not have access to certain card benefits and features.
If you enroll in the short-term plan, you might be able to continue putting new purchases on the card but with a reduced spending limit. If you are participating in the long-term plan, you will not be able to use the card.
Amex will report participating cardholders to the credit bureaus as current, assuming they comply with the program’s rules. But the program’s terms do offer some important caveats: Amex will inform the credit bureaus that you are enrolled in a payment assistance program (if you’re in the long-term plan). And under both plans, Amex will report that you have a lower credit limit.
While these factors do not have as much of an impact on your credit score as a delinquent account does, it could still signal to other lenders that you might be having some financial hardship.
Bank of America
Bank of America cardholders who have trouble paying credit card bills can request a credit card payment deferral by calling the number on the back of their card.
To qualify for payment assistance, cardholders must be carrying a balance, according to the website.
Bank of America sent an email to Preferred Rewards members in May 2020 stating that the company had temporarily suspended the annual program review process. Members whose assets dropped below the regular threshold to keep their status would continue to qualify for program benefits. It is unclear if Bank of America is still suspending this program.
Barclays
Barclays urges credit card account holders to request payment relief online. As of May 4, 2020, the bank is granting payment relief for two statements, but interest will continue to accrue.
Capital One
âWe understand that this is a time of uncertainty for many people, and we know that there may be instances where customers find themselves facing financial difficulties. Capital One is here to help and we encourage customers who may be impacted to reach out to discuss how we might be of assistance,â the bank said in a statement.
In a March 26, 2020 update, Chairman and CEO Rich Fairbank confirmed that they are offering waived fees and deferred payments on credit cards for some cardholders.
Because each customerâs situation is different, the bank encourages customers to contact it directly. To contact Capital One customer service about an existing account, call (800) 227-4825.
See related: How to clean your credit card
Chase
Previously, Chase Bank stated that customers will be able to “delay up to three payments on your personal or business credit card” if needed, with interest continuing to accrue. The website currently does not specify how many payments cardholders can defer.
It also stated that active duty military members who are responding to a disaster might have access to additional benefits. Servicemembers can call the bank for more information.
In a letter to shareholders, the company’s CEO, Jamie Dimon, also promised to not report late payments to the credit bureaus for “up-to-date clients.”
See related: Chase offering limited-time bonus on food delivery for some cardholders
Citi
Citi customers who have been impacted by the coronavirus pandemic might be eligible for assistance. Previously, the bank was waiving payments and late fees for two consecutive billing cycles. However, Citi has ended its pandemic assistance program.
“Due to a significant and steady decline in enrollments, our formal COVID-19 assistance program has concluded and we will focus on providing assistance options to those customers financially affected by COVID-19 on a case-by-case basis. We continue to closely monitor the situation and will evaluate additional actions to support our customers and communities as needs arise,” a spokesperson for Citi said in an email.
During the bank’s pandemic assistance program, interest continued to accrue, but accounts that were current at the time of enrollment were not be reported as delinquent.
Discover
Discover will be extending relief to qualified customers who are experiencing financial difficulty caused by the spread of COVID-19.
“We encourage them to contact us by calling and are directing them to www.discover.com/coronavirus for phone numbers for each product line and other FAQs,” Discover said in a statement earlier this year. “We also can provide relief through our mobile text app, which connects a customer directly with an agent.”
Discover it Miles cardmembers can also put their miles towards their bill â including their minimum payment.
See related: What to do if you can’t pay your business credit card bill
Goldman Sachs
Apple Card customers can enroll in an assistance program. Previously, cardholders could waive payments without accruing any interest. The website currently doesn’t specify if this is still the case.
Key Bank
Cardholders can defer payments for three billing cycles. Though interest will continue to accrue, enrolled cardholders will not receive late fees, and their accounts will be reported as current, as long as accounts were not delinquent at the time of enrollment.
Synchrony
Synchrony is extending relief to customers experiencing financial hardship. The company’s website previously stated that this could include payment relief for up to three statement cycles, while interest would continue to accrue. The website currently offers no specifics about what the issuer is prepared to offer.
Truist (formerly SunTrust and BB&T)
Previously, Truist offered payment relief assistance to customers with personal and business credit cards, among other products. As of April 14, it was willing to delay payments for up to 90 days. The website currently offers no specifics about what the issuer is prepared to offer.
Wells Fargo
Previously, impacted cardholders could defer monthly payments for two consecutive billing cycles. The company’s website currently does not specify what assistance cardholders can expect to receive.
See related: Coronavirus stimulus legislation doesnât suspend negative credit reporting
ultimate guide to coronavirus limited-time promotions for more offers designed to help cardholders maximize rewards amid the coronavirus pandemic.
