May 13, 2020
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Valuations are based on what TPG would pay to buy points and the overall redemption value, factoring in variables like award availability, fees and change or cancellation policies.Learn more
There is no one-size-fits-all credit card out there. Every person has different goals and spending habits, so credit card issuers offer full line-ups of cards to help serve those different needs. But with so many credit cards available, how do you choose the best credit card for you?
The team at TPG has done a lot of the research for you, compiling our top picks of the best credit cards available on the market today. We’ve looked through the best welcome offers, earning rates, redemption options, benefits and more to help you determine which card will help you reach your goals — whether you’re looking to save up travel rewards for your dream vacation or save money on everyday expenses with cash back.
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
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|Card||Best for||Welcome bonus||Rewards||Annual fee|
|Chase Sapphire Preferred Card||Total value||60,000 Ultimate Rewards points after you spend $4,000 in the first three months||5x on Lyft
2x on travel and dining
1x on everything else
|The Platinum Card® from American Express||Travel perks||60,000 Membership Rewards points after you spend $5,000 in the first three months||5x on airfare booked directly with airlines, airfare booked through Amex Travel and prepaid hotels booked through Amex Travel
1x on everything else
|$550 (see rates and fees)|
|American Express® Gold Card||Dining and takeout||35,000 Membership Rewards points after you spend $4,000 in the first three months||4x on restaurants worldwide and the first $25,000 spent annually (then 1x) at U.S. supermarkets
3x on airfare booked directly with airlines or through Amex Travel
1x on everything else
|$250 (see rates and fees)|
|Chase Sapphire Reserve||Travel insurance||50,000 Ultimate Rewards points after you spend $3,000 in the first three months||10x on Lyft
3x on travel and dining
1x on everything else
|Blue Cash Preferred® Card from American Express||Groceries||$250 back after you spend $1,000 in the first three months||6% on select streaming services and the first $6,000 spent annually at U.S. supermarkets
3% on transit and gas stations
1% on everything else
|$95 (see rates and fees)|
|World of Hyatt Credit Card||Hotel rewards||Up to 50,000 Hyatt points — 25,000 when you spend $3,000 in the first three months and an additional 25,000 after you spend $6,000 total in the first six months||4x on Hyatt purchases
2x on airfare, restaurants, local transit and commuting and fitness clubs/gym memberships
1x on everything else
Why it’s the best credit card for total value: We’ve long suggested the Chase Sapphire Preferred as a great option for those who are new to earning travel rewards because it lets you earn valuable, transferable Chase Ultimate Rewards points with strong bonus categories, all at a reasonable annual fee.
Annual fee: $95
Current welcome bonus: 60,000 Ultimate Rewards points after you spend $4,000 in the first three months
Pros: This card starts strong, with a bonus worth $1,200 according to TPG’s valuations. The Chase Sapphire Preferred earns 5x on Lyft; 2x points on other travel and dining; and 1x on everything else. Plus, you’ll earn 3x on groceries on the first $1,500 spent per month through the end of June as a temporary bonus category. Since travel and dining are both broad categories with Chase, this means you’re earning rewards on a large number of purchases. You’ll find points are typically most valuable when transferred to one of Chase’s excellent airline and hotel partners, especially for premium redemptions. Alternatively, points can be worth 1.25 cents each toward travel and activities booked through the Chase Ultimate Rewards travel portal, where you can find money-saving options for budget travel and economy flights.
Cons: The $95 annual fee isn’t waived the first year like it is for some other mid-tier travel cards, and there are no luxury travel perks. While the lack of luxury benefits is standard on cards with lower annual fees, it’s something to consider for anyone who travels frequently enough to get a lot of value out of perks such as lounge access or travel credits. On the opposite side of the equation, you are really getting the best value from your points by redeeming them for travel, either through the Chase travel portal or by transferring them to a partner. If travel is not a priority, a cash-back card may be more valuable to you.
Why it’s the best credit card for travel perks: It’s not cheap, but there’s no credit card that offers better total value than the Amex Platinum, especially for the frequent traveler. From airport lounge access to annual credits, a free ShopRunner subscription and even travel protections such as trip Interruption and travel delay coverage, it offers the most comprehensive protections.
