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With literally thousands of options to choose between, picking a credit card can be a challenging prospect. Understanding which type of card you want, your spending habits and your credit can help you narrow down your list of choices to determine the right fit for you.
What's the Best Credit Card to Get?
While some credit cards are generally better than others, there's no single best credit card out there for everyone. Each card has its own set of features, fees and other terms, some of which can be a better fit for you than others based on your preferences, spending habits and credit.
The first step in the process of choosing a credit card is to learn about the different options in front of you and how each one could work for you.
Choose the Type of Credit Card That Fits Your Needs
There are several types of credit cards from which you can choose. Regardless of which card you have in mind, make sure you meet its credit requirements and that its features work well with your lifestyle.
Low-Interest Credit Cards
Low-interest credit cards generally offer an introductory 0% APR promotion, during which you'll pay no interest on purchases for a set period—typically between six and 21 months. This promotion gives you time to make a large purchase or several purchases and pay them off over time interest-free.
As long as you pay the balance in full by the end of the promotional period, you won't pay any interest. However, if you have a remaining balance by the time the promotional period is over, your leftover balance will be assessed interest based on the card's standard APR.
These cards may also provide rewards, welcome offers and other valuable benefits.
Balance Transfer Credit Cards
Balance transfer credit cards are similar to low interest credit cards, and many cards even fit into both categories. These cards allow you to move debt from another credit card via a balance transfer and pay it off with an intro 0% APR for 12 to 21 months, depending on the card.
This arrangement isn't always completely free, though. Many balance transfer credit cards charge an upfront fee—typically 3% to 5% of the transfer amount—to process the transaction. Depending on how much debt you have and how much you stand to gain in interest savings, however, it could be well worth it to pay the fee.
Cash Back Credit Cards
These cards offer cash back rewards, which are generally more flexible than points and miles―after all, you can use cash for just about anything. Cash back credit cards typically have one of three rewards structures:
- Flat-rate rewards: You earn the same rewards rate on every purchase you make.
- Tiered rewards: These cards offer different rewards rates on different spending categories. For example, you may earn accelerated rewards on groceries, gas, dining out, streaming subscriptions and more.
- Rotating rewards: These cards function similarly to tiered rewards cards. The difference is that these cards rotate their bonus rewards categories every few months.
Many of the best cash back credit cards don't charge annual fees, though there are some exceptions. That said, they also typically offer lower intro bonuses (again, with some exceptions) than you'd get with a travel rewards credit card. It's not uncommon to find a cash back credit card with an intro 0% APR promotional rate that applies to purchases, balance transfers or both.
Travel Credit Cards
Travel credit cards offer rewards you can use to get free travel. Depending on the card, you may also get extra travel-related benefits, such as access to airport lounges.
If you're loyal to a specific airline or hotel chain, you can get one of its co-branded credit cards, allowing you to earn points or miles with the brand as well as specific perks when you fly with that airline or stay at that hotel's properties.
Alternatively, you can opt for a general travel credit card which offers more flexibility with your rewards but also more general travel benefits. Rewards rates can be flat or tiered. It's common for a travel credit card to charge an annual fee and offer a large intro bonus. The higher the annual fee, the more travel perks you can typically get.
Secured Credit Cards
These credit cards work almost exactly like traditional credit cards, with just one distinction: Secured credit cards require that you put up a security deposit—often equal to your approved credit limit—to get approved.
That means that if you're willing to put down $200, you can typically get just a $200 credit limit. As you use the card and make payments, the card issuer will report the activity to the credit bureaus. Make sure any card you're considering reports to all three credit bureaus (Experian, TransUnion and Equifax).
The best secured credit cards don't charge an annual fee, but they tend to have higher interest rates. In some cases, you may be able to earn rewards while you work on building your credit.
Student Credit Cards
If you're a college student, you may be able to qualify for a student credit card instead of a secured card. These cards don't require a security deposit and often come with perks that can help you establish good credit habits.
Unsecured Credit Cards for Bad or Limited Credit
If you're not a student and want to avoid paying a security deposit, there are other unsecured options available. In some cases, you may even be able to get approved without a credit check.
However, it's important to keep an eye on fees and APRs while you're comparing cards. Some unsecured cards for poor credit charge outlandish fees, such as a processing fee to open your account and a monthly service charge in addition to an annual fee.
Store Credit Cards
Store credit cards are offered by many retailers and often will net you rewards or perks when you shop at the store that issued them. You may even get a one-time discount when you apply for the card or get approved.
Some store credit cards can only be used with that retailer, while others allow you to make purchases anywhere. Many store credit cards don't require good credit to get approved, but they typically charge higher interest rates and have lower credit limits than traditional rewards credit cards.
Small Business Credit Cards
If you own a small business, you may want to choose a business credit card over a consumer card.
Business credit cards often provide higher credit limits than consumer credit cards and offer business-specific rewards categories and other benefits. You can find business credit cards with cash back or travel rewards, intro 0% APRs on purchases and balance transfers, and even credit-building features.
Check Your Credit Score Before Applying
Most of the best credit cards for low interest and rewards require good or excellent credit, but you can still get approved for a variety of cards if your credit score is considered fair, poor, limited or even non-existent.
The key is to check your credit score before you apply to gauge your credit health and compare credit cards based on that information. You can even use Experian CreditMatch™ to get matched with cards you may have a good chance of getting approved for based on your credit profile.
Choose the Best Card for Right Now
You may want to spend extra time to pick the best credit card for the long term, but chances are that your credit score, spending habits and preferences will all change over time. Additionally, it's possible that you may miss a great card in your research that you might want later.
As such, it's a good idea to evaluate your situation every year or two to determine if you're still using the best credit card for you.
Rather than trying to predict the future or analyze every single credit card you can find, focus on which card is best for you right now and leave the door open for new and potentially better credit cards in the future.