MDI Digital
By Taylor Tepper
September 21, 2013

See which credit cards topped MONEY’s Best Credit Cards list here.

THE QUANTITY–and quality–of the credit card offers in your mailbox has likely changed in recent months.

That’s owed to the fact that four years after the Great Recession officially ended, banks are finally opening the lending gates again. Until recently, issuers had marketed mainly to low-risk consumers with credit scores of 750-plus. Now card delinquencies are at their lowest level since 1994, TransUnion reports, and Americans are borrowing more than in any year since 2009. So banks are reaching out to a broader swath.

That’s great news for folks who were on the edge of qualifying for the best cards before (FICO scores of around 690 to 749). It’s not so great for those of you who were the target of issuers’ fancy for so long. More qualified borrowers means it’s more of a seller’s market. As a result, the perks you had grown to expect are weakening: Sign-up bonuses are down a bit from their post-recession highs; some issuers have put caps on cash back; and certain rewards are less rewarding (good luck getting 5% on gas anymore, for example).

“What we’re seeing is a reflection of the credit cycle,” says Anisha Sekar, vice president at Nerd-Wallet.com, a site that collects data and offers advice on credit cardsand other financial products.

With all that’s changed, you probably need some help sorting out the credit chaff from the really prime plastic. Et voilà! MONEY teamed up with NerdWallet and combed through its database of more than 1,700 cards to find the best options for five kinds of users: rewards seekers, travelers, borrowers, students, and small-business owners. (For a closer look at the methodology, see page 85.) There’s a card here that’s right for you.

BORROWING

It’s more expensive to carry a balance, with annual percentage rates on new cards averaging 15.31%, up from 14.30% in 2010, according to Bankrate. On the plus side, 0% intro periods have gotten longer, going from eight to 11 months on average over the same time, NerdWallet reports. You can save hundreds—even thousands—by transferring a debt and paying it off within the interest-free window. Or you can take advantage of the 0% trend to pay for a big-ticket purchase over time, at no cost.

1) BEST FOR BALANCE TRANSFERS

Chase Slate (chase.com)

APR: 13% to 23%

INTRO APR: 0% on purchases and balance transfers for 15 months

ANNUAL FEE: $0

BALANCE TRANSFER FEE: $0 if you transfer in the first two months, 3% after that

WHY IT’S A WINNER: Longest 0% period among balance-transfer cards that also have no annual fee and, more important, no balance-transfer fee (a charge that can undercut the benefits of changing cards).

THE CAVEATS: You have to act fast to move the balance or you’ll pay a fee of 3% on the amount you shift over. Also, while Slate offers 0% on new purchases as well, you can get a longer term with the Simplicity (below).

2) LOWEST ANNUAL PERCENTAGE RATE

Lake Michigan Credit Union Prime Platinum Visa (lmcu.org)

APR: 6.25% and up

ANNUAL FEE: $0

WHY IT’S A WINNER: Ideal for those who regularly carry a balance, since it offers the lowest possible APR among no-fee cards (6.25% for applicants with FICO scores of 760-plus).

THE CAVEATS: You have to be a member of the credit union, but you can join with a $5 donation. Not for those who pay in full, since this is a no-frills card.

3) BEST 0% DEAL ON NEW PURCHASES

Citi Simplicity (citi.com)

INTRO APR: 0% on purchases and balance transfers for 18 months

REGULAR APR: 13% to 22%

ANNUAL FEE: $0

WHY IT’S A WINNER: Longest 0% introductory period on new purchases among cards that have no annual fee—so it can be a great way to finance, say, your new kitchen appliances. Plus, it has no late fees and no penalty rates, ever.

THE CAVEAT: Not a great deal for balance transfers. Though it offers 0% for 18 months, you’ll foot a 3% fee.

REWARDS

When it comes to rewards, cash back is king, since it’s more transparent and easier to use than points. The average earn rate on cash cards has edged up from 0.83% in 2010 to 1.09% today, NerdWallet reports. But don’t get too excited: Your ability to earn is often less now, as “some attractive cards have put new limits on the amount you can get back in certain categories, like groceries,” says Alex Matjanec of MyBankTracker.com. Sign-up bonuses have been pared back a bit too, from an average of $82 in 2011 to $79 now.

