Picking a credit card can be a daunting task. There is no one credit card that will fit every person’s needs perfectly. Instead, you have to think through what is most important to you. Do you want miles or points? Foreign transaction fees? Rewards on dining, groceries, or travel?
Everyone’s answer will be different, but we’ve gathered some of the best credit cards in one place. All of these best credit cards have low annual fees (or perks that offset the annual fees),competitive APRs, and lucrative reward rates when possible.
They’re all good cards. But picking the right one for your needs depends on you, so check out our best credit cards list for November 2022.
The Best Credit Cards of November 2022
Wells Fargo Active Cash Card: Best Simple Cash Rewards
Chase Freedom Unlimited: Best No Annual Fee + Sign Up Bonus
American Express Blue Cash Preferred Card: Best Overall Cash Rewards
Discover it Cash Back: Best for Rotating Rewards Categories
BankAmericard Credit Card: Best Balance Transfer Credit Card
Chase Sapphire Preferred Card: Best Bonus Rewards Card
Capital One Venture Rewards: Best Overall Travel Card
Capital One Venture X Rewards: Best for Premium Flexible Travelers
American Express Gold Card: Best for Foodie Rewards
Capital One QuicksilverOne Cash Rewards: Best for Fair Credit
Discover it Secured Credit Card: Best Secured Credit Card for Bad Credit
Petal 1 Credit Card: Best Unsecured Credit Card for Bad Credit
Discover it Student Cash Back Credit Card: Best Overall Student Card
American Express Blue Business Cash Card: Best for Small Businesses
Wells Fargo Active Cash Card
$200 cash rewards bonus after eligible purchases
0% introductory APR
The Wells Fargo Active Cash Card earns its place on our best credit cards list because of its simple approach to cash rewards. You earn 2% back on all everyday purchases, all year long. There’s no limit to the cash back, and you can redeem it in several ways: to cover purchases, as a statement credit, at the ATM in $20 increments, or as a gift card. Both the ATM and gift card options require you to redeem your cash back in specific amounts, which makes them slightly less convenient options, but the redemption process is still simple and straightforward.
In addition to uncomplicated cash back, the Wells Fargo Active Cash Card also has a decent introductory bonus. If you spend $1,000 in the first 3 months, you get $200 cash rewards. That’s a little more in purchases in a little less time than some comparable cards, so do some quick math on your typical monthly spending before signing up in hopes of taking advantage of this offer.
For a no annual fee card, we also love the 0% intro APR for 15 months on purchases and qualifying balance transfers. Like always, we don’t suggest you carry a balance, but if you have to it’s nice to know you’re covered.
There aren’t a lot of bells or whistles to this card (that’s kind of the point), but we do like the cell phone protection plan that protects your phone up to $600 against damage or theft when you pay your bill with it ($25 deductible).
Bottom line, this is a great card for flat rate rewards that don’t require minimums to redeem cash.
Chase Freedom Unlimited Credit Card
$200 welcome bonus after eligible purchases
No annual fee
The Chase Freedom Unlimited Credit Card is all about the bonus rewards for signing up. First, you get a traditional sign up bonus of $200 after you spend $500 on purchases in the first 3 months from account opening. Then for the next year, you’ll also earn 5% cash back on grocery store purchases (excluding Target and Walmart) up to $12,000 spent in the first year. This can add up to almost $600 in additional cash rewards year one.
From there, the Chase Freedom Unlimited Credit Card also offers 0% intro APR on purchases and qualifying balance transfers for the first 15 months.
Outside of the introductory offer, the Chase Freedom Unlimited card still offers good returns with 3% on dining, 3% on drugstore purchases, 5% on travel purchased through Chase Ultimate Rewards, and 1.5% on all other purchases. The rewards earned through these purchases don’t expire and there is no minimum to redeem cash back.
This card also has you pretty covered when it comes to security and insurance features–especially for a no annual fee card. You’ll have purchase protection, fraud monitoring, auto rental collision damage, and trip cancellation to name a few. Plus, it’s easy to use Chase Credit Journey to keep track of your credit. You actually don’t need a Chase account to use the Chase Credit Journey, but it’s good to be aware of it if you already do. The Chase Credit Journey helps monitor your credit score, notifies you if your data is breached, and connects you with round-the-clock support for questions.
