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To determine which credit card is right for you, consider factors such as required credit score, benefits and annual fees. It's a bit like choosing a new pair of shoes. You may know what size you wear—or in the case of a credit card, you may know your credit score—but finding the perfect pair depends on fit, purpose and personal preference.
With so many credit cards available, there's bound to be one that's right for your unique credit situation. Additional factors to consider include card type, issuer, annual percentage rate (APR) and any promotional offers that may make the card appealing.
Your financial goals and history also play a role; maybe you're just starting out or you're recovering from a bankruptcy. When it's time to start narrowing down your list, here's how to zone in on the perfect credit card.
How to Find the Right Credit Card for You
First, arm yourself with the facts by checking your credit scores to see how lenders will view you. Virtually all lenders depend on the FICO® Score☉ or the VantageScore® to make quick, accurate decisions based on your perceived risk as a borrower. These scores range from 300 to 850, with higher numbers being preferable because they predict less lending risk.
Knowing where you stand will help you apply only for credit cards you're likely to get. If you apply for a credit card that's meant for someone with a high credit score but your numbers are on the low end, you'll probably be denied. If you have a high score and pursue a card for those with low scores, you won't get all the benefits you deserve.
Once you know your credit score, understand where it fits into the general range breakdown. Here are the ranges for FICO® Score tiers:
300 to 579 = Very poor credit
580 to 669 = Fair credit
670 to 739 = Good credit
740 to 799 = Very good credit
800 to 850 = Exceptional credit
You'll find a minimum or recommended credit score for each credit card when you read through card details. Card details might specify that fair credit is necessary, or provide a range, such as very good to excellent credit.
Knowing where you stand will give you a sense of what cards are within your reach. Experian's free CreditMatch™ program can streamline the process, paring down the options to the cards that match your credit profile. This is important because every time you apply for a new credit card, lenders will perform what's called a hard inquiry to determine your creditworthiness. Too many hard inquiries in a short period of time can cause your credit scores to temporarily drop, so you don't want to apply for several different cards at once.
Once you know the cards you're likely to qualify for, consider your financial goals and how a new credit card can help you meet those goals. If you'll be making small and occasional charges that you pay off quickly, you won't need a card with a lot of bells and whistles. If your goal is to improve your credit rating, finance a large purchase, deal with existing debt or rack up rewards, pay close attention to the cards that will help you to those ends.
Before applying for any credit card, carefully review its interest rate, fee structure, advantages and disadvantages. Understand that certain benefits, such as cash back or a promotional APR, may have limits and end after a certain period of time or a dollar threshold is met. And if your desired card carries "variable" interest, know that the interest rate you'll pay will depend on your creditworthiness.
How to Choose a Credit Card to Build Credit
Secured credit cards can be ideal for those who either haven't yet used credit or need to fix a damaged credit history. To minimize risk, a credit issuer will require a security deposit on a secured card that usually matches its credit limit. The deposit will be held in a separate account, and if you don't pay your bill, the issuer can take the owed sum from the funds held in deposit. If you keep the account in good standing, however, all that money will be returned to you when you close the account with no balance due.
When analyzing secured credit cards, make sure the card's issuer provides account activity to the three major credit bureaus (Experian, TransUnion and Equifax). If it doesn't, you won't be building a credit history. Also pay attention to the card's annual fee (if it has one), APR, expected deposit and any benefits it may offer. A few examples of secured credit cards that furnish information to credit bureaus are:
Platinum Prestige Mastercard® Secured Credit Card. The security deposit is between $200 and $2,000, and no credit history or minimum credit score is required. The annual fee is $49, and the APR is 9.99% on this card.
Discover it® Secured. The security deposit and credit limit on this card range from $200 to $2,500. Discover it® Secured has a cash back program, offering 2% back on your first $1,000 spent on gas and dining purchases combined every quarter, and 1% on all other purchases. This card has no annual fee, and the APR on purchases is 22.99% Variable.
How to Find the Right Low Interest Credit Card
If you plan on making a large purchases and paying them off over several months, a credit card with a low APR will keep costs down. Prioritize a low ongoing APR if you think you may carry a balance on your new card. If you plan on making just one large purchase (such as a new laptop), a 0% APR card is the better choice. A promotional 0% APR generally will give you a year or more to pay off the balance without any interest being added. The APR eventually will jump to the ongoing rate, which will be based on your creditworthiness.
