How to choose the right credit card for you
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Whether you’re hoping to save money on your monthly grocery bill, rack up rewards for (mostly) free travel, want a card to help earn rewards on business expenses or have some other earnings goal, there is a card out there for you. The credit card market has exploded in recent years with new options, such as the United Club Infinite Card, and revamped classics like the new-and-improved American Express® Green Card.
With more options, however, comes more potential confusion over which card is the best for you. Since many of the best credit cards include annual fees, it’s important that you’re choosing the right credit card for your goals and spending habits to ensure any and all cards in your wallet are worth the expense. Today we’re walking through how to choose the best credit card for you.
The information for the Amex Green 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.
What to look for in a credit card
When choosing the right card for you, the first thing is to consider your goals. From there, you can narrow down what card is the best fit for you by looking at these factors:
- Rewards structure — Arguably the most important feature of a rewards credit card is the bonus categories a card offers. In order to maximize a credit card strategy, you want to earn more than 1% or 1x on as many purchases as possible. So, for example, if you spend the majority of your budget on groceries and dining, you should look for a card that earns bonus rewards in those categories. Alternatively, if you don’t have any spending categories that outshine the others, a flat-rate card that earns across spending categories might be a better option.
- Annual fee — Many of the best credit cards charge annual fees. Don’t let this deter you from applying, because in many cases a card’s fee will be worth it if you can maximize the rewards structure and other benefits offered by the card. However, it is something to keep in mind when credit card shopping. If you don’t think you’ll get enough value from a particular card to offset the cost of an annual fee, you’ll want to look at other options.
- Sign-up bonus — Many cards offer a sign-up bonus after you meet certain spending requirements within the first three to six months. While you shouldn’t base your entire decision off what a card offers upfront, it can help you choose between two cards that may both fit your long-term needs.
- Other benefits — Most rewards cards come with more benefits than just their rewards structure. Higher-tier cards may offer lounge access or annual credits, some cards may have partnerships with brands that give you additional perks and others may even help you hit elite status with your favorite airline or hotel brands. Make sure you’re considering what benefits are important to you when looking at credit cards to apply for.
Not sure where to start? Here are a few examples of what type of card you should look for based on common financial goals.
Want to finance purchases over time or pay off debt? Apply for a 0% APR card
While TPG always encourages that you pay off your balance in full each month, we also recognize that it isn’t always possible — especially during uncertain times like the ones in which we’re currently living. If you are trying to consolidate debt or just know you’ll need help financing purchases over the next couple of months, a card with a 0% APR intro offer could be a good fit for you.
These cards offer a timeframe (generally anywhere between 12 to 18 months) in which you can pay 0% interest on either new purchases, balance transfers or both. So long as you can confidently pay off your balance by the time your intro period ends (and the regular APR kicks in), you can save hundreds or even thousands of dollars on interest payments while reducing the financial burden of paying off your purchases all at once.
The Chase Freedom (No longer open to new applicants) and Blue Cash Everyday® Card from American Express are both solid options, offering 0% intro APR on purchases for the first 15 months from account opening. (Once the intro period ends, a regular variable APR of 13.99%-23.99% applies for the Blue Cash Everyday (see rates and fees); 14.99%-23.74% for the Chase Freedom).
Related reading: Best 0% APR credit cards
Want to save money on everyday expenses? Apply for a cash-back card
If your primary goal is just to save money beyond just travel expenses, consider a cash-back card. Rather than earning travel rewards that are most valuable when redeemed for (you guessed it) travel, cash back is worth a fixed value. You can use rewards to save on your monthly credit card bill, or if you have a card that allows you to deposit your rewards into a bank account, you can always start using rewards as a nice nest egg for an upcoming purchase or a rainy day.
There are a ton of cash-back rewards cards to choose from based on which spending categories will give you the most value. You can find cards with high earning on dining, such as the Capital One® Savor® Cash Rewards Credit Card, or, if you spend more on groceries, there’s the Blue Cash Preferred® Card from American Express® that earns 6% back on the first $6,000 spent per year at U.S. supermarkets (then 1%). If you want a more flexible option, there’s the Bank of America® Cash Rewards credit card, which allows you to choose your 3% back category each month (the 3% is up to a quarterly maximum; then 1%).