In short, this card’s multiple introductory offers earns it a place on our best credit cards list, but its basic offerings are pretty good, too.
Blue Cash Preferred Card
$300 welcome bonus
The Blue Cash Preferred Card from American Express offers you $300 back in a statement credit after you spend $3,000 in purchases in the first six months. The $95 annual fee is also waived for the first year as a welcome gift. And with the practical categories for earning rewards where you already spend money, you may barely notice the annual fee when it returns.
When considering rewards categories, the team behind the Blue Cash Preferred Credit Card considered activities Americans spend a lot of their time doing: eating and commuting. You’ll get:
6% on groceries (up to $6,000) U.S. supermarkets
6% on select U.S. streaming subscriptions
3% on transit taxis, rideshare, parking tolls, trains, etc
3% on gas stations
1% everywhere else
Some categories have limits so it’s not perfect, but a 6% return on something as universal as groceries is awesome.
The Blue Cash Preferred Card from American Express also grants you access to the Pay It, Plan It program, which allows you to split larger purchases into interest-free, fixed monthly payments. These payments do include a small monthly fee, but setting up a payment plan for large, unexpected expenses you wouldn’t be able to cover otherwise can save you money on interest and help protect your credit score. Win, win.
American Express is also looking out for you with such protection as rental and damage insurance and return protection.
Discover it Cash Back Credit Card
First year bonus match
0% intro APR
The Discover it Cash Back Credit Card offers 5% cash back on rotating categories that change each quarter. You have to go on each quarter and activate the bonus categories, so it can be a little bit of work, but we think it’s worth it. The categories are common purchases like:
January through March: 5% back on grocery stores (excluding Walmart, Target, and warehouse stores) and fitness clubs or gym memberships
April through June: 5% on gas stations and Target
July through September: 5% on restaurants and Paypal
October through December: 5% on Amazon.com and digital wallet purchases
At the end of your first year, you’ll also get an extra surprise with Discover’s Unlimited Cashback Match. Basically, at the end of the first year, Discover will match all the rewards you earned. This effectively doubles your reward returns for the year!
We also like that the Discover it Cash Back card includes 0% intro APR for 15 months on purchases and balances transfers. This isn’t the longest offering on the market, but it’s pretty close.
Besides that, you also get Discover’s award winning customer service and information protection perks. With your card, you can activate free social security number alerts and online privacy protection, where Discover searches for your information on 10 popular people search websites and deletes it.
This card doesn’t have any foreign transaction fees, but it’s worth noting that Discover isn’t widely accepted internationally, so it might not be the best card for travel.
BankAmericard Credit Card
0% intro APR
No balance transfer APR for 60 days
The BankAmericard Credit Card really serves one purpose: to help you avoid paying interest for as long as possible. With 0% intro APR on purchases in the first 21 billing cycles and qualifying balance transfers in the first 60 days, you can really save a lot in interest payments. Keep in mind, you do still have to pay the balance transfer fee of 3% or $10, whichever is higher, for each qualifying balance transfer.
This card also avoids charging a penalty APR, so if you’re late in your payments, you won’t be hit with crazy high APRs like other cards. This doesn’t mean you’re off scotch-free, however. You’ll still pay a pretty high late payment fee and missing a payment could hurt your credit score. Still, the wiggle room is nice.
After the introductory period expires, this card has basically served its purpose. There are no rewards to speak of and the regular purchase APR is just fine.
We suggest you get this card to use the introductory period and, depending on your credit history, move on to better cards (maybe a different one from our best credit card list) after.
Chase Sapphire Preferred Card
60K bonus points after qualifying purchases
10% anniversary point boost
The Chase Sapphire Preferred Card currently offers 60,000 bonus points after you spend $4,000 on purchases in the first three months after account opening. Because Chase values points spent for travel on Chase Ultimate Rewards 25% more, these points can add up to $750 in travel purchases.
To earn points on everyday purchases, you can earn:
5x points on travel purchased through Chase Ultimate Rewards
2x on all other travel
3x on dining
5x on Lyft (through March 31, 2025)
3x on streaming and online grocery,
1x point on all other everyday purchases
If it seems like a lot of bonus categories, it’s because it is. Plus, on your anniversary you get a 10% anniversary point boost to help you earn even more points.
