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Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
It’s been eight years since the end of the Great Recession, and credit cards are back. Today, 171 million Americans have at least one card in their wallet, the highest number since 2005. Consumers also owe more than $1 trillion in revolving credit card debt, an all-time record. Even the percentage of consumers with less-than-stellar credit who have access to plastic is nearly back to pre-crisis levels.
A strengthening economy and rising demand means one thing: increasing competition for your business. “It’s a really good time to be a credit card customer,” says Jim Miller, senior director of J.D. Power’s banking practice, adding that a growing number of card issuers are coming out “with new products that offer rich sign-up bonuses, increased cash back rewards, and new benefits.”
With more features, though, comes more confusion. Nearly two-thirds of consumers surveyed by Experian are “overwhelmed” by all the card options now available to them. To help you cut through the clutter, Money teamed up with NerdWallet to identify the best cards for you.
Since one credit card isn’t going to benefit everyone equally, Money picked the best offering in 10 separate categories—from cash back rewards to travel perks. “You can maximize your benefits and rewards based on which cards you use for which purposes,” Miller says.
The categories include:
- Best Cash Back Card
- Best Rewards Card
- Best Cards for Balance Transfers
- Best Low Interest Rate Card
- Best Card for Small Businesses
- Best Card for Students
- Best Card for Consumers With Bad Credit
- Best Store Card
- Best Hotel Card
- Best Airline Mileage Cards
Best Cash Back Card
Cash back credit cards are popular for obvious reasons. Yet whenever someone promises you money for nothing, it’s time to read the fine print. For example, some cash back cards offer accelerated rewards on certain categories like travel, dining out, or warehouse club purchases—but if that’s not where you do the bulk of your spending, you won’t see a big payoff.
Also, check to see if you have to meet a minimum spending threshold before you begin earning points toward getting cash back. And since you’ll want to earn points quickly, make sure you understand the card’s earnings rate formula.
Finally, avoid cards that cap or restrict the amount of rewards you can earn, or make it complicated to earn additional points—for instance by routinely switching up spending categories that garner a bonus.
Winner: Citi Double Cash
Rewards: Two points for every $1 spent and paid off
Annual Fee: $0
Why It’s a Winner: The best cash back cards let you earn points with few restrictions. And that’s the case for Citi Double Cash, which gives you points worth $2 back for every $100 you spend—on anything. There are no category restrictions. No rotating categories to keep track of. And no caps on the amount of rewards you can earn. This Citi Mastercard also has no annual fee and offers a below-average APR if you have good credit.
The Catch: The way Citi Double Cash shows you the money is a bit complicated. You don’t get it all at once. Instead, you get half upfront and half when the purchase is paid off. But that can be used as motivation to pay off your purchases quickly rather than letting them rack up interest.
Best Rewards Card
Credit card reward programs can put serious money back in your pocket. But their rules can also be a confusing jumble of miles, points, and redemption options you have to sift through.
The best cards are the ones that make it simple both to earn and redeem your rewards. The best programs also offer you more than one point or mile per dollar spent, with no cap on the amount you can earn and no expiration dates for points or miles already earned.
One caveat: Though you may prefer no annual fees, don’t make that a deal breaker here. Many good cards in this category charge annual fees.
Winner: Chase Sapphire Reserve
Rewards: Three points for every $1 spent on travel and dining out; One point for every $1 spent on everything else; $300 annual travel credit; Access to 900-plus airport lounges worldwide
Annual Fee: $450
APR: 17.74%–24.74% variable
Why It’s A Winner: Despite an extremely high annual fee, this Chase-issued Visa actually has a lot going for it. For starters, it gives users a very good return on basic spending and accelerated rewards in many common categories, including airfare, hotel stays, and dining out. And if you’re a frequent global traveler, there are plenty more valuable perks. For instance: free rental car insurance; access to more than 900 airport lounges worldwide; a $100 credit if you enroll in TSA PreCheck or Global Entry; and no fees on transactions made while overseas.
The Catch: The sticking point is obvious: the $450 annual fee. However, the $300 annual travel credit—which can be used to cover costs like baggage fees or seat upgrades—goes a long way toward offsetting that annual fee if you’re a globe-trotter. Plus, there’s a sign-up bonus of 50,000 “ultimate rewards” points if you make $4,000 in purchases within the first three months. That’s a high threshold, but if you hit it, those points could be worth as much as $750 toward booking travel through Chase’s Ultimate Rewards portal. This makes Chase Sapphire Reserve ideal if you’re planning for a big trip.
Best Cards for Balance Transfers
If you’re paying off credit card debt at a high interest rate, balance transfer cards with a low APR can buy you financial breathing room. In fact, cards that offer 0% interest on balance transfers are a responsible way to tackle your debts—but only if you resist the temptation to turn around and load them up with new purchases (which could be charged a much higher APR).
