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It's no secret that interest rates are going up this year—and that means that your credit card APRs will, too. But that hasn't deterred banks from continuing to offer rich credit card rewards. In fact, competition in the rewards landscape is fierce—which means it's a great time for consumers to get the most bang for their credit card spending.
"This is absolutely a good time to be looking for a new credit card. Rewards are still lucrative and intro bonuses are still pretty high," says Matt Schulz, a senior industry analyst at CreditCards.com.
So where are the biggest opportunities? Here's what you need to know about the credit card rewards landscape in 2018:
1. Big Intro Bonuses Are Sticking Around for a While
In late 2016, Chase unveiled its Chase Sapphire ReserveSM credit card with a tantalizing offer: 100,000 bonus points upon signing up for the elite travel rewards card. While Chase has since dropped its offer to a lower but still lucrative 50,000 bonus points, that promotion set off something of an arms race in the credit card industry.
The result? Consumers have been able to take advantage of hefty intro bonus offers—and that trend is expected to continue well into 2018.
"We're continuing to see banks giving out higher and higher sign-up bonuses in a race against each other to capture market share," says Julian Kheel of ThePointsGuy.com. "So this is a very good time to shop around for a new credit card and score a high sign-up bonus."
Kheel adds that paying attention to the history of the card you want is key. "You need to educate yourself because these bonuses do change on a regular basis. They go higher, lower and then higher again. So you want to try to sign up during a peak period," he says.
How do you know when an offer is at its peak? You can check the history on a card to see if it has a tendency to go up and down. If it's in a down period, consider waiting a couple of months. The Gold Delta SkyMiles® Credit Card from American Express, for example, is currently offering, for a limited time, 30,000 bonus miles after you make $1,000 in purchases on the card in the first four months. This offer expires 9/19/18.
2. Expect to See Big Companies Continue to Partner With Banks on Credit Card Offerings
"One of the other really interesting things in reward cards right now is that after years of most of the headlines going to general-purpose cards, like Sapphire Reserve, Capital One and all that, we're seeing more brand-specific partnerships with credit cards," says Schulz.
Examples include Chase's partnership with Amazon to offer 5% back on Amazon.com purchases for Prime members on its Amazon Prime Rewards Signature Visa, and the new Uber credit card from Barclays. And this February, Chase teamed up with the coffee behemoth to release the new Starbucks Rewards Visa.
"These are huge, powerful brands with loyal followings—and they also attract the type of customer any credit card issuer would want to have a relationship with," says Schulz. "These brands, like Starbucks in particular, hold a lot of loyalty. Banks are stumbling all over themselves to try to get in front of more affluent millennials, and Starbucks is certainly a good way to do that. The same goes for Uber and Amazon."
Kheel says that he expects more banks to partner with powerful stores and branded services to offer similar new cards, but he adds that consumers need to be savvy when evaluating whether these cards are actually good for their wallets. In many cases, even if you are loyal to a specific brand like Starbucks, you can probably score better rewards through another card.
"Companies with very established brands want to monetize that further through credit cards," says Kheel. "But as a consumer, it's really important you don't just select your credit card based on a brand or store you go to all the time. You might be better off paying for your Starbucks purchases with a card that earns you three points for every dollar spent on dining rather than just collecting points for free coffee."
The Starbucks Credit Card: A New Option
Indeed, the Starbucks card, may not be the best offering even for those who guzzle coffee regularly. You don't get cashback for purchases on the card. Rather, you earn stars in Starbucks own rewards program: up to three stars for every dollar spent on Starbucks purchases and one star for every $4 spent everywhere else. That rewards rate is hardly worth the card's $49 annual fee—especially because you already earn two stars per dollar spent as a regular member of the company's rewards program.
Other co-branded cards could be a great deal, however. For those who love to dine out and travel, the Uber card offers some of the best deals in the biz: 4% back for every dollar spent on dining out and 3% back on hotels, airfare, travel agency purchases and even home share exchanges like Airbnb.
3. Banks Are Enticing You to Use Mobile Payment Options With Greater Rewards
Paying with your smartphone has been around for a while through options like Apple Pay, but banks are encouraging their customers to take advantage of them by dangling additional rewards for using these services.
The Chase Freedom® card, for example, has included mobile wallet purchases in its rotating 5% cash-back rewards category for the first quarter of 2018. Eligible purchases include anything done through Apple Pay, Android Pay, Samsung Pay and the bank's own Chase Pay. U.S. Bank recently launched its premium Altitude Reserve Visa Infinite Card, which offers three points on every dollar spent on mobile wallet purchases, while the Wells Fargo Cash Wise Visa® Card offers 1.8% back on qualified digital wallet purchases, like Google Pay and Apple Pay, in the first year.
"We're going to see escalating enticements for mobile payments," says Kheel. "Banks know they need to give people some incentive that's specific to mobile wallets in order to get them to use it. These kinds of bonus points can change behavior, even for consumers who aren't used to it. In fact, I don't do a lot of mobile payments, but I'm absolutely using mobile payments with my Chase Freedom® card to earn that 5% cash back through the end of March."
And once consumers become used to employing mobile payments, they're more likely to continue—so expect more banks to sweeten the mobile payments pot this year.
4. Banks Are Beefing up Benefits on Both Existing and New Credit Cards
If you're a frequent traveler—or just someone who wants to earn travel opportunities through credit card spending—you're in luck. Airlines may be devaluing their frequent flier programs, but banks have gotten very creative in offering benefits and rewards opportunities for the jet set in order to capture this lucrative type of spender. We'll see more of that in 2018.
"[Many banks] are working to improve their programs and credit card products, either by providing more value for their points, or more benefits on the cards themselves," says Kheel.
At the end of January, Capital One unveiled a rich partnership with online travel agency Hotels.com. Users of the Capital One Venture Rewards Credit Card and the Capital One VentureOne Rewards Credit Card will earn 10 miles for every dollar spent on purchases made at Hotels.com/Venture.
"That's about the best possible travel rewards return you can get when booking hotels, and a great example of a feature being added to an existing card to really take it up a notch for a specific travel consumer," says Schultz.
High annual fee cards that come with elite travel benefits are in a race to outdo their competitors, so they are beefing up their features.
For example, American Express unveiled in January the new Hilton Honors American Express Aspire Card, a premium card with a $450 annual fee. But it offers a $250 airline incidental fee credit and a $250 annual Hilton resort statement credit, which more than makes up for the annual fee for the right user. It's also one of the rare cards offering a 100,000 point bonus after you spend $4,000 in the first three months.
Earning opportunities are impressive, as well: Users get 14 points per dollar spent on Hilton properties, 7 points per dollar spent on flights booked directly with the airline or through Amex Travel, and three points on everything else.
Existing cards have also improved their offerings to stay relevant. Citi Prestige, for example, has made it easier to use the card's popular fourth-night free hotel benefit. Users can now book online using not only cash but also their reward points. And American Express has added several new benefits to its The Platinum Card® from American Express, such as a $200/year Uber credit and five bonus points per dollars spent on airlines and hotels booked through Amex Travel.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on August 1, 2018, and has been updated.