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Published: May 17, 2023 49 min read
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3x points on business-related expenses; 25% additional point value when redeeming on travel through Chase

There's a lot to consider when deciding which credit card is best for you. After all, many cards offer a wide range of perks, from extra security features to cash back and rewards for your everyday spending.

We took a comprehensive look at the top offerings in the industry to see which are the best for everyday purchases, business expenses, luxury spending and beyond.

Here are Money’s picks for the best credit cards of 2023.

Our Top Picks for the Best Credit Cards of May 2023

Best Credit Cards Reviews

Courtesy of American Express
  • 6% cash back at U.S supermarkets, up to $6,000 per year, 1% thereafter
  • 3% on U.S. gas stations and other transit-related expenses
  • Secondary rental insurance, purchase protection and extended warranty*
  • $0 intro annual fee for the first year, $95 thereafter
  • 6% cash back at U.S. supermarkets is only up to the first $6,000 spent per year, then drops to 1%

Terms apply. Click here for rates and fees.

Annual fee
$0 introductory annual fee for first year, then $95
Insurance and protection
Return protection, rental car insurance, extended warranty and purchase protection*

Why we chose it: The American Express Blue Cash Preferred® is an excellent option for families trying to get the most out of everyday spending, thanks to excellent cash-back rewards on food and transportation.

The American Express Blue Cash Preferred® Card gives back an unmatched 6% — more than double what most cards offer — on purchases at most U.S. supermarkets and most U.S. streaming services, including Netflix, Hulu and Disney+. In other words, that $95 annual fee will probably pay for itself after a couple of months. (Terms apply.)

The card also offers 3% cash back on gas purchases in the U.S. and other expenses in the transit category, such as tolls, parking, taxis, trains and more. Essentially, whatever your means of transportation, you’re going to earn rewards. On other eligible purchases, cardholders will get 1% cash back, as well as on groceries after spending the $6,000 annual limit for 6%. Rental car insurance*, purchase protection (in events such as theft or loss) and extended warranty on bought items are all available through the card as well.

While it does have an annual fee, the American Express Blue Cash Preferred® Card’s cash-back rate is high enough to make up for it. Of course, it’s important to make sure the $95 annual fee is worth it for your particular situation. For example, if you’re a single person who rarely buys groceries, then you probably won’t get as much value from this card as a prolific cook or a family of four.

Click here for rates and fees.

Courtesy of Alliant
  • Outstanding 2.5% flat rate cash back for qualifying customers
  • No annual or foreign transaction fee
  • 2.5% cash back has strict requirements to qualify
  • No introductory offers
Annual fee
Insurance and protection
Personal identity theft protection, travel accident insurance, rental collision waiver, purchase security and extended warranty

Why we chose it: Alliant’s 2.5% cash back is one of the highest flat rates in the industry, which makes it one of the best all-around cards out there.

Alliant offers one of the highest cash-back rates around: 2.5% on every purchase up to the first $10,000 spent per billing cycle. After that, it’s 1.5%, which is still very good.

The catch, however, is that you must qualify as a Tier One customer to get the 2.5%. In order to qualify, cardholders must have an Alliant High-Rate Checking account, which implies signing up for eStatements and receiving at least one monthly electronic deposit. Users must also have a minimum daily balance of $1,000 in the account.

While this can seem like a lot of hoops to jump through, that 2.5% is high enough to make it worth the extra steps.

The card also includes some protective perks, such as travel accident and rental car collision insurance, extended warranties and reimbursement for identity theft recovery costs.

All information about the Alliant Visa Signature Card has been collected independently by

Courtesy of Chase
  • 3x points on business-related expenses like shipping services and online advertising
  • 25% additional point value when redeeming on travel through Chase
  • Low $95 annual fee
  • No annual statement credits
  • $150,000 spending limit on rewards is low for large businesses
Annual fee
Insurance and protection
Trip cancellation and interruption insurance, rental collision waiver, cell phone protection, purchase protection and extended warranty

Why we chose it: The Chase Ink Business Preferred® has a low annual fee but offers high rewards in business-related categories, making it a perfect choice for small businesses.

The Chase Ink Business Preferred® Credit Card provides a great way for business owners to get something back for those operating expenses. It has a low annual fee of $95, yet it delivers a long list of bonus rewards.

Cardholders get 3x points for every dollar (up to the first $150,000 spent each anniversary year) on shipping services, online advertising, internet, phone bills and travel. Also, when redeemed on travel through Chase Ultimate Rewards®, points are worth 1.25x, meaning 100 points are actually $1.25 instead of just $1.