Annual fee: $550 (see rates and fees)
Current welcome bonus: 60,000 Membership Rewards points after you spend $5,000 in the first three months
Pros: If you’re looking for travel perks, you’ll find them on the Amex Platinum. First, you’ll get 5 points per dollar spent on airfare booked directly via airlines, as well as both airlines and prepaid hotels booked via Amex Travel. Next, the card provides access to three different airport lounge networks, including the exclusive Centurion Lounges, Delta Sky Clubs when you’re flying Delta and more than 1,200 Priority Pass lounges worldwide.
You’ll also get up to $200 in annual airline fee credits that can be used to offset the cost of fees that airlines charge for services, ranging from seat assignment fees to checked bags to bringing pets on board. On top of that, you’ll get up to $200 in annual Uber credits, which can be used either for ride-hailing or on UberEats when you’re hungry. Cardholders also receive a $100 Global Entry/TSA Precheck credit every four years.
The Amex Platinum also provides up to $100 in annual credits at Saks Fifth Avenue so you can look your best when you’re traveling. Add it all together and you’re getting at least $500 in credits alone each year from the Amex Platinum, which nearly offsets the card’s entire annual fee of $550 (see rates and fees).
Last, but not least, the Amex Platinum recently added a number of temporary benefits during the coronavirus pandemic, including a welcome bonus extension for new cardholders who apply before May 31, 2020, and a statement credit for streaming and wireless phone services.
Cons: This card comes with a super high annual fee, which isn’t feasible for every traveler. If you know you won’t utilize at least most of the benefits offered with this card, you’ll be better off choosing a card that focuses on rewards earning rather than luxury benefits. Speaking of rewards, this card also isn’t the best option for those who want a card for everyday spending. You’re only earning bonus points on specific travel purchases, so you’ll need a different card for your grocery and commuting expenses each month.
Why it’s the best credit card for dining and takeout: Whether you dine in or out on a regular basis, you won’t find a more powerful credit card than the American Express Gold. With 4 points per dollar at U.S. supermarkets on the first $25,000 in purchases each year (then 1x) and restaurants worldwide, plus up to $120 in dining credits every year, the Amex Gold is designed specifically to maximize these purchases and should be in every foodie’s wallet.
Annual fee: $250 (see rates and fees)
Current welcome bonus: 35,000 Membership Rewards points after you spend $4,000 in purchases in the first three months of account opening.
Pros: The American Express Gold Card has you covered across the board when it comes to food, whether you’re eating in or dining out. Not only does the card earn 4 points per dollar at restaurants around the globe, but you’ll get that same 4 points per dollar at U.S. supermarkets, on up to $25,000 in purchases per year (then 1 point per dollar). On top of that, you’ll also earn 3 points per dollar on all flights purchased directly with airlines or via Amex Travel.
The card comes with an up to $100 annual airline fee credit that can be used for flight expenses such as checked baggage, seat upgrades and much more. Add that up to $100 airline credit together with the card’s up to $120 dining credit, and you’ll nearly offset the entire annual fee each year through credits alone.
Cons: Something to consider is how the Amex Gold rewards travel purchases — you’re only getting 3x on flights purchased directly with airlines or via Amex Travel. For someone who is hoping to earn bonus points on Airbnbs, ride hailing services and other travel expenses, this isn’t the card for you.
Why it’s the best credit card for travel insurance: Earning 3 points per dollar on all travel purchases makes the Chase Sapphire Reserve the top choice among credit cards when it comes to buying almost anything travel-related. Even better, a wide range of purchases are considered “travel” — everything from airlines, hotels, car rentals and cruises to taxis, subways, buses, parking and more.
Annual fee: $550
Current welcome bonus: 50,000 Ultimate Rewards points after you spend $3,000 in the first three months
Pros: Whether you’re traveling locally or internationally, the Chase Sapphire Reserve could be a great fit for you. The card offers a $300 travel credit every year, which is automatically applied to any eligible travel purchases, making it incredibly easy to use and offsetting more than half of the $550 annual fee right off the bat.