The best credit cards for balance transfers will offer you 0% rates for an extended stretch of time—at least more than a year—combined with no fees on that balance transfer.
Rewards: This card has no rewards.
Annual Fee: $0
APR: 0% on transfers and purchases for the first 15 billing cycles, then 12.99% to 22.99%
Why It’s a Winner: BankAmericard’s introductory 0% APR on transfers and purchases lasts 15 billing cycles, making it ideal if you need more than a year to pay down your debt.
While that’s not the longest 0% window available—Citi Simplicity’s 0% rate on purchases and balance transfers, for instance, goes on for 21 months—the BankAmericard credit card doesn’t charge any fees on those transfers. Some credit cards will impose balance transfer fees as high as 5%, which can really add up if you’re planning on shifting a large amount of debt to the new card.
The Catch: Balance transfers are fee-free only if you move your debt within 60 days of opening your account. After 60 days, the card will impose a 3% fee on balance transfers. And Bank of America will not allow you to make balance transfers from another Bank of America account.
Best Low Interest Rate Card
While all credit card users covet the lowest interest rates they can get, low-rate cards are particularly useful for consumers who plan to carry a balance from time to time.
Keep in mind, though, that a low APR isn’t the only criteria you should consider. The annual fees that some low-rate cards charge can eat into the money you save on interest. And keep in mind that some 0% offers are advertising teaser rates—and “no interest” credit cards can sometimes have quite high interest rates after the promotional periods end.
What’s more, if you accrue or transfer a balance that you fail to pay off before the end of the promotional period, some cards will hit you with deferred interest charges, meaning you’re liable for all the interest as if there had never been a teaser rate.
Winner: Lake Michigan Credit Union Prime Platinum
Rewards: This card has no rewards
Annual Fee: After making a one-time $5 donation to join the credit union, this card has no annual fee
Why It’s a Winner: A big reason why we like this Visa card, issued by the Lake Michigan Credit Union, is that applicants with excellent credit (typically defined as having FICO scores of 720 or higher) can get an APR of just 7.25%. That means this credit card’s interest rate is competitive with that of personal loans, which is unheard of.
Slightly lower rates may be available from credit unions with very specialized memberships (credit unions in general can offer low rates because their banking tends to be more community based, reducing the cost of gathering assets). However, the lowest rate you can expect from cards issued by credit unions serving a broad audience is usually in excess of 9%.
The Catch: This card is issued by a credit union for residents of the Lake Michigan area, and you probably don’t live there. No worries: Anyone can join the credit union by donating $5 to the Amyotrophic Lateral Sclerosis Association of Michigan. Then you can apply for the card.
Best Card for Small Businesses
If you run your own business, you’ll want a credit card that fits your company’s needs. For one thing, business owners are likely to require much higher spending limits than a personal card can offer. Plus, a credit card tailored for small businesses can make bookkeeping and billing easier, while giving you better information about your firm’s spending patterns. Another advantage: A small-business credit card will help you keep your personal and business finances separate.
Winner: Capital One Spark Cash Select
Rewards: 1.5% cash back on all purchases; $200 cash bonus if you spend $3,000 in first three months after opening the card
Annual Fee: $0
APR: 0% introductory APR for the first nine months, then 13.99% to 21.99%
Why It’s a Winner: Spark Cash Select tops this category for several reasons. For starters, it offers you excellent business-friendly benefits like quarterly and year-end spending summaries, downloadable purchase records for importing into Quicken or Excel, and auto-rental collision damage waivers through Visa. Capital One will also allow you to add employee cards onto your account for free. Plus the card offers a simple yet generous cash back rewards program giving you 1.5% cash back on every dollar spent, regardless of where you spend your money. That makes this Capital One small-business card particularly attractive to entrepreneurs who spend across a wide variety of categories.
The Catch: You will need excellent credit (a FICO of 720 or higher) to obtain this card. However, Spark Cash Select charges no annual fees, and the card’s cash back program places no cap or expirations on rewards.
Best Card for Students
College students with plastic get a bad rap. Student credit cards, if used responsibly, can be one of the best ways to help young adults establish credit and then build a credit history that will benefit them later in life.
But while issuers are eager to extend credit cards to college students—who they hope will become their next generation of loyal customers—there are restrictions. If you’re under 21, for instance, you’ll be required to prove that you can make the minimum payments on your cards. And if you don’t have a job or some other source of income, you will be required to find a cosigner to qualify.
The best cards for students are ones that don’t charge any annual fees, encourage the formation of good credit habits, and offer rewards. A good student card will also teach college kids how credit scores work and how they affect your ability to borrow.
