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How to choose the best credit card for you

Oct. 20, 2022
11 min read
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The promise of earning valuable perks from a credit card can be exciting. But, choosing the best card to add to your wallet isn’t always as easy as it seems.

There are many factors to weigh before you fill out an actual application. At the very least, you need to consider your spending habits, the types of rewards you value the most and the kind of credit card you’re likely to qualify for at this time.

Here’s everything you need to know about how to choose a credit card.

Use the right card and maximize your rewards on everyday purchases. Try it today with the free TPG App.

Check your credit report

Step one to choosing the right credit card is checking your credit report from Equifax, TransUnion or Experian. When you apply for a credit card, the condition of your credit will have a considerable influence over whether you get approved or not. You can check all three of your credit reports for free once every 12 months at AnnualCreditReport.com.

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Be sure to go through each report in detail. Get a sense of how your credit shapes up — good, bad or otherwise. It’s also wise to check for errors and report them. Credit errors do happen and they could unfairly lower your credit scores. If you discover errors, you can dispute them with the credit bureaus. The Consumer Financial Protection Bureau provides sample dispute letters that may help.

You can check your credit scores as well, even though the scores you find online will likely be different from the score your lender sees. Credit card issuers have different minimum credit score requirements for different cards. So, if you find that your credit score currently falls in the “fair” range, it’s probably not wise to apply for a premium rewards card that requires excellent or good credit to qualify.

Related: 6 things to do to improve your credit score

Understand your spending habits

Next, you should look back and examine your spending habits. Do you spend a lot of money each month on groceries to feed a large family? Do you order takeout or dine out often?

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With the right credit card strategy, you may be able to boost your reward-earning potential in different spending categories. For example, there are credit cards that offer extra rewards when you spend on certain categories:

When you choose a credit card that offers higher rewards for purchases you make frequently, you can earn more points, miles, or cash back (depending on the type of card).

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Let’s look at dining as an example and imagine you spend an average of $1,000 per month on dining purchases. You could earn up to $20 per month (or $240 per year) with a 2% cash back card like the Citi® Double Cash Card (1% when you buy, plus 1% as you pay).

Now, assume you place the same $1,000 in monthly dining purchases on the Chase Sapphire Reserve®. You would earn 3 points per dollar spent for a total of 3,000 Ultimate Rewards points each month (or 36,000 per year). Based on our valuation of Chase points of 2 cents per point, those 36,000 Ultimate Rewards points could be worth up to $720 in rewards — that’s a lot more bang for your buck.

Related: These are the best credit cards for everyday spending

Research the different card types out there

Once you know your credit score and identify your heavy spending categories, you’re ready to start sifting through credit card offers. At this point, you should try to figure out which credit card features are the most appealing and how you plan on redeeming your points.

For example, if you have a specific trip in mind and you know which airline you want to use, you may want to get a cobranded airline card or opt for a card that provides flexibility in transfer partners, like the Chase Sapphire Preferred® Card.

Here are some common types of credit cards to consider:

Cobranded airline and hotel credit cards

Cobranded airline and hotel credit cards are ideal for people who are loyal to a specific program but not enough to earn elite status. These cards offer benefits that can make your travels a little more comfortable.

With airline cards, you can expect free checked bags, discounts on inflight purchases, and possibly even progress toward elite status. On the other hand, hotel credit cards usually offer mid-tier status, resulting in perks like room upgrades, free breakfast and bonus points on paid stays.

Bank rewards cards

Bank rewards cards offer the ultimate flexibility in terms of redemptions. These cards often offer generous bonuses in everyday spending categories.

When it comes to redeeming points, you have the option to choose cash back or transfer points to airline and hotel transfers — making these rewards extremely versatile. If you opt for a premium bank rewards card, you can even take advantage of valuable perks like airport lounge access and annual travel credits.

Some of our favorite bank rewards cards include the Chase Sapphire Preferred, Citi Premier® Card and the American Express® Gold Card.

Cash-back credit cards

Cash-back credit cards may be a good fit for people who prefer to keep things simple regarding credit card rewards. There are no rewards programs to track and you never have to worry about a card issuer devaluing your rewards. Plus, cash rewards give you the ability to spend your earnings on anything you like.