In addition to bonus points on travel purchases, the card also earns 3 points per dollar on all dining purchases, including delivery services such as Seamless, Grubhub and UberEats. And, like the Chase Sapphire Preferred, it’s added a temporary grocery bonus category — you’ll earn 5x on up to $1,500 spent per month though June 30, 2020. Road warriors can use the card to access more than 1,200 Priority Pass airport lounges and restaurants and get away from the hustle and bustle of the terminal, along with having numerous travel protections such as trip delay reimbursement and primary rental car insurance.
Cons: Chase recently updated the Chase Sapphire Reserve, adding new benefits while raising the annual fee. While many (including some TPG staffers) find the new benefits valuable, those who don’t use Lyft or DoorDash may not be as happy with the changes. Make sure you’re going to use the benefits and earn enough rewards every year to offset the cost of the card before shelling out $550 on annual fees. Also, you must spend the $300 annual credit before you start earning 3x points per dollar spent on travel and dining.
Why it’s the best credit card for groceries: With the Blue Cash Preferred, you’re earning 6% on the first $6,000 you spend at U.S. supermarkets each year (then 1%). That alone is worth $360 in rewards over the course of a year, not including what you can earn from other bonus categories.
Annual fee: $95 (see rates and fees)
Current welcome bonus: $250 back via statement credit after you spend $1,000 in the first three months of account opening.
Pros: For only a $95 annual fee (see rates and fees), you’re getting a great cash-back rewards structure — 6% back on U.S. supermarkets (up to $6,000 per year; then 1%) and select U.S. streaming services, 3% back on transit and U.S. gas stations and 1% on everything else. Plus, you can earn a $250 statement credit after you spend $1,000 in the first three months. The card does come with some protections, including travel accident and car rental insurance, plus purchase and return protections.
Cons: This card only earns cash back, which means you won’t be able to transfer to partners to maximize reward value. The Blue Cash Preferred also comes with a 2.7% foreign transaction fee (see rates and fees), which means you won’t want to use it while you are traveling outside of the U.S.
Why it’s the best credit card for hotel rewards: For starters, the card earns Hyatt points, which are among the most valuable hotel rewards currencies. The card also provides a free award night each year, with the opportunity to earn another through spend, a fast track to elite status (which is hard to earn with Hyatt), and more — all for a modest annual fee.
Annual fee: $95
Current welcome bonus: Up to 50,000 Hyatt points — 25,000 when you spend $3,000 in the first three months and an additional 25,000 after you spend $6,000 total in the first six months
Pros: One of the card’s most valuable advantages is that it’s a Hyatt credit card. The World of Hyatt program is incredibly valuable, with points worth 1.7 cents each, according to TPG valuations. For a mid-tier card, the card itself comes with some solid benefits, too. You’ll earn 4x on Hyatt (on top of 5 base points with the program), plus 2x on airfare, restaurants, local transit and commuting (including ride-sharing services) and fitness club/gym memberships. You’ll get an automatic free night at a Category 1-4 hotel each year, and another when you spend $15,000 on the card each cardholder year. You’ll earn five elite-qualifying nights each year, plus an additional two nights for every $5,000 spent on the card. Finally, the card also comes with solid travel protections, including baggage-delay insurance, lost-luggage reimbursement, and trip interruption/cancellation insurance.
Cons: While you’re earning bonus points on spending categories like restaurants and transit, there are other cards that provide a higher value on those non-travel expenses. Also keep in mind that this is a Chase-issued card. This means it is subject to the infamous 5/24 rule — if you’ve opened five or more accounts across all issuers in. the past 24 months, you’ll likely be denied for this card.
This page includes information about the Discover it Student Cash Back and Discover it Cash Back that is not currently available on The Points Guy and may be out of date.
Why it’s the best credit card for rotating cash back: The Chase Freedom earns 5% on the first $1,500 spent each quarter in rotating categories. While $1,500 per quarter in bonus spending may not seem like a lot, that still equates to $300 in annual cash-back rewards. During Q2 2020, you’ll earn 5% back on grocery stores, fitness clubs, gym memberships and select streaming services.
