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If you’re searching for a new credit card, there’s a good chance you'll turn to Google and look up "what’s the best credit card." That’s a question I often get asked by everyone from family and friends to the salesperson who sold me a car, but I always have the same answer: there’s no true best credit card — it all depends on you.
There are hundreds of cards available, like a simple cash-back card, such as the Citi® Double Cash Card (see rates and fees), or a home improvement card like the Home Depot Credit Card. Everyone has unique financial and personal situations, so a card that’s the best for me isn’t necessarily the best for you, and vice versa.
That said, there are best credit cards for earning rewards in specific categories, like groceries, dining and travel, as well as getting out of debt and building credit.
It's important to know why you want to open a credit card before you apply, so you don't open the wrong type of card. If you opened a $550 annual fee rewards card, but then realize it's not for you, you can't just shred it and recover the cost. The card will remain open and you'll still be responsible for paying the annual fee. Not to mention — applying for a credit card results in a hard pull on your credit report, so you'll want to apply with discernment.
Luckily, with a little research, you can avoid the potential headache of having a card that doesn't meet your spending habits. Below, we outline some questions that you can ask yourself to make sure you choose the best credit card for your needs.
What’s your credit score?
Checking your credit score is an important first step that helps you gauge which cards you may qualify for. You may fall into one of five credit score ranges, according to FICO®:
- Very poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Card issuers review the range you fall into when they pull your credit report during the application process. Issuers will also check your credit for any potential red flags, such as maxed out credit limits and late payments.
It’s important to regularly check your credit score and review your credit report so you know where you stand and can work toward improving your credit score. You can check your FICO® Score for free with *Experian Boost™ and Discover Credit Scorecard.
When will you use the credit card?
Credit cards provide you with the convenience of buying now and paying later, but they can do so much more. With the right credit card, you can earn rewards that can pay for your next vacation, finance a home renovation, finally pay off your debt and build credit. It's well worth taking a moment to think about just how you'll be using it.
From my personal experience, taking the time to understand when you'll use a credit card can pay off in travel and dining benefits. I was able to offset $350 worth of food on a vacation to Phoenix, Arizona thanks to benefits on my American Express® Gold Card.
Here are some ways you may want to use a credit card:
- To earn rewards: Rewards cards, like the American Express Gold Card, allow you to earn cash back, points or miles on everyday expenses that may include groceries, dining and travel. The rewards you earn can help offset your bills and save you money in the long-run.
- To finance large expenses: If you have big purchases coming up, it can be a good idea to use a credit card that offers no interest for up to 18 billing cycles, like the U.S. Bank Visa® Platinum Card. (After the intro period, a 18.74% - 29.74% variable APR applies.) Balances must be transferred within 60 days from account opening. This allows you to pay for purchases over time, without interest as long as you make at least the minimum payments and repay the entire balance before the intro period ends.
- To get out of debt: If you have credit card debt, completing a balance transfer is a great way to move debt from a card with high interest charges to another with no interest for up to 20 months. The Citi Double Cash Card is a great choice, with an intro 0% APR for the first 18 months on balance transfers (then, 19.24% - 29.24% variable). Balance transfers must be completed within four months of opening an account, intro balance transfer fee is 3% of each transfer ($5 minimum) applies; after that, a balance transfer fee of 5% of each transfer ($5 minimum) applies.
- To build credit: Establishing credit is one of the most important financial actions you can take since credit plays a key part in many major life decisions, like getting approved for a mortgage or auto loan. Cards designed to help credit newbies build credit include the Petal® 2 “Cash Back, No Fees” Visa® Credit Card and Discover it® Secured Credit Card.
Once you know how you plan to use a card, you can fine-tune your search for the best credit card.
Are you willing to pay an annual fee?
Many credit cards charge an annual fee that can range from under $100 to upwards of $550. You should determine what is the maximum amount of money you’re willing to pay to use a credit card. That may be $0 or more, depending on the card benefits.
It’s important to calculate whether the annual fee is worth the cost. For instance, the American Express Gold Card is a great card for dining out, ordering takeout and traveling, but it comes with a relatively high $250 annual fee. (See rates and fees.)
That said, the annual fee can easily be offset by taking full advantage of the card’s up to $240 in food-related credits every year, among other perks. Card members receive up to $120 per year ($10 statement credit every month) for purchases made with Grubhub, Seamless and other eligible restaurants, after a one-time enrollment. Plus, receive up to $120 per year in Uber Cash ($10 in Uber Cash every month) that you can apply toward U.S. Uber Eats orders and Uber rides in the U.S. Add your Gold card as a payment method in your Uber account to benefit. (Learn more about the Uber Eats Pass benefit; offer ends 12/31/2021.) Terms apply.
I'm able to offset the Gold card's annual fee through these benefits, but that's not always the case. I recently downgraded my Chase Sapphire Reserve® after only one year, since the $550 annual fee was no longer worthwhile for me. As a result, I now have a credit card that I don't really use much. I couldn't have predicted that Chase would increase the annual fee from $450 to $550 a week after I applied, but I could've possibly taken more time to decide if I was able to offset the fee in the long-term.
If you don’t want to pay an annual fee, that’s perfectly okay. There are many no-annual-fee credit cards with competitive benefits. The Citi Double Cash Card offers one of the best cash-back rates: 2% cash back: 1% on all eligible purchases and an additional 1% after you pay your credit card bill.
Bottom line
Even though there’s no single best credit card, there’s still a best credit card for you. That may be a rewards card, 0% APR card or a starter card that can help you build credit. Simply review the reasons why you need a credit card and what you want to get out of using one. Your answers can help narrow down your options and influence the card that you apply for.
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*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
Petal® 2 “Cash Back, No Fees” Visa® Credit Card issued by WebBank.
For rates and fees of the Discover it® Secured Credit Card, click here.
For rates and fees of the American Express® Gold Card, click here.