PAUL YEUNG/BLOOMBERG/GETTY IMAGES

Cash back cards like the Blue Cash Preferred® Card from American Express are great if you want to maximize everyday spending categories like U.S. gas stations, U.S. supermarkets and select U.S. streaming services.

The Citi® Double Cash Card is a unique option if you want to earn cash-back rewards that also have the potential for high-value redemptions when paired with a more premium card .

No-annual-fee credit cards

No-annual-fee credit cards can be a good fit for people who prefer to minimize their out-of-pocket expenses when earning rewards.

The Chase Freedom Flex is a great example of a high-value card with no annual fee. The card offers rotating 5% cash back categories where you can maximize your earnings. You can earn 5% cash back in rotating quarterly categories on the first $1,500 in purchases each quarter you activate. The best part is that if you also have the Chase Sapphire Preferred or Chase Sapphire Reserve, you have the option to transfer these points to Chase’s travel partners.

Related: How to maximize your Chase Ultimate Rewards points

Learn basic credit card terms

As you shop around for the credit card that ticks off all of your boxes, it helps to understand the basic credit card terms you’ll come across during your search. Knowing these terms will better enable you to compare offers from multiple card issuers and choose your favorite.

  • APR: This stands for annual percentage rate — the interest a card issuer charges you stated as a yearly rate. A card’s APR may be less important than you think if you don’t carry an outstanding balance. With most credit cards, you won’t owe any interest if you pay your full statement balance by the due date.
  • Fees: Credit card fees are additional costs that may be associated with certain credit cards. Common fees to watch out for are annual fees, late payment fees, balance transfer fees and foreign transaction fees — to name a few. A credit card fee isn’t necessarily a deal killer, but you should understand what you’re agreeing to before applying for a new account.
  • Minimum payments: A minimum payment is the lowest amount of money you can pay to your card issuer each month. If you don’t pay the minimum payment, you may incur late fees and could damage your credit rating.
  • Perks: Aside from rewards, some credit cards offer other perks that can be extremely valuable. Airline fee credits, TSA PreCheck and Global Entry credits, airport lounge access and rental car coverage are just a few examples. Enrollment is required for select benefits.
  • Rewards: Credit card rewards are usually tied to how much you spend on the account. Rewards may come in the form of points, miles, or cash back you can earn and redeem.
  • Welcome bonus: A credit card welcome or sign-up bonus is an offer some card issuers make to attract new clients. Typically, you must spend a minimum spend requirement to qualify within a few months of opening your new account. For example, that might look like “spend $2,000 or more in the first three months of account opening”. If you meet the spending requirement, you’ll receive a certain number of points, miles or cash back in return.

Related: TPG’s beginner’s guide to credit cards: Everything you need to know

Review credit application requirements

We’ve already discussed how good credit is vital if you hope to qualify for a new credit card. Suppose you want to maximize your chances of being approved for a credit card. In that case, you should be familiar with other factors card issuers may consider too, like household income and outstanding debt.

Chase has stricter application rules than some other major card issuers. JON HICKS/GETTY IMAGES

It may also help to review credit card application restrictions from different card issuers to see if any of them might hold you back. For example, American Express limits welcome offers to once per lifetime, while Chase will generally not approve you for a new card if you’ve applied for five or more cards in the last 24 months.

Because of rules like these, you’ll want to apply for the highest Amex card bonus possible and keep track of your credit inquiries before applying for a Chase card.

Related: Want to open a new Chase card? Here’s how to calculate your 5/24 standing

Bottom line

Ultimately, choosing a credit card comes down to making a decision based on your personal needs. You should consider a card that offers the most rewards in your biggest spending categories and helps you meet your future travel goals.

Before you apply for a credit card, it’s essential to be aware of your credit score and any card issuer limitations that could impact your ability to get approved or earn a welcome bonus. If you qualify and use your new credit card responsibly, it has the potential to be a great tool that can help you build credit while earning attractive rewards as a bonus.

Additional reporting by Emily Thompson, Stella Shon and Ariana Arghandewal.

Featured image by RGSTUDIO/GETTY IMAGES
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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How we chose these cards

Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
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TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023