Winner: Capital One Journey Student Credit Card
Rewards: 1% cash back on purchases; An additional 0.25% cash back for paying your bills on time that month; No caps on rewards you earn and no expirations
Annual Fee: $0
APR: 24.99% variable
Why It’s a Winner: This Capital One offering is one of the few “student” cards that doesn’t require you to be enrolled in college. It has a generous 1% cash back and lets young adults boost that rate to 1.25% if they pay their bills on time each month. So, Capital One Journey relies on positive incentives to instill good financial habits. Another way it does this: by offering cardholders a quick transition to a higher credit limit after five months of on-time payments.
This Capital One student card also tries to help students cut through that confusion by giving them access to credit education tools and credit score monitoring through Capital One’s CreditWise program. There’s no fees on foreign transactions either, making it the best card for students planning to study abroad.
The Catch: If there’s a knock on this card, it’s that the 24.99% variable APR is high relative to other offerings in this category. Discover it for Students, for instance, starts out with a 0% introductory APR for six months then goes to a range of 13.99% to 22.99%. Bank of America Cash Rewards credit card for students begins with a 0% rate for 12 billing cycles for new purchases and balance transfers. And then it shifts to an APR range of 13.99% to 23.99%.
However, if the point of getting a student card is to introduce your child to good credit habits—by paying their bills on time and off completely—then the APR shouldn’t be a deal breaker.
Best Card for Consumers With Bad Credit
It can be hard to find good credit cards for people with bad credit. If you have a limited credit history or a poor track record in handling credit (in general, a FICO score of 600 or lower, though this can vary a bit based on the lender) getting credit isn’t as simple as instant approval.
But cards for folks with bad credit aren’t impossible to obtain; the process just takes a little more work. And these cards come with more restrictions—such as lower credit limits—and often charge more in fees. No surprise.
The easiest cards to obtain if you have bad credit are so-called secured cards, where you have to put money down as a security deposit. And that deposit is generally your credit limit. (Be careful: If a card issuer tells someone with bad credit that there’s no deposit needed, it’s probably a marketing hook. Carefully read the fine print on any unsecured credit cards for bad credit; they are likely to carry very high fees in addition to having high interest rates.)
Provided you pay on time and keep your account in good standing, you will eventually get your deposit back when you close the card or switch to an unsecured card.
Winner: Capital One Secured Mastercard
Rewards: This card has no rewards.
Annual Fee: $0, but Capital One charges a $49, $99, or $200 refundable deposit—the amount depends on your creditworthiness
APR: 24.99% variable
Why It’s a Winner: Capital One Secured Mastercard charges no annual fee and comes with helpful features aimed at getting people with poor credit back on their financial feet.
For instance, a good card for people with bad credit will report their activity to at least one of the three major credit bureaus, which will help you build or reestablish good credit. Capital One Secured Mastercard will report your activity to all three of the major credit bureaus.
Moreover, Capital One offers incentives for cardholders to act responsibly. You can obtain access to a higher credit line, for example, by making your first five monthly payments on time—and without having to increase the amount of your deposit. The maximum credit line for this card is $3,000.
In addition, this card will help you keep track of your credit score through access to Capital One’s CreditWise suite of credit-management tools.
The Catch: This card offers no rewards or cash back. By contrast, rival Discover it Secured offers 2% cash back for spending at restaurants or gas stations and 1% on other purchases. Of course, if you’re starting off with a $200 spending limit, even a 2% cash back offer probably won’t move the needle. Another caveat: Capital One requires that you have a bank account to fund this card, so you won’t be approved if you don’t have a traditional checking or savings account.
Best Store Card
Department stores and specialty retailers that offer their own credit cards often push their plastic like an impulse buy—offering instant approval and discounts for signing up at the register. But it pays to slow down and read the fine print.
For instance, the average credit card in general sports an APR of 16.67%. Yet many store cards charge far more. The Best Buy credit card has an APR of 26.24%; Walmart’s card carries an interest rate of 23.9%; and cards offered by Old Navy and the Gap (both owned by the same company) charge 25.99%.
What’s more, instant approval for store cards often translates into lower credit limits—sometimes as low as just a few hundred bucks. This means even a moderate purchase may put you near or at the credit limit of that card. This is important because the percentage of the credit limit you use on each card and across all your cards can be a factor in your FICO score.
Winner: Amazon Prime Rewards Visa
Rewards: $70 Amazon gift card for new cardholders; 5% cash back on Amazon.com purchases; 2% cash back on purchases at restaurants, gas stations, and drugstores; 1% cash back on all other purchases
Annual Fee: $0, but you must have an Amazon Prime membership, which costs $99 a year
Why It’s a Winner: This Chase-issued card sports an APR lower than that of most store cards while offering tons of rewards.
Assuming you shop regularly at Amazon.com, the cash back value for each $100 you spend there comes to an estimated $5—a generous redemption rate that rivals many general-purpose rewards cards. Amazon’s almost endless breadth of merchandise adds to this card’s value, as it’s far more versatile than a department store or shoe-store card.