The real value of Chase Sapphire Preferred is the flexibility of the points redemption. You can redeem your points in cash back, purchase travel through Chase Ultimate Rewards or even transfer them to several frequent user hotel and airline programs like Hyatt or SouthWest.
Other travel perks include auto rental coverage, trip cancellation insurance, and lost luggage insurance. You also get an annual $50 hotel credit that is applied when you book a hotel through Chase Ultimate Rewards.
Capital One Venture Rewards Credit Card
75K bonus miles with eligible purchases
$100 Global Entry or TSA PreCheck credit
The Capital One Venture Rewards Credit card offers unlimited two miles per dollar on every purchase for only $95 a year–a relatively low price compared to other travel cards. Because most travel cards reward travel-specific purchases, this reward on everyday purchases is unique–though you do also get 5 miles per dollar on hotels and rental cars booked through Capital One Travel.
With this card you also get other perks to make traveling smoother like no foreign transaction fees, travel accident insurance, rental car coverage, and even $100 reimbursement for Global Entry or TSA PreCheck. Plus, you get two complimentary visits per year to Capital One Lounges or 100+ locations through their Partner Lounge Network.
When you’re ready to redeem these miles, you can purchase travel through Capital One Travel, apply it as a statement credit, or transfer the miles to one of Capital One’s 15 airlines or hotel partners. If you book travel through Capital One Travel, you’ll receive Capital One’s best prices guarantee so that you feel confident booking a good price.
This card does require excellent credit so not everyone will qualify, but if you can, the bonus alone might convince you. Right now, if you spend $4,000 within the first three months, you’ll get 75,000 bonus miles — that’s almost $750 toward travel.
Capital One Venture X Credit Card
75K bonus miles after eligible purchases
$300 annual travel credit
The Capital One Venture X Credit Card is all about the premium rewards program and travel experience. You get 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening — that’s roughly $750. You also get 10,000 bonus miles every year on the anniversary of your card.
When it comes to actually earning miles through purchases, you can earn 2x miles on everyday purchases, 5x miles on flights booked through Capital One Travel, and 10x miles on hotels and rental cars booked through Capital One Travel. This is one of the highest rewards returns on the market and if you’re planning on doing a lot of traveling, it can be very lucrative.
On top of all this, Capital One also gives you $300 in annual travel credits for bookings through Capital One Travel and the peace of mind that comes with Capital One’s best prices guaranteed. Basically, if you purchase a flight through Capital One Travel when they recommend you do and the price drops, you’ll be able to apply for a partial reimbursement.
You’ll also get a Global Entry or TSA PreCheck credit and other travel safety perks like lost luggage insurance and cell phone protection.
These are all great, but the perk that pulls this card into the premium card category is the complimentary, unlimited access to Capital One Lounges or 100+ other locations through their Partner Lounge Network. If you want to rest and unwind at the airport, this might be the card for you.
We know at first this card’s fee may be too steep for some, but, for us, the premium perks and high earning potential (and the fact that it’s cheaper than other premium travel cards) earns it a spot on our best credit cards lists.
American Express Gold Credit Card
90K membership rewards points after purchases
$120 dining credit
The American Express Gold Credit Card is a great choice for people who love to eat out. With this card, you’ll be rewarded 4x points on restaurants worldwide (and take out and delivery in the US), making it one of the best dining reward returns on the market.
The rewards don’t end there with 4x points at the supermarket (up to $25,000), 3x points on flights, and 1x points for all other purchases. Plus, if you sign up now, you can earn 90,000 membership rewards points as a welcome bonus after you spend $4,000 in the first 6 months.
These membership rewards points can be redeemed through American Express’ airline or hotel partners, for gift cards, to cover previous card charges, or at check out on online stores. You can even transfer your points to various airline and hotel frequent travel loyalty programs. Most points transfer on a 1:1 basis, but be aware that you’ll be charged $0.00006 per point with a maximum fee of $99 when you send them to US airlines.
If the perks don’t move you, the American Express Gold card also offers a $120 Uber credit and $120 dining credit (to select restaurants) each year. Each of these credits come as $10 statement credits each month. Waiting month to month is tedious, but still it’s free food money.