Annual fee: $0
Current welcome bonus: $200 after you spend $500 in the first three months of account opening (when you apply directly through Chase)
Pros: A card with rotating categories is great to have in your wallet regardless, but the current bonus categories on the Freedom make it even more valuable right now. Remember, Chase cash-back cards can be paired with Chase Ultimate Rewards cards such as the Chase Sapphire Preferred to turn that cash back into full-on Ultimate Rewards points. That means you’ll be earning 5x on those rotating categories, or a 10% return on spending, since TPG values Chase points at 2 cents each. Whether you’re looking to boost your Ultimate Rewards account balance or just want a reliable cash-back card, the no-annual-fee Chase Freedom is a great option.
Cons: As with any rotating category card, you’re only getting 5% in a select number of categories each quarter. So while the Chase Freedom will be an excellent grocery store and streaming services card for Q2 2020 while those are still bonus categories, you’ll probably want to use a different credit card throughout the quarters when it’s not. Additionally, keep in mind that you have to activate your new categories each quarter, which means you’ll miss out on rewards if you forget.
The information for the Chase Freedom has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for 0% APR: The Chase Freedom Unlimited is one of the best cash-back cards around because of its low cost and flexibility, but the card also comes with a solid 0% intro APR offer. You’ll have 15 months of 0% APR on new purchases (regular variable APR of 14.99%-23.74% applies after the intro period ends) to help you finance large purchases or pay down debt.
Annual fee: $0
Current welcome bonus: $150 after you spend $500 in the first three months of account opening
Pros: You’ll earn 1.5% cash back on every single purchase, without having to worry about restrictive bonus categories. However, if you also have an Ultimate Rewards card such as the Chase Sapphire Preferred or Ink Business Unlimited Credit Card, those basic points can be transformed into Ultimate Rewards points. You’ll then be able to redeem them at a higher rate through the Chase travel portal or transfer them to hotel and airline partners.
Finally, new cardholders will receive a $150 bonus after spending $500 in the first three months. Whether you’re looking for a one-and-done credit card to handle all of your spending or a no-annual-fee card to pair with your existing lineup, the Chase Freedom Unlimited is the card for you.
Cons: While 1.5% cash back on all purchases is pretty standard for a no-annual-fee, flat-rate card, it also isn’t the highest rewards rate available. Furthermore, if you do not have a Chase Ultimate Rewards card, your redemption options are more limited.
Why it’s the best credit card for flat-rate rewards: There aren’t many cards that get great value for both direct redemptions and transfers to partners, but the Capital One Venture Rewards credit card pulls it off. You can use Capital One miles to offset nearly any travel purchase you make or transfer them to any of Capital One’s travel partners, making the miles you’ll earn with this card infinitely flexible. Because you’re earning a flat 2x miles on every purchase, you know you’re getting value no matter the spending category.
Annual fee: $95
Current welcome bonus: 50,000 miles after you spend $3,000 in the first three months of account opening.
Pros: The Capital One Venture earns 2x miles on all purchases. Since you can redeem Capital One miles as a statement credit against eligible purchases at a rate of 1 cent per mile, you’ll easily earn at least 2% back in rewards on everything you buy. The Capital One Venture also allows you to transfer miles to 13 airline and two hotel partners. This includes two of United’s Star Alliance partners – Singapore Airlines and Avianca LifeMiles – as well as Delta partner Flying Blue and even JetBlue for domestic travelers.
These partners let you truly maximize Capital One miles, opening up valuable premium cabin redemptions for a fraction of the cash price.
Cons: The biggest drawback to the Capital One Venture is that the transfer partner ratio is less optimal than that of Chase and Amex. While Capital One does run transfer bonuses that help combat this, the standard transfer rate for most partners is 2:1.5. Of course, like other mid-tier cards, the Capital One Venture also doesn’t come with much in the way of luxury benefits for frequent travelers.
The information for the Capital One Venture card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for small businesses: The Ink Business Preferred is a great mid-tier small business credit card that offers a lot of value to business owners. The card has a great bonus right now, and you’re getting 3x across multiple business categories. All in all, it’s a great card any business owner should consider having in his or her wallet.