The Catch: You have to be an Amazon Prime member, which means the effective annual fee is $99. But that fee is generally in line with many other cash back cards. Plus Prime membership comes with loads of other benefits, such as free two-day shipping on eligible products and access to streaming movies and TV shows via Amazon Prime Video.
Best Hotel Card
Hotel cards can be a great way to rack up rewards when you hit the road. But are they really worth it?
That depends. If you are loyal to a particular chain, hotel cards can be a twofer: They offer the best rewards for spending at their affiliated properties as well as status in the brand’s loyalty program.
Because of their rewards packages, though, don’t expect these cards to come with zero annual fees. Just make sure the card’s other benefits and perks—for instance, free in-room Wi-Fi or no fees on transactions made abroad—are worth the annual costs.
Winner: Starwood Preferred Guest Credit Card from American Express
Rewards: Up to five points per $1 spent at Starwood properties, such as Westin, Sheraton, and W Hotels; Double points for spending on eligible purchases at participating Marriott Rewards hotels; 25,000 bonus points for signing up if you spend $3,000 within the first three months
Annual Fee: $0 for the first year, then $95 annually
Why It’s a Winner: This American Express card is incredibly versatile. Points can be redeemed for stays at Starwood’s 11 brands. Plus SPG members who link their accounts to Marriott Rewards (Marriott International bought Starwood last year) can transfer points between the two programs or to a frequent-flier program.
Points can be redeemed for flights on 150 airlines with no blackout dates. Also, as a cardholder and an SPG member, you’ll get free premium-speed Wi-Fi in your hotel room.
The Catch: After the first year, the card levies an annual fee of $95, which is higher than what some other hotel cards charge. Plus, you really have to be a frequent traveler to Starwood properties to make this worth it.
Best Airline Mileage Cards
Airline cards can help you supplement the frequent-flier miles you earn when you fly. Choosing an airline card is, to some degree, a simple exercise: The best miles card for you is likely to be the one whose airline you fly most frequently. Many airline cards charge annual fees, and they come with similar APR ranges and mileage redemption values. But you still want to examine the fees and look at other criteria. Among the best perks: free checked bags and access to airline lounges, which can help offset the cost of the annual fees.
If You Mainly Fly American: Citi AAdvantage Platinum Select World Elite Mastercard
Rewards: $1.30 per $100 spent, according to BoardingArea.com; 30,000-mile sign-up bonus if you spend $1,000 in first three months
Annual Fee: $95; waived the first year
APR: 16.99%–24.99% variable
Earn double miles on AA flights and get 25% off in-flight purchases. With mileage discounts, you can get a free flight for as little as 7,500 miles. You also get a free checked bag on U.S. flights and priority boarding for up to four people.
If You Mainly Fly United: United Explorer Card
Rewards: $1.40 per $100 spent, according to BoardingArea.com; 40,000-mile sign-up bonus if you spend $2,000 in first three months
Annual Fee: $95; waived the first year
APR: 17.74%–24.74% variable
Earn double miles on United purchases, and get one free checked bag and priority boarding for you and a companion.
If You Mainly Fly Delta: Gold Delta Skymiles from American Express
Rewards: $1.30 per $100 spent, according to BoardingArea.com; 50,000-mile sign-up bonus if you spend $2,000 in first three months; $50 credit if you make a Delta purchase in first three months
Annual Fee: $0 first year, then $95
Earn double miles on Delta purchases and get a free checked bag and priority boarding. Miles can be used on Delta and more than 15 partner airlines.
If You Mainly Fly Southwest: Southwest Rapid Rewards Plus Credit Card
Rewards: $1.40 per $100 spent, according to BoardingArea.com; 40,000-point sign-up bonus if you spend $1,000 in first three months; 3,000 bonus points on the anniversary of opening your account
Annual Fee: $69
APR: 17.74%–24.74% variable
Earn double points on Southwest tickets or car rentals or hotels through Rapid Rewards partners.
If You Fly Other Airlines: Alaska Airlines Visa Signature
Rewards: $1.80 per $100 spent, according to BoardingArea.com; 30,000-mile sign-up bonus if you spend $1,000 in first three months; Buy one ticket, get one for just the taxes and fees if you make $1,000 in purchases in first three months.
Annual Fee: $75
Get triple miles on Alaska and Virgin America purchases, and a free checked bag on Alaska and Virgin America flights for you and up to six companions.
Update: The print version of this story cited BarclayCard Ring Mastercard as an “honorable mention” in the Best Balance Transfer Card category. As of Sept. 20, Barclays stopped accepting new applications for this card, which is being reevaluated. Existing cardmembers can continue to use the Ring Mastercard with the current benefits.
Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.