Basically, this card offers great membership reward points on dining out and buying groceries, just make sure you spend enough to make it offset the annual fee.
QuicksilverOne Cash Rewards Credit Card
Possible to upgrade to better credit line
The Capital One QuicksilverOne Cash Rewards Credit Card is an unusual card because it accepts fair credit and offers above average rewards. With this card, you can earn unlimited 1.5% cash back on all purchases.You can even get 5% cashback on any travel purchases you make on the Capital One Travel website.
While this card does have a $39 annual fee, this unlimited cashback should help you earn back the expense. When you’re ready to redeem these points, you can redeem them for cash, receive a statement credit, or apply them to cover a recent purchase.
Like all cards for less than stellar credit, the Capital One QuicksilverOne Cash Rewards Credit Card has a pretty high APR so we don’t suggest you carry a balance on this card. Plus, after 6 months of responsible use you may be upgraded to a higher credit line–leading to higher credit limits and lower APRs.
Basically, this card is an easy way to begin growing your credit score, which is why we consider it one of the best credit cards for fair credit.
Discover it Secured Credit Card
First year dollar-for-dollar match
No annual fee
Like all secured cards, the Discover it Secured Credit Card requires a refundable security deposit in order to extend you a line of credit. Your deposit amount matches your credit limit so if you want a $500 credit limit, you’ll pay a $500 security deposit. The Discover it Secured Credit Card’s security deposits start at $200 and go up to $2,500.
This deposit makes you less of a risk for Discover, so even bad credit users will probably qualify.
It might be difficult to think about $200 leaving your bank account for a while, but hopefully it won’t be for too long. After seven months, Discover will begin automatically evaluating your creditworthiness. If you’ve proven you can responsibly use the card, they’ll upgrade you to an unsecured card and refund your deposit. This chance to move up to a higher credit line is one of the main things we look for in a secured card.
When it comes to rewards, the Discover it Secured Credit Card offers 2% back on gas stations and restaurants (up to $1,000 in combined purchases each quarter) and 1% back on all other purchases. Plus, at the end of the first year, you’ll experience Discover’s Unlimited Cashback Match. All the cashback you received in the first year will be automatically doubled–a dollar-for-dollar match. Many secured cards don’t offer rewards at all, so this is a pretty good showing.
This card does have a pretty high APR, but, all in all,, it’s a pretty good offering for a secured card with no annual fee.
Petal 1 Credit Card
No annual fee
High credit limits available
The Petal 1 “No Annual Fee” credit card is a good choice for people with bad credit looking for an unsecured credit card. It has no annual fees, no foreign transaction fees, and you don’t have to put down a security deposit. Plus, while this card does have a late payment fee (up to $40) and returned payment fee ($29), you’ll avoid the sneaky fees other credit cards targeting bad credit try to pile on.
To help people qualify, Petal doesn’t just look at your credit score, but also checks out your “cash score” or banking history. This allows more people to qualify, even if their credit history is limited or just plain bad.
For an unsecured starter card, this card has a pretty high credit limit of up to $5,000. Don’t expect to get that limit on the first go around as credit limits begin at $300. However, thanks to Petal’s Leap program you can earn a credit line increase in as little as 6 months with on-time payments.
You can keep track of these future line increases on the Petal app. We don’t suggest you carry a balance on this card as it only offers high APRs, but if you do, the Petal app has a calculator that will help you understand how much retaining that balance will cost you in interest.
Finally, Petal does offer rewards for their Petal 1 credit card, but the cashback is pretty vague. They offer 2-10% back on select merchants in your area. It’s not something to write home about, but ultimately rewards aren’t the real purpose of this card.
Discover it Student Cash Back Card
Rotating bonus categories
No annual fee
The Discover it Student Cash Back Credit Card offers students the unique opportunity to build credit (for no annual fee) while earning great rewards. Because it’s marketed to students, no credit score is required, and the income requirements are low. In other words, most US college students should be able to qualify.