Annual fee: $95
Current bonus: 100,000 Ultimate Rewards Points when you spend $15,000 in the first three months
Pros: You’ll earn 3x in the first combined $150,000 spent on travel, shipping, internet, cable and phone services and advertising on search engines and social media sites. The points earned can be used for 1.25 cents each on the Chase Ultimate Rewards Travel Portal, or you can potentially get even more value by transferring to one of Chase’s partners. The card also comes with some great travel protections and cell phone protection.
Cons: The bonus does require a high spending threshold, which may not be possible for all small businesses—especially those that have smaller budgets in this current economic climate. The card also doesn’t come with perks like lounge access, annual credits or other top-tier benefits. If those are important to you and your business, you’ll want to look elsewhere. You currently have to sign into a Chase credit card or business banking account in order to apply for this card.
The information for the Ink Business Preferred card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for flat-rate cash back: With the Citi Double Cash, you’ll earn 2% cash back on every purchase (1% when you buy and 1% when you pay your bill). That is an excellent rate of return for a no-annual-fee credit card.
Annual fee: $0
Current welcome bonus: N/A
Pros: The Citi Double Cash provides a straightforward way to earn cash back on every purchase. It’s great as a stand-alone credit card for beginners, or, for more experienced cardholders, an easy card to pair with others for non-bonus spending categories. Plus, Citi now lets you convert your Citi Double Cash rewards into Citi ThankYou Points when you have a qualifying ThankYou card such as the Citi Prestige® Card.
Cons: The Citi Double Cash does not currently offer a welcome offer, so if you’re looking for a card with a great bonus to jumpstart your cash-back savings, you’ll want to look elsewhere. Additionally, the card doesn’t come with many other benefits. That’s to be expected from a no-annual-fee cash-back card, but it’s something to keep in mind.
The information for the Citi Prestige has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for customized earning: The Bank of America Cash Rewards card allows you to choose the category in which you earn 3% cash back each month, which means you have more control of your rewards structure. If your spending needs change throughout the year, this card can accommodate that.
Annual fee: $0
Current bonus: $200 back after you spend $1,000 within the first 90 days
Pros: You’ll be able to choose which category you earn 3% back in each month from the following list: gas, online shopping, dining, travel, drug stores or home improvement/furnishings. The card also earns 2% on groceries and wholesale clubs. That’s a solid earning structure on its own, but those who qualify for the Preferred Rewards program with Bank of America can earn up to 5.25% back on the category of your choice and up to 3.5% on groceries and wholesale clubs.
Cons: The card does come with a $2,500 spending cap in combined bonus spending each quarter. Additionally, you’ll have to have a pretty penny saved with Bank of America in order to take advantage of the Preferred Rewards program (at least $20,000 in combined, eligible Bank of America accounts).
The information for the Bank of America Cash Rewards has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for no annual fee: The Wells Fargo Propel packs a punch for no annual fee, with a number of 3x rewards categories and cell phone protection.
Annual fee: $0
Current welcome bonus: 20,000 points after you spend $1,000 in the first three months
Pros: The Wells Fargo Propel earns 3x on travel (flights, hotels, taxis, ride-hailing and car rentals among others), dining (which Wells Fargo defines as “eating out and ordering in”), gas stations and popular streaming services. While you may not be traveling a lot right now, those other two categories are both very valuable while we’re all staying home — and once travel is once again safe, 3x on those expenses is a great earning rate. Plus, like with Chase cards, you can pool rewards across Go Far Rewards cards. If you have the Wells Fargo Visa Signature (another no-annual-fee credit card), you could even get up to 1.75 cents per point of value when you redeem through the Wells Fargo travel portal. The card also comes with cellphone protection.
Cons: You’re getting a fixed value of 1 cent per point no matter what, which for points and miles experts can put this card at a disadvantage against cards from Chase, Amex, Citi and Capital One that allow you to transfer to partners and get potentially much more than 1 cent per point/mile.
The information for the Wells Fargo Propel has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for students: The Discover it Student Cash Back comes with pretty much identical benefits as the standard version, but it’s easier to be approved for if you are a college student with little to no credit.