Business credit cards
If you are a small-business owner and cash is not flowing and bills are piling up, the most important thing to do is contact your card issuer.
Some banks are also providing assistance in case you can’t pay your business credit card bill.
Another coronavirus complication: Scams
As consumers wrestle with the impact of the coronavirus, scammers are trying to take advantage of the situation.
In a June 2020 public service announcement, the FBI warned that the increasing use of banking apps could open doors to exploitation.
“With city, state and local governments urging or mandating social distancing, Americans have become more willing to use mobile banking as an alternative to physically visiting branch locations. The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps,” the PSA warns.
Scammers might also be capitalizing on health and economic uncertainties during this time. In one such scam, cybercriminals are sending emails claiming to contain updates about the coronavirus. But if a consumer clicks on the links, they are redirected to a website that steals their personal information, according to the Identity Theft Resource Center (ITRC).
Identity theft in 2020: What you need to know about common techniques
Bottom line
The outbreak of a disease can upset daily life in many ways, and the ripple effects go beyond our physical health. Thankfully, many card issuers are offering relief. If you’re feeling financially vulnerable, contact your credit card issuer and find out what assistance is available. And while data security may seem like a secondary consideration, it’s still important to be vigilant when conducting business or seeking information about the coronavirus online.
Some of the offers mentioned below are no longer available.
Running an errand to fill up your gas tank or restock your pantry may not be the most glamorous part of your day, but, with the right cash back card, you can make those everyday tasks much more rewarding.
Best credit card combinations for everyday spending
For Amex loyalists
For maximizing points
For maximizing cash back
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There are many cash back credit cards that offer bonus rewards on everyday purchases such as gas and groceries. One of our favorites is the Blue Cash Preferred® Card from American Express, which gives you a whopping 6% cash back on U.S. supermarket purchases and (up to $6,000 in purchases per year, 1% thereafter), 6% cash back on select U.S. streaming services 3% cash back on transit and U.S. gas station purchases and 1% cash back on everything else.
The card does charge a $95 annual fee, but we think that fee is well worth it if you want to earn the most cash back on your everyday spending. We figure that the average shopper who spends $15,900 on the card would earn around $323 in cash back each year.
Estimated yearly rewards: Amex Blue Cash Preferred
Blue Cash Preferred® Card from American Express
Average rewards rate
Estimated cash back earned (after annual fee)
6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter)
6%Â select U.S. streaming services
3% transit and U.S. gas stations
1% other purchases
2.63%
$323
Even better, you can push your rewards rate higher by pairing the Blue Cash Preferred card with credit cards that offer bonuses on other categories of purchases. Here are some of the best card pairings for the American Express Blue Cash Preferred card.
Combination one: Amex all the way
If you love American Express cards, or you just want to keep things as simple as possible for yourself by sticking to a single issuer â the American Express Cash Magnet® Card that offers 1.5% cash back on every purchase makes a great partner to the Blue Cash Preferred card.
See related: Which 1.5% cash back card is right for you?
By swapping in the Cash Magnet card to earn 1.5% cash back on purchases that donât qualify for a bonus with the Blue Cash Preferred card, the average cardholder can push their cash back rate to 2.91%, amounting to $368 in cash back with $15,900 yearly credit card spend.
Estimated yearly rewards: Blue Cash Preferred + Amex Cash Magnet
Combined rewards
Average rewards rate
Estimated cash back earned (after annual fee)
6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter) with the Blue Cash Preferred card
6%Â select U.S. streaming services with the Blue Cash Preferred card
3% transit and U.S. gas stations with the Blue Cash Preferred card
1.5% other purchases with the Cash Magnet card
2.91%
$368
Combination two: Maximizing points
The Chase Freedom Unlimited® is another great card to pair with the American Express Blue Cash Preferred card. Just like the Cash Magnet card, it offers at least 1.5% cash back on every purchase. However, the rewards that you earn with the Freedom Unlimited card are a little more versatile than the Cash Magnet card and it comes with additional cash back categories: 5% on Chase Ultimate Rewards travel, plus 3% on dining and drugstore purchases. You can transfer them to certain Chase Ultimate Rewards cards, including the Chase Sapphire Preferred® Card*, which awards a 25% bonus on those points when you redeem them for travel for the Chase Ultimate Rewards portal.
If you prefer to earn points rather than cash back on purchases that fall outside the Blue Cash Preferred cardâs bonus categories, Ultimate Rewards cards are a great way to go:
6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter) with the Blue Cash Preferred card
6%Â select U.S. streaming services with the Blue Cash Preferred card
5%Â Chase Ultimate Rewards travel with the Freedom Unlimited card
3%Â dining and drugstore purchases with the Freedom Unlimited card
3%Â transit & U.S. gas stations with the Blue Cash Preferred card
1.5% other purchases with the Freedom Unlimited card
3.49%
$459.91
Combination three: Maximizing cash back
If you prefer cash back rewards and want to earn the most cash back possible, the Citi® Double Cash Card and the Blue Cash Preferred cards is one of the ultimate card pairings. The Citi Double Cash card offers up to 2% back on every purchase â 1% when you make the purchase and another 1% when you pay your bill on time.
Combined with the Blue Cash Preferred card, the Citi Double Cash card pushes the rewards rate to 3.19% cash back for the average cardholder. We figure that a cardholder who spends around $15,900 per year on these two cards can earn nearly $412 in cash back per year.
Estimated yearly rewards: Amex Blue Cash Preferred + Citi Double Cash
Combined rewards
Average rewards rate
Estimated cash back earned (after annual fee)
6% U.S. supermarkets (up to $6,000 in purchases, 1% thereafter) with the Blue Cash Preferred card
6%Â select U.S. streaming services with the Blue Cash Preferred card
3%Â transit & U.S. gas stations with the Blue Cash Preferred card
2% other purchases with the Citi Double Cash card (1% when you buy, 1% as you pay)
In 2020, the coronavirus pandemic brought a huge shift in spending as the country shut down. The travel industry specifically took a hit, and many card issuers responded by adding rewards on everyday spending to travel cards.
While I think travel spending will eventually rebound in 2021, it seems likely that the additional perks on everyday spending are here to stay.
Read more from our credit card experts.
Ask Ted a question.
Everyday spending
Early on in the COVID-19 pandemic, many card issuers pivoted to grocery spending, food delivery and takeout, streaming services, home improvements, and other everyday spending categories out of necessity. In 2021 and beyond, I think theyâll do so by choice.
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These perks really seem to be resonating with consumers, whether weâre talking about earning bonus rewards for these types of spending, redeeming points or miles at a higher than normal ratio to offset related purchases, receiving free premium memberships for services such as DoorDash and Instacart, or getting statement credits to defray eligible costs.
It all adds up to cash back with a twist. Thereâs an experiential component that cardholders love and habitual aspects that appeal to card issuers trying to build loyalty. If youâre more likely to use a card that offers these perks â especially if youâre willing to pay an annual fee â thatâs a win all around.
See related: Guide to Chase Pay Yourself Back
Travel
Necessity is the mother of invention, of course, and the fact that the pandemic crippled travel led to many of the aforementioned incentives. I expect travel to bounce back in a big way once we have widespread vaccine availability. Late Q2 or early Q3 seems like a good bet, according to health experts.
This should unleash an incredible amount of pent-up travel demand. People want to see their families and friends, they want to explore bucket list destinations and many will have money (and points and miles) to burn after a year of lockdowns.
I expect the good deals will last for a while because itâs a competitive industry, and business travel should remain depressed longer than leisure travel. Airlines will want to pack planes, hotels will want to fill rooms and cruise lines will be especially desperate for business. We should see favorable prices along with other incentives to liquidate rewards and sign up for travel credit cards.
Approval standards
In 2020, lenders became much more risk-averse as the pandemic created a ton of uncertainty and job losses. In Q2, 72% of credit card issuers tightened their approval standards and 0% eased them, according to the Federal Reserveâs Senior Loan Officer Survey. In Q3, 31% tightened and 4% eased. A similar trend played out with respect to existing cardholdersâ credit limits.
This hit balance transfer cards the hardest. According to Mintel Comperemedia, card issuers sent 42% fewer direct mail advertisements for 0% balance transfer cards in the first three quarters of 2020 when compared with the same period in 2019. Card issuers were worried enough that their existing customers wouldnât pay them back; taking on new customers with existing debt wasnât particularly appealing.
This will hopefully turn around in the second half of 2021, assuming we have widespread vaccine access and a better economy and job market. I think balance transfer cards will be the last card sector to bounce back, however.
sign-up bonuses. But approval standards will likely remain tight as issuers look for the most creditworthy and affluent applicants. We saw some of this in late 2020, like the 100,000-mile Capital One Venture Rewards Credit Card bonus (since expired) which required $20,000 of spending within the new cardholderâs first 12 months.
I think particularly lucrative bonuses will become more widely available and less restrictive in the second half of 2021. Early in the year, the best offers will probably be reserved for those with high credit scores and high incomes.
Final thoughts
A couple of pleasant surprises this year: Credit card debt and delinquencies both fell in 2021. Credit card debt declined 11% between February and October, according to the Fed. This could be due in part to the government stimulus package passed earlier this year or consumers spending less and prioritizing paying down debt.
While weâre all anxious for our lives to return to normal, carrying less credit card debt would be a good habit to hold onto after the pandemic is over.
Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and Iâd be happy to help.
