Since many cardholders are eager to earn rewards, a key criteria for a card’s inclusion in our list is whether it offers impressive rewards value. This includes a card’s erage rewards rate, estimated annual rewards earnings, welcome bonus value and reward redemption value.
To estimate a card’s erage annual rewards earnings, we calculate its erage rewards rate based on how much it earns in different bonus categories, as well as how closely those categories match the erage person’s spending habits. In other words: Does the card earn rewards at a high rate in the most popular spending categories?
We use consumer spending data from the Bureau of Labor Statistics (BLS) to get a reliable third-party measure of people’s spending habits. The most recent BLS data estimates erage total spending in 2023 was $77,280 per consumer. We then narrow our focus to which purchases are likely to be put on a credit card and earn rewards, subtracting expenditures like housing, vehicle purchases and education. This gives us a total “chargeable” annual spend of around $22,500.
This includes the following spending by category:
Groceries: $6,000 Dining out: $3,900 Entertainment: $2,500 Gas: $2,400 Apparel and services: $2,000Using this data, we assign a weighting to each of a card’s bonus categories. For example, a card’s grocery rewards rate receives a 26 percent weighting based on how much of the erage person’s budget is spent on groceries. We also estimate the redemption value of points or miles from various issuer, airline and hotel rewards programs.
This weighting and rewards valuation allows us to estimate a card’s erage annual rewards earnings — how many points or miles you’d earn with a given card if your spending was about erage and you used the card for all of your purchases — as well as what those points are worth. We also use point valuations to determine a card’s welcome bonus value
With these calculations complete, we assign each card a score based on how its erage rewards earnings, welcome bonus value, rewards rate and redemption value stack up against other cards in its primary category.
The better these values, the higher its score will be, making it more worthy of inclusion in our list and increasing its potential ranking.
Here’s a deeper look at the factors considered as part of a rewards card’s “Value” rating: