Study determines which rewards cards are most beneficial

Many consumers do a lot of research to determine which credit cards will work best for them and help earn the most possible rewards for their normal spending habits, but new research shows which cards might be best for the average person.

The Capital One Cash Rewards card that comes with a $100 cash back bonus was recently named the most beneficial account of its type on the market based on two years of typical consumer spending, according to a new study by the independent research group NextAdvisor. Given average spending in the various categories in which people may shop, users can earn as much as $460 cash back in the first two years the account is open by using this card.

The researchers determined that the average American spends about $12,000 per year on their credit card, based on a 2010 report from the Bureau of Labor Statistics, the report said. The largest single portion of typical spending that rewards cards incentivize was on groceries, on which consumers spent 7.5 percent (or $900) in a given year. They added another $600, roughly 5 percent of the average yearly spending, as a result of dining out, with $540 (4.5 percent) for gas.

Travel accounted for another 2 percent and seasonal spending categories, which rotated roughly by quarter, made up 1 percent, the report said. Department store spending totaled just 0.5 percent. Altogether, these three categories added up to $420. The remaining 80 percent of consumer spending fell outside the areas of incentivized purchases and would have been rewarded with the standard cash back rate.

What differentiated the top cards?
Interestingly, the Capital One card was most beneficial both because it gave users $100 cash back just for signing up, and because it granted a flat 1 percent cash back rate on all purchases with a 50 percent bonus at the end of the year, the report said. This allowed the average borrower to rack up some $280 in benefits in the first year the account is open, and another $180 in the second year (given that there is no sign-up bonus during that time). Capital One had the most cards on the list of any major lender, with four out of the top 12.

The other two cards in the top three were issued by American Express, the report said. The Blue Cash Everyday Card was ranked second with potential earnings of $388 over the first two years, and the Blue Cash Preferred Card was third at $354 in rewards during that time.

However, before signing up for any kind of credit card, rewards account or otherwise, consumers should first take the time to check their credit reports. Doing so will help them to identify any potentially unfair markings that may be marring their credit standings. Fortunately, working with a credit repair company may help to resolve such problems.