Opinion: The Two Most Rewarding Reward Credit Cards

After posting several entries recently about changes in credit card rewards, we thought we’d detail our two current favorite reward credit cards. (Note that we are NOT an affiliate marketing site for any card or other product, so we have no agenda in recommending any one card over another.)

The Hilton American Express offers 6 Hilton HHonors points per $1 spent at grocery stores, gas stations, drug stores, and for phone, cable/satellite TV, and internet service; 3 points for other purchases. This card is useful primarily if you stay at Hilton properties (ranging from Hampton to Doubletree to Hilton, etc.). When we use points in lieu of payment, we generally feel we get about 1% reward per point. Thus, the Hilton Amex gives us what we think of as 6% or 3% rewards for our purchases.

The Schwab Visa offers two significant advantages: It offers 2% cash rewards on all purchases, and it does not charge any foreign-currency conversion fees (nearly every other credit card charges about 3%). So used for international travel (or any purchase in a foreign currency) the Schwab card provides the equivalent of a 5% reward. The Schwab rewards are a little awkward, in that you need to open a Schwab brokerage account for the rewards to be credited to. But there are no fees nor minimum balances for that account.

(We still have a fond spot in our hearts for the Alaska Visa, but Alaska Airlines isn’t a viable airline for many folks around the country. In addition, the card has a $75 annual fee, but you do receive an annual $50 companion ticket – a pretty good value if you use it for an $800 Hawaii ticket. And Alaska does have many airline partners, including Delta, AirFrance, American, British Airways, Qantas, LAN. Still, the card’s reward is only 1 mile per $1 spent, so you need to use your miles wisely to get a return better than 2%.)

Needless to say, within the current credit-card environment, you’ll never know in advance whether or not your card’s rewards will be changed in the future. But for now, and for most travelers, we think the Hilton Amex and the Schwab Visa are your top two bets.

UPDATE: Our friend Marcus (@CreditMatters on Twitter) reminded us that Hilton’s new fee card – Surpass – offers 9 Hilton HHonors points for spending at Hilton properties (in addition to the same other Hilton points as above), and comes with a basic membership in the Priority Pass airport lounge access program ($99 value). If you spend $20,000 per year on the card, you receive Hilton Gold status; with $40K spend you receive Diamond status. Annual fee of $75.