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How Do Industry Experts Evaluate Credit Card Rewards?

If you've ever searched for a specific credit card online, you've most likely come across dozens of reviews and breakdowns. The more you delve into the topic, you can begin to see certain consistent trends emerge among the way analysts examine credit cards.
Robert Harrow
By 

Analyst at ValuePenguin.com

Analyst at ValuePenguin.com
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If you've ever searched for a specific credit card online, you've most likely come across dozens of reviews and breakdowns. The more you delve into the topic, you can begin to see certain consistent trends emerge among the way analysts examine credit cards. For example, the Chase Sapphire Preferred is often found on "best travel card" lists. The reason a general consensus among experts exists is because of a common methodology underpinning their research. The fundamentals around which a majority of credit card analysis is preformed involve:

  1. The Rewards Rates. The rewards rate is a percentage which represents the total value you get back with each transaction. For instance, a rewards rate of 2 percent means that after spending $100 using a particular card, I will receive the equivalent of $2 back. The $2 can take on many forms -- from direct cash back credited to your account, or an amount of points which, when redeemed, are worth 2 percent. The rewards rate is one of the most surefire ways of comparing across different credit cards. It allows experts to see the long term savings an individual will get from using the card.

  • Value of the Rewards Program. The form of your credit card rewards is, perhaps, almost as important as the amount of rewards. One of the biggest considerations analysts must make is how useful are the prizes being given to consumers who use a particular card. If they are points, do they have redemption options which consumers will enjoy? Are the rewards straightforward to use? All these questions ultimately play a big role in evaluating a card's worth.

  • Comparisons across the Credit Card Landscape. Analysts often must keep in mind all the credit cards available to consumers, even when evaluating a single card. Before reviewers know whether they can or cannot recommend a credit card, they look to see whether another card (or cards) fulfill a particular purpose better. To begin, credit card experts first identify what a card is trying to accomplish. If, for example, Credit Card A is mainly built around rewarding grocery purchases, is it doing better than other cards an individual could apply for? The answer plays a huge role in how a score is determined. It is impossible to determine a credit card's value in a vacuum.

  • Ancillary Features. In the highly competitive credit card market, issuers are falling over themselves trying to attach additional features to their credit cards to grab consumer attention. Part of an analyst's evaluation of a card involves reviewing these extra features, to separate the wheat from the chaff. If a card, for example, offers airport lounge access, reviewers will have an idea of the scope of this reward. How many airports carry said lounges? Are guests allowed? All answers eventually get boiled down to a quantitative assessment of these features.

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