The information for the Capital One Savor 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.
Related reading: My mom got her first rewards card after using cash for 50 years
Want to book free travel? Apply for a transferrable currency card
When it comes to travel rewards, transferrable currencies are the most valuable. That’s because these cards allow you to book travel through an issuer portal or by transferring points to other loyalty programs for airlines and hotels. You can often get outsized value from these types of cards if your primary goal is to book award flights and hotel stays for (almost) free. Many of these cards also come with additional benefits such as travel insurance protections, annual credits, lounge access and more.
If you’re a beginner (or just don’t travel enough to warrant a high annual fee), cards such as the Chase Sapphire Preferred Card and Capital One® Venture® Rewards Credit Card are excellent choices — both have annual fees that are under $100. But if you do travel frequently, you might consider a premium card such as the Chase Sapphire Reserve or The Platinum Card® from American Express (see rates and fees) — both of which have high $550 annual fees, but come with higher earning rates on travel purchases and a ton of additional benefits.
Related: Best travel rewards cards
Want to build credit during college? Apply for a student credit card
Most of the cards mentioned above require you to have a good credit score, which means a proven history of paying bills on time and being a responsible borrower. While you’re in college, getting one of the cards that help you build credit so that you can eventually add more of our best credit cards to your wallet is a great step to take. Plus, building credit also helps when it comes time to finance a car, apply for a mortgage and more. Many student credit cards are available to college students who are just starting out with little to no credit, and many also still earn rewards.
The Citi Rewards+℠ Student Card is an option. The Citi Rewards+ Student Card offers bonus earnings on gas and grocery stores, plus a unique round-up feature that helps you earn even more rewards on each purchase. It has no annual fee.
The information for the Citi Rewards+ Student 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.
Related reading: Best cards for students
Want to earn rewards on side hustle expenses? Apply for a small business card
You don’t have to have a Fortune 500 company or even a physical office location in order to qualify for a small business credit card. If you have a side hustle selling on Etsy or a freelance gig, you can still apply. Business credit cards offer categories that personal cards do not often come with, such as office supplies or internet services. Plus, a small business card is a great way to keep your personal and business expenses separate when it comes time to do your taxes.
There is a business card out there for pretty much anyone and everyone, no matter what type of business you have. One great all-around business card is the Ink Business Preferred Credit Card, which offers 3x Ultimate Rewards points on the first $150,000 spent in assorted business categories each month while only charging a $95 annual fee each year. You can also find flat-rate business credit cards that earn rewards across all expenses, such as the Ink Business Unlimited Credit Card, which comes with 1.5% on all purchases, or the Capital One® Spark® Cash for Business, which earns 2% back across every purchase.
Related reading: Best small business credit cards
Want help earning elite status? Apply for a premium cobranded card
Some of the top cobranded travel credit cards offer ways that you can jumpstart your elite status journey, allow you to earn certain tiers through spending or occasionally even receive complimentary status just by being a cardholder. If your biggest travel goal is to hit elite status, then there are plenty of options out there to help you accomplish that goal.
For example, the Delta SkyMiles® Reserve American Express Card, with its $550 annual fee (see rates and fees), gives you four different opportunities to earn 15,000 Medallion® Qualification Miles (MQMs) at $30,000, $60,000, $90,000 and $120,000. Combined with the ability to earn a Medallion Qualification Dollar (MQD) waiver after spending $25,000, you could be well on your way to earning Delta elite status before you ever step on a Delta flight. A number of hotel credit cards offer complimentary elite status just by being a cardholder, including the Hilton Honors Aspire Card from American Express, with an annual fee of $450 (see rates and fees). You’ll get automatic Hilton Honors Diamond status, which TPG values at $3,025.
As you can see, there are a ton of options out there. No matter what your goals are for 2020 and beyond, I promise there is a card out there that will help you hit them.
Featured image by Isabelle Raphael/The Points Guy.
For rates and fees of the Hilton Aspire card, please click here.
For rates and fees of the Blue Cash Preferred card, please click here.
For rates and fees of the Blue Cash Everyday, click here.
For rates and fees of the Amex Platinum card, please click here.
For rates and fees of the Delta SkyMiles Reserve, please click here.
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TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.