Here is an example of credit cards with low APRs:
Discover it® chrome. This card offers 0% introductory APR on purchases and balance transfers for 14 months for new cardholders. After the intro APR period ends, the ongoing rate can vary from 11.99% - 22.99% Variable. This card does not have an annual fee and can earn you generous rewards on your purchases.
Citi® Diamond Preferred® Card. This card, from our partner, offers an introductory APR of 0% for 18 months on purchases and balance transfers, with a variable ongoing rate of 14.74% to 24.74% and a balance transfer fee of 3% (minimum $5). There is not a rewards program with this card, but you also won't be charged an annual fee.
How to Pick the Right Balance Transfer Credit Card
Balance transfer credit cards are perfect if your goal is to transfer existing debt from high interest credit cards. Many cards have a promotional 0% APR on balance transfers, and the right balance transfer card essentially will freeze any interest growth on that debt until the promotional rate expires.
The card issuer will typically charge a balance transfer fee that's a small percentage—often 3%—of the amount you move over. This charge is added to the balance, but you'll still come out ahead if you pay off the debt before the promotional period expires. The card's ongoing APR will apply to any balance remaining on the card once the promotional APR goes away. More to keep in mind: Paying late might cause the promotional rate to end prematurely, and any purchases you make may incur the ongoing APR, so check the terms thoroughly before you apply. Many balance transfer cards also offer perks and rewards programs.
Citi® Double Cash Card - 18 month BT offer. This card has a 0% for 18 months on balance transfers APR, then goes to 13.99% to 23.99% (Variable) depending on creditworthiness. There's no annual fee, and it offers a cash back rewards program.
How to Choose the Best Credit Card for Rewards
Want your credit card to work for you? A rewards card may be the right choice. To maximize this card's value, use it often and pay the balance in full every month so you avoid interest (which would negate the reward benefits).
There are several types of rewards cards from which to choose, and some cards offer benefits in more than one category:
- Cash back cards allow you to redeem a percentage of what you spend as either cash or as an account statement credit.
- Travel cards let you build points or miles for airfare, obtain elevated status with airlines and hotels, and reap other travel perks.
- Points-based cards accumulate points you can trade for things such as travel expenses, products and services, gift cards or even cash.
The more generous the rewards, the more likely the card will come with an annual fee. You'll need to decide which type of rewards you value most, and whether you're willing to do a little work to earn higher rewards. For example, some cash back cards allow you to earn more in certain rotating categories (such as gas or groceries) if you go into your account and activate the offer each quarter.
Many rewards cards also come with intro bonuses. If you spend a certain amount in purchases during a set period once you open the account, you'll be eligible to claim a big bonus—cash, miles or points. Miles and points are usually equal to about a penny each, so a 50,000 intro bonus may be roughly valued at $500; you'll get them after meeting the minimum spend.
Here are examples of each reward card type:
Blue Cash Preferred® Card from American Express. You will earn 6% cash back on select U.S. streaming subscriptions and at U.S. supermarkets (up to $6,000 per year; after that you'll earn 1%), 3% on gas and select modes of transportation, and 1% on everything else. You'll also be eligible for a $250 statement credit after you meet the $1,000 minimum spend within 3 months of opening the account. The introductory APR on purchases is 0% for 12 months from the date of account opening, then climbs to 13.99% to 23.99% (variable). This card has a $95 annual fee. Find out if you are matched to this card through Experian CreditMatchTM.
Chase Sapphire Preferred® Card. You'll earn 2 points per $1 spent on dining and travel purchases worldwide with this popular travel card. What's more, you'll get 60,000 bonus points when you spend $4,000 in purchases within the first 3 months of owning the card. That translates to $750 in travel rewards when you book through the Chase Ultimate Rewards portal. You won't pay foreign transaction fees when taking this card abroad. It has a variable APR of 15.99% to 22.99% and a $95 annual fee.
Make Your Credit Card Work for You
At this stage you should have a clear idea about which cards are right for you. Now it's time to go ahead and apply for the card that's the best fit for you. Your goal is to come out on top, with improved financial health and a credit score you can be proud of; make sure the credit card you choose helps you get there.