Other than the rewards and redemption bonuses, the Chase Ink Business Preferred® offers many great travel perks. There are no foreign transaction fees, and it includes trip cancellation insurance and rental car collision insurance.

While this Chase card is not the most jam-packed with bonus rewards and perks, its straightforward points system and an annual fee that’s much lower than competitors make it an excellent choice for small business owners.

However, if your business incurs an extraordinary amount of expenses, consider The Business Platinum® Card from American Express. It has a wide variety of annual statement credits, luxury benefits and a much higher cap on rewards — $2 million versus Chase’s $150,000. However, its annual fee is a whopping $695, so be sure your business actually gets the most out of it.

Best Secured Credit Card: Bank of America® Customized Cash Rewards Secured Credit Card

Courtesy of Bank of America
  • 3% cash back on the category of your choice
  • 2% cash back on groceries and wholesale clubs like Sam's and Costco
  • Users can deposit a large amount (up to $4,900) to open initial credit line
  • Special categories have a $2,500 spending limit (1% cash back thereon after)
  • Foreign transaction fees
Annual fee
Insurance and protection
Standard protection and coverage

Why we chose it: The Bank of America® Customized Cash Rewards Secured Credit Card offers more rewards and a higher spending limit than top competing secured cards, and its Visa network makes it more widely accepted as well.

This secured card by Bank of America® has been available for a long time, but only to those who were denied its unsecured version. Now, users can apply for the secured card, making an initial security deposit and increasing their chance of approval. It’s a great way to start building or repairing your credit with a card that offers plenty of rewards.

You can get the Bank of America® Customized Cash Rewards Secured Credit Card with a minimum security deposit of $300. Your credit limit is established based on the amount you deposit along with your income and credit score, if applicable.

If you want to ensure a higher credit line (and can afford it), you can deposit up to $4,900. Not all secured credit cards offer such flexibility, and competitors tend to keep the maximum deposit well below $3,000.

What truly makes this card stand out, however, are the rewards. Cardholders choose a category that earns them 3% back, and it can be changed monthly — choices include online shopping, dining, travel, drug stores or home improvement/furnishings. For instance, if you plan on buying airplane tickets, you might want to choose 3% cash back on travel for that month. Then, the month that you’re set to depart, you could change it to dining to take advantage of all that restaurant-hopping you're bound to do.

You also get 2% back on groceries and purchases at wholesale clubs such as Sam’s or Costco, and 1% on everything else.

The downside is that both the 3% and 2% spending categories have a combined $2,500 spending limit per quarter. After that, you’ll get 1% cash back. This is still more than other secured card competitors, which typically have limits below $1,000.

All information about the Bank of America® Customized Cash Rewards Secured Credit Card has been collected independently by

Courtesy of American Express
  • 4X points at restaurants, plus takeout and delivery in the U.S. up to $25,000 per calendar year, then 1X.
  • 3X points on flights booked directly with airlines or through
  • Automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S. each month, totaling up to $120 per year
  • $250 annual fee
  • Supermarkets category doesn't include superstores or warehouses

Terms apply. Click here for rates and fees.

Annual fee
Insurance and protection
Trip delay insurance, baggage insurance, rental car insurance, extended warranty and purchase protection*

Why we chose it: If you want to be rewarded for eating, this is the card. The American Express® Gold Card offers generous rewards on dining purchases in all categories, from restaurants to groceries and even Uber Eats. (Terms apply.)

When it comes to food, few cards cover all the bases. However, the American Express® Gold Card has high rewards for purchases at restaurants, supermarkets and delivery services: whether you go out or stay in, you’ll get 4x points on just about every food-related purchase you make. (Terms apply.) Although the special rewards for delivery and takeout services are limited to the U.S., the benefit applies to sit-in restaurants worldwide.

You can also qualify for an annual $120 statement credit after dining at specific restaurants that partner with American Express, including Shake Shack and The Cheesecake Factory, as well as a $120 annual credit on Uber and UberEats. (Enrollment is required.)

Other than these dining rewards, the American Express® Gold Card gives you 3x points on airline tickets booked through Amex Travel and 1x on any other purchase, along with classic American Express® benefits, such as baggage and rental car insurance, purchase protection* and access to pre-sales on select events and preferred seating when applicable.

Courtesy of American Express
  • Generous luxury perks and protection services such as rental car insurance*
  • 5x points on flights and hotels booked through the American Express travel portal.
  • $200 annual statement credits on Uber, hotels, airline fees and more
  • $695 annual fee is one of the highest in the market
  • No 0% introductory APR period

Terms apply. Click here for applicable rates and fees.