With this card, you can earn 5% back in rotating categories. It sounds complicated, but basically you sign up to earn 5% each quarter on different categories of spending. These categories change but are all pretty normal places to spend money:
January through March: 5% back on grocery stores (excluding Walmart, Target, and warehouse stores) and fitness clubs or gym memberships
April through June: 5% on gas stations and Target
July through September: 5% on restaurants and Paypal
October through December: 5% on Amazon.com and digital wallet purchases
Then, at the end of the first year, Discover will double your cashback thanks to Discover’s Unlimited Cashback Match. Basically, if you earned $50 in rewards your first year, you’ll actually get $100 from Discover. Effectively, this means you actually earn 10% back in these categories in the first year.
The Discover Student Cash Back also has a nice low introductory APR offer: for the first 6 months, you can get 0% APR. Because a student card is all about building credit, we suggest you pay off your balance in full each month, but it’s still nice to know you have a low APR if you need it.
American Express Blue Business Cash Card
$250 welcome bonus
Extended buying power
The American Express Blue Business Cash Card is a good first business card for small businesses. First of all, you’ll receive a $250 welcome bonus after you spend $3,000 in purchases in the first 3 months. This bonus is not the best offered on the market, but for no annual fee it’s still respectable.
The real benefit of the AmEx Blue Business Cash Card comes in the credit benefits. With this card, you’ll receive 0% intro APR for the first 12 months and access to the Expanding Buying Power feature. This feature allows you to spend above your credit limit as your business expenses rise. Basically, American Express understands sometimes you have to spend money to earn some. However, the amount you can spend above your credit limit is not unlimited (it depends on your credit record and payment history).
When you do spend above your credit limit, you’ll be required to pay off the excess in full at the end of the billing cycle. This flexibility is definitely a point in the Blue Business Cash Card’s favor.
When actually using this card, you’ll receive 2% cash back on business purchases (up to $50,000 per year) and 1% cash back on all other purchases (up to $50,000 each year). You also get free employee cards, easy connection with Quickbooks, and car rental insurance.
Plus, it’s nice that you can find out if you’re qualified for the card in as little as 30 seconds
How Do Credit Cards Work?
Credit cards are a revolving line of credit used to make purchases, transfer balances, or take cash advances. They work by the user making purchases borrowed against this card, paying that debt off, and then borrowing again without having to apply for a new line of credit — hence the term revolving credit.
What actually happens when you swipe your card? Frst, the details of that purchase gets sent to the bank who then seeks authorization for this transaction from your credit card issuer. The issuer either approves or denies the transaction, and if approved, the payment is sent to the merchant to cover the purchase. This process sounds complex, but the whole thing happens in just seconds.
At the end of the billing period, you’ll receive a statement that shows all your transactions from this period in addition to any previous balances carried over from past periods. The statement will also show the minimum payment required. You must pay the minimum payment amount to keep your card in good standing and avoid penalty fees. Any balance that remains on the card after the minimum balance is paid will then incur interest.
To avoid paying interest, you must pay off your card in full each billing period. Cards normally have what’s called a “grace period” which is the time between the end of your billing period and the bill’s due date during which you can pay off your bill at any time without being charged interest.
Once you pay the minimum balance — or better yet, the full balance — the whole cycle begins again.
Credit Card Terms to Know
While using a credit card is pretty simple, understanding some of the specific terms can be complicated. Check out the important terms we think you should know to fully understand how a credit card works.
The yearly amount you’ll be charged for the use of this credit card. Some cards have no annual fee, meaning they do not charge for the use of the card.
APR stands for the “annual percentage rate” and represents the interest rate and fees you’ll be charged when you don’t pay off your balance each billing cycle–basically, the price you’ll pay to borrow money.
Most cards have different interest rates for different types of transactions on the card, including:
Purchase APR: The interest rate that applies to purchases on the card
Balance Transfer APR: The interest rate that applies to debt moved onto the card from another source
Cash Advances APR: The interest rate that that applies to withdraw cash from the card
Penalty APR: The high interest rate that applies if you fall behind on your payments
Promotional APR: The temporarily low interest rate that normally applies to balance transfers or purchases
The billing cycle is the period of time between one statement closing date and the next. During this period all transactions or purchases will apply to that cycle’s statement balance.
The cardmember agreement is a legal document that lays out the terms and conditions of this credit card. The cardmember agreement should include things like different APRs for this card, the minimum payment rules, late fees, and foreign transaction fees. It’s important to read this agreement carefully before signing up for the card so that you understand what you’re getting into.
