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Breaking down the best credit card reward offerings

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Ted Rossman, Bankrate.com and CreditCards.Com Sr. Industry Analyst joined, Yahoo Finance to discuss credit card companies pull out eye-popping sign-on bonuses to capture post-pandemic spending.

Video Transcript

- Let's bring in Ted Rossman. He is here from Bankrate.com, and he's going to help us understand what's going on in the latest salvo in the credit card wars. Because it's costing the banks like JPM, it's costing them a bit of cash. What's going on?

TED ROSSMAN: I think they're OK spending that marketing cash, though, because it's going to mean more customers and more consumer spending. And that's really what it's all about these days. The card companies are leaning in full force into this consumer spending rebound. And it's really extraordinary because 2020 was a very slow year in the credit card industry. This year started that way.

And then really just in the past couple of weeks, things are really popping. We're seeing a lot of enhanced bonuses. We're seeing some new cards. Everybody wants in on this spending rebound.

- Ted, let's talk about some of those offerings. And I know you've gone through a number of these new bonuses that are being laid out from these companies. Which ones are offering the best deals right now?

TED ROSSMAN: There are a number of 100,000-point or mile offers. Some that stand out are the Chase Sapphire Preferred. This is a really popular card. That bonus is going to be worth at least $1,250 towards travel, maybe even more. You only have to spend $4,000 in the first three months. So I think the Sapphire Preferred is a great option. Capital One Venture is another really outstanding 100,000-mile bonus.

You have to spend a bit more for that one. Some of the co-branded cards, too, like United, Marriott, Hilton, IHG Hotels, they all have 100,000-point offers. I would urge people, though, to do the math. Because these points and miles are currencies, if you will. And they're all worth a little bit different amounts.

So you want to think about your loyalty to that brand, what you might want to use these points for. But lots of great options out there.

- In the case of those 100,000-point cards, Ted, do you have to pay an annual fee, or is it simply just the $4,000 in spending to trigger the point reward?

TED ROSSMAN: A lot of the ones that I mentioned carry a $95 annual fee, like the Sapphire Preferred, the Capital One Venture, the Marriott Boundless Card. With that Chase Sapphire Preferred, you can reportedly get that annual fee waived if you apply in the branch. But these fees are sometimes well worth it because they entitle you to premium perks.

I mean, these bonuses, depending on the card, these could be worth $1,000 or more. So that's going to go a long way towards defraying your fees, plus all the rewards you get from your ongoing spending.

- Ted, comparing this with what we've seen in previous years, have we ever seen as many credit card companies offering bonuses like this?

TED ROSSMAN: This really reminds me of what we saw more like 2016. When the Chase Sapphire Reserve came out, that really upended the credit card rewards landscape. People used to say that millennials didn't want credit cards. It turns out that they did, and they really gravitated to the experiential perks of a card like that.

And I think the same thing is happening nowadays, where travel, all of a sudden, is a huge incentive again. So the ability to transfer to airline and hotel partners, maybe also get some experiential perks like dining rewards, these are all hot sectors. Let's not forget about cash back, though, because there were a couple of new back cards announced this week-- Wells Fargo has one that pays 2% on everything.

And then Citi, just today, announced a card that's going to give you 5% cash back on your top spending category every billing cycle. 0% balance transfers are returning. Across the credit card landscape, all of a sudden it's a real frenzy.

- Are they giving any incentives if you tie it to their digital payment programs?

TED ROSSMAN: We're definitely seeing increased interest in contactless, so whether we're talking tapping a card or tapping a phone. There's not usually extra rewards for doing that. It's more of a convenience play, or in the age of COVID, more of a sanitary play. One card that really plays that up is Apple Card, where when you use Apple Pay, the mobile payment service, you're going to get 2% cash back, whereas when you use the physical card, it's 1%.