Annual fee
Insurance and protection
Cell-phone protection, return protection, trip cancellation and delay insurance, baggage insurance, rental car insurance, extended warranty and purchase protection*

Why we chose it: The card’s long list of rewards and benefits is nearly unmatched, making its high annual fee a worthwhile investment for people who travel often and spend enough to get the most out of it.

American Express® has built quite a reputation for offering generous rewards and luxury perks. In addition to giving one point per dollar on regular purchases and five points for every $1 spent on travel and hotels booked through the American Express® website, this metal card (yes, it’s actually made from metal) stands out for its wide array of statement credits and additional perks.

The Platinum Card® by American Express gives users an annual statement credit (meaning it’s deducted from the total you owe) of up to $200 for Uber use, up to $240 for subscriptions on Peacock, Audible, The New York Times and SiriusXM; the full cost of Walmart+ ($12.95 monthly) and $300 back per calendar year on the Equinox+ digital fitness app, or eligible Equinox club (enrollment required); and $100 and $300 credits for eligible purchases at Saks and SoulCycle, respectively. These credits alone are worth more than the card’s $695 annual fee.

This card comes with some nice travel perks as well. You get access to American Express® airport lounges worldwide, special access to dinner reservations in high-end restaurants and premium benefits with select rental car companies such as complimentary enrollment in Avis Preferred Club. Additionally, cardholders get benefits like cell-phone protection, extended warranties on any purchase with a manufacturer’s warranty to match, and insurance coverage* for certain situations such as rental car accidents or even accidental loss of life.

Courtesy of Chase
  • $300 annual credit for travel purchases
  • 10x points on hotels and rental cars through Chase
  • 5x points on flights purchased through Chase
  • 50% additional point redemption value when redeeming for travel on Chase Ultimate Rewards®
  • High $550 annual fee
Annual fee
Insurance and protection
Trip cancellation and interruption insurance, rental collision waiver, lost luggage reimbursement, trip delay reimbursement, purchase protection, return protection, extended warranty

Why we chose it: The Chase Sapphire Reserve® gives you a high rate of rewards for most expenses you incur while traveling, and it goes a few steps further, providing comprehensive travel insurance with a lower annual fee than its main competitor.

The Chase Sapphire Reserve® can make your travels much more comfortable and less expensive. In addition to letting you earn 5x points on airfare through Chase Ultimate Rewards®, the Reserve offers an outstanding 10x points on hotels and rental cars. You also get 3x points on all restaurants, so if you plan to dine out a lot on vacation, there’s an extra reward for you (there’s no foreign transaction fee either).

Another great benefit is that all those accrued points can be redeemed at a higher rate when buying your next plane tickets. When you use points to purchase travel through Chase Ultimate Rewards®, your points are worth 1.5 times their original value. So if you’ve accrued 1,000 points (worth $10 in cash back), you actually have the equivalent of 1,500 points ($15) if you use them to buy flights through Chase.

Chase also offers an annual $300 statement credit for purchases categorized as travel (this includes car rentals, hotels, tickets and more), and a credit worth $85 to $100 every four years for TSA PreCheck or Global Entry fees. Cardholders also get PriorityPass membership, which grants access to airport lounges and exclusive restaurants, as well as discounts on hotels in the IHG group, such as Holiday Inn and InterContinental.

There are also a few limited-time memberships or perks included for free with card membership, with partners such as Lyft (10x points when using Lyft) and DoorDash (three months of DashPass).

While this card offers a lot of benefits, it does have one big drawback — its steep annual fee, which can be a deal-breaker for some. If that's the case, consider the next card on our list, the Chase Sapphire Preferred®, which provides plenty of rewards, for a very affordable annual fee.

Why we chose it: The Chase Sapphire Preferred® offers excellent insurance coverage and a wide variety of travel rewards categories for a low annual fee of $95.

When it comes to travel, the Chase Sapphire Preferred® covers a lot of bases. First, it offers 5x points on travel through Chase Ultimate Rewards®, and when those points are redeemed through the same portal, they’re worth 25% more. This means that if you have $1,000 in points for a flight ticket, you technically have $1,250.

There’s also an annual $50 statement credit for hotel purchases and, at the end of each account anniversary, a point bonus equaling 10% of what you spent throughout the year.

One of the card’s main highlights is the insurance coverage it offers travelers. There’s flight cancellation and interruption insurance, as well as trip delay reimbursement and baggage delay insurance. Even more noteworthy, this is primary rental insurance, which covers up to the cash value of the car.