The credit limit is the amount of money that the credit card issuer is willing to lend you each billing cycle. You can not spend more than this amount each billing cycle.
A credit score represents your credit-worthiness. A FICO credit score is the most commonly used and is a number between 300-850 that represents your payment history, amounts owed, length of credit history, etc. The higher the credit score the better your credit is considered.
Fixed APR is an interest rate that remains the same for the length of time you carry a credit card balance. Your credit card issuer can change this rate; however, they have to provide you 45 days notice before it can be applied.
Foreign Transaction Fees
A foreign transaction fee is a fee applied by your credit card issuer if you make purchases outside of the US or through a foreign vendor. The fee varies by credit card company but is normally around 3%, although some credit card companies waive the fee completely.
The grace period is the time between the end of your billing cycle and when your bill is actually due. Not all credit cards offer this period, but if yours does, then during this period you won’t be charged interest on your balance. This period normally ranges from 21 to 25 days, but be warned that it normally only applies to purchases not cash advances or balance transfer.
The minimum payment is the amount you are required to pay each billing period to continue using the card. Often this payment is either a percentage of the balance and a flat minimum payment like 3% or $10. Any remaining balance on the card will incur interest.
Variable APR changes with any fluctuation in the prime rate, the national rate that banks use to set their own interest rates. This rate can go up or down at any time without written notification to the user.
How Does Credit Card Interest Work?
Credit card interest rates are expressed as an annual percentage rate or APR. This APR represents the amount it will cost you to borrow money.
If you carry a balance on your credit card — something we recommend you avoid — the credit card company will charge you interest daily and apply that to your balance. To find your daily interest rate, simply take the APR and divide it by 365. For example, if your credit card offers 20% APR, your daily interest rate is approximately .055%. It seems pretty small, but it will add up.
If you’re carrying a $1,000 balance on that same card, you’ll be charged $.55 each day. From there, the interest for that balance adds up to roughly $16.20 a month. This interest is then added to your total balance and will also incur interest in the future.
Calculating interest can feel complex but the solution to avoid needing to is simple–avoid carrying a balance.
Pros and Cons of Using a Credit Card
There are pros and cons to using credit cards.
Protection from theft or fraud
Pay purchases off over time
Builds credit if used responsibly
High interest rates
Overspending and debt
Harms credit if used irresponsibly
There are a lot of pros to using a credit card, and a few cons to be aware of. First, a credit card is a convenient, safe way to carry around money. You avoid the risk of theft that comes with carrying large amounts of cash and the inconvenience of running out of money while making a purchase.
On the flipside, it can be easy to spend more money than you’re capable of paying off, starting a difficult to change debt spiral.
It’s great that a credit card allows you to pay for large purchases over time, but interest and fees might make that purchase cost a lot more than it did initially.
Overall, we think credit cards are worth it, but the risks should help you remember to use it responsibly.
Types of Credit Cards
There are a lot of different types of credit cards on the market, and these differences can make picking one confusing. While actually using the card will appear very similar, these differences affect who is eligible for the card and how you’re rewarded for using it. These categories aren’t mutually exclusive, and understanding them can help you pick the best card for you.
Secured Credit Cards
Secured credit cards require a refundable security deposit before you can open the credit card. This security deposit works as collateral, protecting the credit card issuer. Because of this, secured credit cards often have low credit requirements and are easy to qualify for. This deposit is fully refundable, but if you ever miss a payment, the credit card issuer will recoup that payment from that deposit.
Unsecured Credit Cards
Unsecured credit cards are what most people think of when they think of credit cards. There is no deposit so your eligibility is determined by your credit-worthiness. Credit card companies will normally look at your credit score, but may also take into account your income, financial history, and current debt.
Student Credit Cards
Student credit cards are specifically marketed to students enrolled in U.S. universities or colleges. Normally, they are easier to qualify for because they have lower income and credit history requirements. These cards also tend to come with lower spending limits.
Business Credit Cards
Business credit cards are cards that allow business owners to keep track of their business-only expenses. Often these cards have perks attractive to business owners like upgraded rewards for online advertising expenses or free employee cards. These cards also often have higher credit limits than personal cards.