Annual fee: $0
Current welcome bonus: Discover will match the cash back you earn in your first year
Pros: The Discover it Student Cash Back earns 5% on the first $1,500 spent each quarter on rotating categories each quarter you enroll. During Q2 2020, you’ll earn 5% back on gas stations, Lyft, Uber and wholesale clubs (on the first $1,500 each quarter you activate; then 1%). Students can potentially earn up to $300 in bonus rewards each year, and Discover will even match the cash back you earn at the end of your first year with the card. That means you could get up to $600 in rewards your first year on bonus spending alone. Additionally, students get a $20 statement credit each year your GPA is a 3.0 is higher (up to the next five years). And if you want to keep the Discover it Cash Back after college, you can always convert it over to the standard card when the time comes.
Cons: Like any rotating category card, you’re only earning 5% in select categories each quarter (on the first $1,500 in purchases each quarter you activate). This means if you want to be able to capitalize on groceries or gas stations year-round, you’ll want another card that earns bonus rewards on those purchases all the time. Additionally, keep in mind that you have to enroll in bonus categories every quarter, which can be an extra headache for students already juggling a full plate of class assignments and exams.
The information for the Discover it Student Cash Back has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Why it’s the best credit card for airline rewards: The Citi / AAdvantage Platinum Select offers a way to earn American Airline miles and enjoy a few elite-like perks without paying a high annual fee. It’s perfect for beginners or casual American Airlines flyers.
Annual fee: $99
Current welcome bonus: 50,000 AA miles after you spend $2,500 in the first three months of account opening.
Pros: The card’s welcome bonus is solid — TPG values it at $700. You’ll earn 2x miles on eligible American Airlines purchases, at gas stations and at restaurants. The card also comes with a solid lineup of perks for a card with a $99 annual fee, including a free checked bag, preferred boarding, access to reduced mileage awards and a $125 American Airlines flight discount after you spend $20,000 or more in purchases each cardmember year and renew the card.
Cons: You won’t get any luxury perks, such as lounge access or help hitting elite status. This card is best suited for those who are loyal to American Airlines. If you consider yourself a “free agent” when it comes to travel loyalty programs, you’d be better off with a card that earns transferable rewards that can be used across airlines and hotel brands.
The information for the Citi AAdvantage Platinum card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Credit cards offer a convenient way to pay for purchases while building credit and earning rewards. There are hundreds of credit cards available, each with its own advantages and disadvantages. For instance, you might find a card with a strong balance transfer offer but no rewards, or a great travel card that has an annual fee. The key is to understand your individual needs and what cards you can qualify for based on your credit profile — then pick the best credit card that meets those requirements.
There are a number of factors to consider when choosing the right credit card for you. The top three to keep in mind are:
Credit cards are available to people with a wide range of credit profiles, from those with excellent credit scores to folks that are rebuilding their credit or starting from scratch. There are credit cards you may be eligible for even if you don’t have a top-notch credit profile, but you should know before applying which cards you’re most likely able to get. That way you won’t waste time and a hard inquiry trying to get a card you won’t get approved for.
You might not be able to get a premium credit card without a strong credit profile, but by getting other cards and using them responsibly, you can build up your credit score over time and improve the likelihood that you’ll eventually be eligible for the very top cards.
The biggest advantage of most credit cards is how much you earn in rewards based on your spending. This means it’s important to pay attention to each card’s bonus categories, which are the types of purchases that earn extra rewards. Some of the most popular bonus earning categories include travel and dining purchases, but there are many other earning categories, from groceries to entertainment to streaming services to even fitness club memberships.
When choosing a credit card, you’ll want to match the card that best rewards your personal spending patterns so you can maximize how many bonus rewards you earn on a regular basis.
Credit cards are notorious for having high interest rates, so it’s vital that you either avoid paying any interest at all by paying your bill in full each and every month, or choose a card with a low interest rate. However, when it comes to fees, the calculation is a bit different, as it can sometimes make sense to pay an annual fee — even a substantial one — if the benefits you get from the card are worth the cost.
When choosing the right card for you, you’ll want to calculate how much value you think you’ll get from the card and then compare that amount to the card’s annual fee. If you’re getting more in value than it’s costing you, then the card may be a good choice for you. You’ll also want to consider other fees that might apply to using the card, such as whether it charges foreign transaction fees when you use it on international purchases.