1) BEST TIERED REWARDS (TIE)

American Express Blue Cash Preferred (americanexpress.com)

APR: 13% to 22%

ANNUAL FEE: $75

SIGN-UP BONUS: $150 after spending $1,000 in first three months

REWARDS:

  • 6% on groceries on up to $6,000 in purchases and 1% thereafter
  • 3% on U.S. gas stations and certain department stores
  • 1% on everything else

WHY IT’S A WINNER: Impressive rates (6% is almost unheard of) on key categories. If you charge $2,000 a month—including the $364 on groceries, $275 on gas, and $166 on department stores the Bureau of Labor Statistics finds typical for households earning $74,000 to $161,000—you’ll reap $489 a year, net the fee (excluding bonus).

THE CAVEAT: The 1% base rate is meager, so you may want to use this card in tandem with the one below.

U.S. Bank Cash Plus (usbank.com)

APR: 14% to 24%

ANNUAL FEE: %0

SIGN-UP BONUS: $50 to $100

REWARDS:

  • 5% on two categories from a list of 12 (e.g., restaurants, department stores, cell service, hotels) on up to $2,000 a quarter
  • 2% on your choice of gas, groceries, or drugstores
  • 1% on everything else
  • $25 bonus when you redeem $100 or more, once a year

WHY IT’S A WINNER: 5% is pretty sweet, particularly since you get to choose where it’s applied and there’s no annual fee on the card. If you dish out $2,000 a month and $450 of it is on restaurants and your cell plan, you’ll earn $557 a year with the redemption bonus (but not the signing bonus).

THE CAVEATS: Must elect categories quarterly—they are subject to change—or you get only 1% on everything. Can apply for card only at U.S. Bank branches.

2) BEST FLAT-RATE REWARDS (TIE)

Fidelity American Express (fidelity.com)

APR: 14%

ANNUAL FEE: $0

SIGN-UP BONUS: None

REWARDS: 2% on every purchase

WHY IT’S WINNER: Rewards are almost double the average earn rate with no limit on cash back, making this the best deal among no-fee, category-free cashcards. You’ll take back $480 a year if you spend $2,000 a month.

THE CAVEAT: Cash has to go into a Fidelity account (IRA, 529, brokerage, or cash management)—though funds can be withdrawn from the latter two.

Capital One Quicksilver (capitalone.com)

APR: 13% to 21%

ANNUAL FEE: $0

SIGN-UP BONUS: $100 after spending $500 within the first three months

REWARDS: 1.5% on every purchase

WHY IT’S A WINNER: Earn rate handily beats the average cash card, and there’s no cap. Rewards are redeemable as a statement credit, check, or gift card. Charge $2,000 a month and you’ll score $360 a year, not including signing bonus.

THE CAVEAT: Pays less than the Fidelity card, but offers easier access to the cash.

MDI Digital

COLLEGE STUDENTS

The best plastic for your college kid probably isn’t marketed as a student card; such options have all but disappeared since 2009’s CARD Act went into effect. Among collegiate cardholders, 66% carry balances, Sallie Mae/Ipsos found. So a low APR should be a high priority.

Students must be 21 or have real income to get their own cards. Before 21, you can co-sign. A secured card—you deposit cash up to the limit as collateral—caps the damage your kid can do to your credit. But beware: With a low limit, “it’s easy to max out, which isn’t great for his credit score,” says Gerri Detweiler of Credit.com.

1) BEST SECURED

Digital Credit Union Visa Platinum Secured (dcu.org)

APR: 11.5%

ANNUAL FEE: $0

WHY IT’S A WINNER: No annual fee is rare on secured cards, and rates as low as 11.5% can soften the blow if Junior misses a payment. Digital Credit Union reports account status to the credit bureaus, so your child builds a credit history. You can set the credit limit, from $500 to as high as you wish.

THE CAVEAT: Must be a member of DCU to apply, though you can join with a $10 donation to Reach Out for Schools. Set the limit above what you think your child will need to use so as not to harm his nascent credit score.

2) BEST UNSECURED

Northwest Federal Credit Union FirstCard Visa Platinum (nwfcu.org)

APR: 10% fixed

ANNUAL FEE: $0

WHY IT’S A WINNER: Features a very low APR for a no-fee unsecured card available to those without credit history. Account status is reported to credit bureaus. Another plus: Applicants must complete an online course about credit.

THE CAVEATS: Must be a member of the credit union, but a $10 donation to Financial Awareness Network gets you in. Also, maximum credit limit is only $1,000, so caution Junior to spend cautiously.