Rewards Credit Cards
Rewards credit cards are a type of card that offers you points, miles or cash back on your purchases. Rewards cards can often be broken down into more specific categories depending on the spending they reward and the rewards they offer. For example, there are dining and travel cards that more heavily reward spending in these categories or airline cards that pay out your rewards in airline miles on their airline. There are also cashback cards that specifically pay out your points in cash through direct deposit or statement credits.
Travel Credit Cards
Travel credit cards are a subcategory of reward credit cards geared towards the frequent traveler. They often heavily reward spending in travel categories like booking hotels and rental cars and can get you great travel deals when you redeem your points. Often you’ll find the cards offer other travel perks like no foreign transaction fees, lost luggage insurance, or airport lounge access.
How Do Credit Card Rewards Work?
Each credit card company’s rewards program functions a little differently but there are a few basics that are standard.
First, credit card companies normally offer rewards in the form of cash back, miles, or points. You earn these rewards through either a fixed rate like 2% cashback on all purchases or bonus categories like 5x points on travel purchases and 1x on all other purchases. Some cards, like the DiscoverCashback Credit Card, even have rotating bonus categories, offering 5% cashback in categories that change each quarter.
One way to maximize your reward earning potential is to choose a card with bonus categories that match your spending habits.
Another quick way to earn points is through a sign up bonus. Many cards offer extra miles or points for simply signing up and spending a set amount in the first few months. This is often a quick way to get lots of rewards.
When it comes to redeeming your rewards, there are several ways to do it. Normally, cash back can be directly transferred to your bank account, applied as a statement credit, or sometimes transferred to specific merchants like Amazon. Points can often be redeemed on the credit card company’s rewards portal for gift cards, travel reservations, charitable donations, or statement credits. Miles, especially with co-branded airline cards, can be used to purchase flights or transferred to the company’s travel partners.
It’s worth noting that some credit card companies require a minimum number of points to redeem, often around $25 worth.
Just remember the goal of all points redemption is to get the best bang for your buck so check each redemption to make sure it’s a good return.
How to Choose a Credit Card?
Choosing the perfect credit card ultimately depends on your needs, your credit score, and spending habits; however, there are a few things to help you start moving forward. These three easy steps should help you choose the best credit card for your needs.
1. Check Your Credit
Understanding your credit score will help you know what cards are available to you and which are not.
Your FICO credit score, the most common credit score, is a three digit number ranging between 300-850 that represents your creditworthiness. Basically, the higher your score the better the credit cards that are available to you.
You should be able to find your score through your credit card website or financial institution like a bank or loan office. If not, you can purchase your score from credit score companies like FICO.
Knowing your score allows you to see what credit category you land in. Most credit cards advertise which range of score will most likely qualify for their card. The following is the ranges for credit scores.
Very Good: 740-799
Finding your range will help you know what card will be available to you.
2. Think About What Type of Credit Card Matches Your Needs
Before picking a card, you need to decide what type of card fits your needs. Think about how you spend and what you’re planning on getting from this card.
If the main goal of this card is building credit, then your best bet is a card designed for building credit. A secured credit card might be a good first step. Secured credit cards require a refundable security deposit as collateral before they extend a line of credit. This often means that most people can qualify for secured cards, regardless of credit history. Plus, some secured cards allow you to upgrade your card to an unsecured credit card after responsible use.
If your goal is to get out of debt, you’ll want to look for cards that have introductory low or 0% APR for balance transfers. You’ll still have to pay the balance transfer fee normally, 3% or $5 whichever is greater, but then you’ll be saved the normal balance transfer rate for the first introductory period. This won’t solve your debt problem, but it will buy you time before interest kicks back in.
If your goal is to maximize rewards, look no further than a rewards credit card. The best of these cards require excellent credit scores, but the rewards can be lucrative. For rewards, most cards offer cash back, miles, or reward points. When it comes to finding the best rewards card for your needs, think about where you spend most of your money. Often these cards will have bonus categories that maximize your reward earnings, but you won’t benefit from them unless you spend in that category. For example, it won’t help you to have a travel rewards card that gives you 5% on airline flights if you don’t fly anywhere that year!