When it comes to day-to-day spending, you can earn 3x points on dining, online grocery stores (excluding Target, Walmart and wholesale clubs) and select streaming services, which makes it much easier to rack up points for travel.

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Best credit cards with no annual fee

Paying a credit card’s annual fee is worth it when the rewards offset the price. However, if you want to maximize rewards without paying a dime, there are many credit cards with great perks that don’t charge you for it. Check out some of the best no-annual-fee credit cards for the most popular categories.

Best No-Annual-Fee Card: Chase Freedom Unlimited®

Courtesy of Chase

The Chase Freedom Unlimited® provides a flat 1.5% on all purchases, plus Chase’s classic 5% on travel through Chase Ultimate Rewards®, 3% on dining and 3% on drugstore purchases. This, along with its very generous intro offer, purchase protection, rental collision waiver and much more, make this card the complete package.

  • 5% on travel through Chase Ultimate Rewards®
  • 3% on dining and drugstore purchases
  • 1.5% on all purchases
  • Wide array of protection and insurance policies
  • 3% foreign transaction fee

Best no-annual-fee cash-back card: Wells Fargo Active Cash℠ Card

Courtesy of Wells Fargo

Straightforward rewards can be a thing of beauty. This cash rewards credit card gives you a $200 introductory bonus if you spend $1,000 within three months of opening your account and 2% back on almost everything you buy or pay (only excluding things like money orders) — meaning if this is your go-to card for purchases, you essentially have a 2% discount on, well, life.

  • 2% on nearly every purchase without any caps or category limits
  • Tends to have great introductory offers
  • No special rewards

All information about the Wells Fargo Active Cash℠ Card has been collected independently by

Best no-annual-fee card for dining: Capital One SavorOne Cash Rewards Credit Card

Courtesy of Capital One

While its 3% cash-back rewards on dining equals that of some competitors, the fact that this card also has 3% back on theaters, concerts and sporting events (and up to 8% on some tickets bought directly through Capital One) makes it the perfect card for a night out. Its generous intro offer gives it a slight edge over the competition too.

  • 3% back on dining and entertainment, select streaming services and grocery stores (excluding superstores like Walmart® and Target®)
  • Up to 8% cash back on entertainment when buying through Capital One Entertainment
  • Not available in Puerto Rico

Best no-annual-fee card for travel: Chase Freedom Flex℠ Credit Card

Courtesy of Chase

The Chase Freedom Flex℠ Credit Card offers a whopping 5% back on quarterly bonus categories (on up to $1,500 in combined purchases in those bonus categories each quarter you activate them). It also offers 5% on travel booked through Chase’s website, along with flight delay and cancellation insurance and a rental collision waiver. In addition, it gives 3% back on dining while for those nights when you’re hitting the town.

It charges foreign transaction fees, but when it comes to booking flights and domestic travel, it truly is a standout choice.

  • 5% back on rotating categories each quarter
  • 5% on travel through Chase Ultimate Rewards®
  • 3% on dining and drugstores
  • Trip delay or cancellation insurance
  • Only 1% on regular purchases
  • 3% foreign transaction fee

All information about the Chase Freedom Flex℠ Card has been collected independently by

Best for business: Chase Ink Business Cash® Credit Card

Courtesy of Chase

For small businesses, this card offers arguably the most value of any card out there. The Ink Business Cash has great rewards: 5% cash back on certain business-related expenses and 2% on restaurants and gas, along with a substantial intro bonus.

It also lets you bonus_miles_full.

  • 5% cash back on office supplies, internet and phone services up to a combined $25,000 each year
  • 2% on restaurants and gas stations up to a combined $25,000 each year
  • Purchase protection and extended warranty on qualifying purchases
  • Rewards cap on 5% and 2% categories is low at $25,000
  • 3% foreign transaction fee

Other credit cards we considered

Blue Cash Everyday® Card from American Express

Courtesy of American Express

This no-annual-fee card by American Express® recently got even better. With added and improved categories yielding higher rewards, along with generous intro offers, it’s a great option for grocery shopping, gas pumping and just everyday purchases. It didn’t make our list because the Blue Cash Preferred® Card also from American Express offers even more benefits (Terms apply. Click here for applicable rates and fees.)