SMALL BUSINESS

Entrepreneurs using a credit card to finance a startup or capital improvements should look at rates first. Biz card APRs average 13.6%, a hair lower than on personalcards. Almost half of cards also offer a 0% intro period, for an average of eight months. Nearly nine in 10 offer rewards, and a card that pays you back in the categories where you spend can make sense if your business pays in full every month, says NerdWallet’s Sekar.

1) BEST FOR CASH BACK

Chase Ink Cash (chase.com)

APR: 13%

ANNUAL FEE: $0

SIGN-UP BONUS: $200 cash after spending $3,000 in first three months

REWARDS:

  • 5% on office-supply stores, phone service, Internet, and cable on up to $25,000
  • 2% on gas and restaurants on up to $25,000
  • 1% on everything else, no cap

WHY IT’S A WINNER: Offers top-drawer cash-back rates on categories in which businesses typically spend a lot, and the Ink Cash has no annual fee. Assuming that your business spends $75,000 ($25,000 in each reward tier), you’d make back $2,000 a year, not including the sign-up bonus.

THE CAVEAT: Has a 3% fee for foreign transactions, so this is not the card to take to that conference overseas.

2) BEST FOR BORROWING

Wells Fargo Business Platinum (wellsfargo.com)

APR: 9% to 18%

ANNUAL FEE: $0 (or $50, waived the first year, if you join rewards program)

SIGN-UP BONUS: Double rewards for first six months

REWARDS: 1 point per dollar or 1% cash back, your choice

WHY IT’S A WINNER: Lowest APR for business borrowers among no-annual-fee cards.

THE CAVEAT: Rewards are subpar, especially considering the fee. Plus, cash is distributed quarterly, as opposed to on demand.

TRAVEL

The average earn rate on travel rewards cards has reached a cruising altitude of 1%, NerdWallet reports, but redeeming miles can be challenging. Unless you fly one airline a lot, go for one of the newer breed of cards that are airline agnostic. “The generic travel rewards cards don’t have blackout dates or restrictions,” says Ben Woolsey of Creditcards.com.

Go abroad a lot? More cards have no foreign transaction fee (27% vs. 4% in 2010). Only your plastic may not always work: Many countries are moving to a “chip-and-pin” technology available on few U.S. cards.

1) BEST FOR TRAVEL REWARDS

Barclaycard Arrival World MasterCard (barclaycardus.com)

APR: 15% to 19%

ANNUAL FEE: $89 (waived first year)

SIGN-UP BONUS: 40,000 bonus miles if you spend $1,000 in first 90 days (buys a $400 flight)

REWARDS:

  • Two miles per $1 spent
  • 10% miles back when you use them for travel

WHY IT’S A WINNER: Card not only comes with one of the largest sign-up bonuses but also has an impressive ongoing rewards rate of 2% with no caps. Miles can be applied as a statement credit when you spend on any kind of travel, be it flights, cruises, car rentals, or hotels. So you have a lot more leeway than an airline card. Plus, Arrival World MasterCard does not have a foreign transaction fee.

THE CAVEAT: Doesn’t have chip-and-pin technology, so it might not always work overseas. A salesperson can manually put through a magnetic strip card like this one, but you could have trouble at unmanned kiosks.

2) BEST FOR USING OVERSEAS

Andrews Federal Credit Union GlobeTrek Rewards (andrewsfcu.org)

APR: 8% to 18%

ANNUAL FEE: $0

SIGN-UP BONUS: 5,000 points with your first purchase

REWARDS: One point per $1 spent

WHY IT’S A WINNER: One of a handful of cards in the U.S. that come equipped with chip-and-pin technology while also having no foreign transaction fee and no annual fee. You can join the Andrews Federal Credit Union by first joining (for free) the American Consumer Council.

THE CAVEAT: Value of rewards on the Globe Trek is average—and they cannot be redeemed for cash, only for travel and merchandise; this card is really only for use while traveling overseas.

METHODOLOGY

MONEY decided upon the criteria to consider—which included intro and regular APRs, sign-up bonuses, annual fees, rewards, and other fees—then set parameters for what would make the best cards in each category (for example, lowest rates and no annual fee for someone who carries a balance). NerdWallet plugged the terms into its database and made several suggestions for each category, nothing the issuers from which it receives compensation when people apply through the site. MONEY made the final decisions and independently fact-checked the picks.

NOTE: APRs are rounded to the nearest percentage point and are variable except where noted. Rates are based on creditworthiness (largely FICO score) when a range is listed. Many of the winners require excellent (750+) credit.

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