Other factors to consider when choosing the right credit card are the travel benefits it provides, whether it offers bonus perks for high spending levels, protection coverages, the card’s issuer and convenience.
Credit card companies offer different kinds of cards to meet different consumer needs. Some people put a lot of money on their cards every month and then pay them off immediately — those people benefit from a card that returns a portion of their spending in the form of rewards. Others tend to carry a balance from month to month — they’re better served with a card that offers a low ongoing interest rate. Still others are working to improve their credit — issuers have cards designed for those people, too.
If you’re interested in frequent flyer miles, hotel points or a retailer’s rebate program, a rewards credit card could be right for you. Rewards credit cards offer proprietary points or miles that can be accumulated and redeemed for free goods, services or travel. In some cases, the rewards earned from certain credit cards can be transferred to a variety of other programs — these are known as flexible rewards.
The upside of rewards credit cards is that in some cases, you can leverage the points or miles to get more value from them than you would from cash. The downside is you must redeem the rewards within the issuer’s loyalty system.
There’s nothing more powerful than cold hard cash. If you’re just looking for money in your pocket, you’ll likely want a cash-back credit card. With a cash-back card, you’ll earn a percentage rebate on every purchase (i.e.: 1%, 2%, 2.5%) that adds up to cash in your account. Most cash-back cards provide the ability to redeem your earned cash back as either a statement credit against other charges on your card, as a check or direct deposit into your bank account, or in some cases for gift cards or at retail partners when making purchases.
Even though you can often get enough value from a credit card to offset the annual fee it charges, some people never want to pay an annual fee for a card. For those folks, there are plenty of no-annual-fee credit card choices on the market today. While you won’t find the top-end benefits, perks and earning rates of cards with annual fees on a free credit card, there are definitely worthwhile options that can earn you plenty of rewards or cash back.
There are also specific types of credit cards for businesses, for people looking to carry a balance at a low interest rate, for those loyal to a specific airline, hotel or retail brand and many other categories of cards.
To make sure you’re maximizing what a credit card can do for you, you should take time every 12 months to analyze your overall financial picture and determine if each of your current credit cards is serving your needs. If you aren’t earning bonus rewards in the categories you spend in most often, or if you don’t have the travel benefits you need, or if you’re paying a high annual fee but aren’t taking advantage of a card’s features, it may be time to get a new credit card that better fits your requirements.
Keep in mind that circumstances change over time, and a credit card that was previously right for you may no longer be a good fit. With so many options on the market, there’s no reason to have the wrong credit card in your purse or wallet.
Before you sit down and fill out a credit card application, make sure you know your personal credit score (remember to check your score with all three major credit bureaus), as well as what features you want most in a credit card and the best options on the market with those features. It’s also important to know the application restrictions and rules for the specific financial institution that issues the card you want. You don’t want to waste time and a hard credit inquiry on a card you won’t be able to get.
Related reading: How many credit cards should you have?
Credit card terminology can be confusing for beginners. What’s the difference between an issuer, a card’s network and a cobranded company?
The issuing bank is the institution that provides the financial backing for a credit card. It will be the one that typically determines (and pays for) credit card rewards and benefits. Examples include Chase and Capital One. Payment networks, on the other hand, are the companies that process the transactions between a merchant and an issuer, such as Mastercard or Visa.
Some issuers also do their own payment processing, such as American Express or Discover. Cobranded credit cards pair a credit card issuer with a company to provide unique brand-specific rewards for a cardholder. As an example, let’s take the Hilton Honors American Express Surpass® Card. American Express is both the issuer and the payment network, while Hilton is the cobranded company.
There are dozens of financial institutions that issue credit cards, from international banks to local credit unions. If you prefer individual attention and a one-on-one relationship with your issuer, you might want to look for a neighborhood bank that can offer you that level of attention.
On the other hand, the largest issuers tend to be able to offer the most generous perks thanks to being able to leverage their size. So, if your focus is on the best earning rates and benefits, you might prefer to apply with the largest issuers with the most robust credit card portfolios. These issuers include Chase, American Express, Citi, Capital One, Barclays, Bank of America and Wells Fargo.
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