3. Shop Around for the Best Card in That Category
Once you’ve figured out your card category, you want to find the best of that type of card. The first thing we check is the annual fees vs the rewards. Some of the more lucrative rewards cards have pretty steep annual fees. They can still be worth it, but only if the rewards offer you more value than the annual fee costs you.
Next, check out the APR. You want the lowest APR you can. While we suggest you never carry a balance and therefore never need to deal with interest, it’s still good to keep it low just in case. Some cards even offer 0% APR as an introductory offer.
Finally, check out the other perks. Will you be traveling internationally? Look for a card that has no foreign transaction fees. Or, other cards offer perks like DoorDash memberships or reimbursement for streaming fees. These perks should be the last thing you take into account, but are still fun to have.
How to Apply for a Credit Card?
Nowadays, applying for a credit card is pretty simple. For most, you simply have to head over to the credit card company’s website and apply online. It’s also possible to apply in person at a bank or over the phone, but online tends to be the easiest and quickest.
Before you actually apply we suggest you check whether the card you want offers you the chance for pre approval. Being pre-approved or prequalified means they will check your qualification with a soft credit pull. This lets you know how likely you are to be approved without the consequences of a hard credit pull.
If you’re pre approved, move forward with the application. You’ll need to provide your name, social security number, address, bank account info, income, and monthly housing payment. This information helps the credit card issuer to verify that you are who you say you are and what your creditworthiness is.
From there being approved or denied can take as little as a few moments although most take seven to 10 business days.
Then you just wait for your card to show up in the mail.
Alternatives to Credit Card
If a credit card just isn’t in the cards (pun intended) for you, then check out these other alternative ways for spending your money.
The most obvious alternative to credit cards is simply using cash for everything. Cash is great when it comes to feeling conscious of the comings and goings of your money, but there’s a lot more risk walking around with cash in your pocket. When you lose a credit card, you can cancel it, but when you lose cash, it’s just gone.
A debit card is the most common alternative to a credit card. A debit card is connected to your bank account and when you make a purchase, the money is pulled from your bank account to cover the transaction. You can only spend the money physically in your bank account. It’s nice because you can’t go into debt, but a debit card will not help you grow your credit score.
One option some debit cards offer is overdraft protection. Overdraft protection protects the user by allowing a transaction to be approved even if you don’t have enough money in your bank account. There are normally some rules, requirements, and limits regarding overdraft protection so make sure to check with your bank.
A personal loan might be a good alternative to a credit card if you’re needing money for a specific expense. A personal loan often has lower interest rates than a credit card, and you normally receive it in the form of a lump sum. This works well for big purchases like a home improvement project, but is less practical for daily expenses like grocery trips. However, opening a personal loan and paying on time payments will help grow your credit score.
PayPal is a decent alternative for online shopping. PayPal is an online payment system that can be used to send money to friends or purchase things online. It connects to your bank account and provides more fraud protection than cash or most debit cards. You can even set up a One Touch payment so that you can pay for things online without having to log into PayPal every time. PayPal will not help you build your credit score.
Frequently Asked Questions (FAQs) About Credit Cards
If you still have questions, check out our answers to the most frequently asked questions about credit cards.
What qualifies as a good interest rate for your credit card depends a lot on your credit score. As a general rule, we consider an APR less than 14% as stellar, but these rates will only be available for people with excellent credit.
The best way to avoid paying interest on your credit card is to pay off your card’s balance each billing period. If you carry a balance month to month, you’ll most likely end up paying interest. There are some cards that offer 0% APR as an introductory offer, which means if you carry a balance you’ll avoid paying interest for a limited time. Just make sure you understand when the promotional period ends so you don’t end up paying interest when you don’t plan on it.
A good credit score is 670 or higher. Having a good credit score results in lower APRs and higher credit limits. Credit scores are divided into categories based on your FICO credit score range:
Very Good: 740-799
Everytime you apply for a credit card the credit card company will do a “hard pull” on your credit. This hard pull can drop your credit score slightly — about five points or less. So yes, applying for a credit card does affect your credit score but not by much. If you apply for multiple cards at the same time; however, it will probably start to affect your score more substantially.
Contributor Whitney Hansen covers banking, credit cards and investing for The Penny Hoarder. She also writes on other personal finance topics.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.