  • 3% cash back at U.S. supermarkets up to $6,000 on eligible purchases, then 1%
  • Purchase protection included
  • 3% cash back on gas at U.S. gas stations, on up to $6,000 per year on eligible purchases (1% after that)
  • No travel insurance or protection
  • High spending requirement for intro bonus

Apple Card

Courtesy of Apple

The Apple Card isn’t just cool and matches your iPhone, it actually has great rewards and an unmatched user experience on the Apple Wallet app. However, the Apple Card didn’t make the cut for our top picks because it doesn’t have intro offers and lacks insurance and purchase protection.

  • 3% back on Apple, T-Mobile, Uber, Walgreens and payments through iTunes
  • 2% back on all purchases using ApplePay
  • Outstanding user interface and iPhone integration
  • No purchase protection or insurance benefits
  • No intro offers

All information about the Apple Card has been collected independently by

Costco Anywhere Visa® Card by Citi

Courtesy of Citi Bank

While the Costco Anywhere Visa® Card by Citi has one of the most tempting cash back categories (4% on gas) and decent rewards and coverage on travel, its lack of intro offers or any outstanding benefits in Costco itself are big drawbacks.

  • 4% cash back on gas
  • 3% cash back on select travel, hotel and rental cars through Costco Travel
  • 2% cash back at Costco
  • Travel accident insurance
  • Cash back only accessible at the end of the year
  • No flight delay or cancellation insurance

Aspiration Zero Credit Card

Courtesy of Aspiration

Aspiration Zero is a good option for those who want to be as eco-friendly as possible, even when they’re shopping.

The company plants a tree for every purchase, and pledges to donate to charities 10% of the fees customers choose to pay. It also offers a 1% cash-back reward once the customer reaches "carbon zero" — that is, once a customer make at least 60 purchases, or 30 if they've enabled the "plant your change" feature. (The company calculated that planting 60 trees per month per customer would offset that individual's carbon footprint.)

However, the low rewards rate when compared to competitors, along with its short time in the market, kept it out of our main list.

  • Plants a tree with every purchase
  • $300 intro bonus after spending $3,000 within the first three months
  • Donates 10% of fees to charities
  • 0.5% cash-back (1% after 60 purchases) is lower than many competitors

All information about the Aspiration Zero Credit Card has been collected independently by

Credit Cards Guide

Using credit cards wisely can help you better manage your finances, raise your credit score and even get you discounts and rewards on the things you buy. The flip side is that it’s easy to overspend with credit cards and wind up deep in debt. The terms and fees can be very confusing too, so it’s important to take the time to understand the fine print.

How do credit cards work?

Credit cards are what’s known as revolving credit. With this kind of credit, a lender gives you access to a credit line. You can borrow from it up to a pre-set limit, and you are expected to pay it back monthly. As you pay down your balance, credit is once again available for purchases.

For most loans, lenders charge an annual percentage rate (APR), or interest rate, on the amount you owe. With credit cards, you can avoid paying interest charges if you pay the balance off in full every month.

However, if you don’t pay your balance in full, you’ll be hit with interest charges, and APRs for credit cards are fairly high. While rates on mortgage notes and personal loans can start around 3% or 4%, the lowest APR you can find on a credit card is around 10% — a rate that will only be available to those stellar credit. Most average between 12% to 26%.

The interest charges and annual fees many cards charge can pile up as debt over time, even if you use the card sparingly. If you can’t pay the monthly bill in full, you must at least pay the required minimum amount each month; otherwise, the bank can raise your APR, charge you late fees and/or report you to the credit bureaus.

However, there are advantages to paying with a credit card, especially when it comes to the added security they can provide. For instance, if you file a complaint about a fraudulent transaction, the card issuer will cancel the charge and there will be no money missing from your account while the issue is being fixed.

While you can dispute a fraudulent transaction involving your debit card with your bank, you’re responsible for those charges until the bank sorts the matter out. Because your debit card is linked to your checking account, this could significantly impact your day-to-day spending or any automatic payments set up to draw from that account.

The best credit cards can also offer so many rewards and perks that, when managed well, can actually save you money in the long run.

Types of credit cards

While all credit cards essentially work the same, there are different ways to categorize them depending on their terms, benefits and how they’re used. Confusing things further, some debit cards and prepaid cards can act and look like credit cards, with Visa or Mastercard logos included, but they don’t offer the same protections and rewards that credit cards do. Here are some of the types of actual credit cards you’ll encounter:

Regular credit cards

Many banks have plain credit cards without any special rewards or benefits. These are just cards with a preset credit limit and a Visa, Mastercard or American Express® logo.

Rewards credit cards

Rewards credit cards offer cardholders additional perks for their spending. This could come in the form of cash back, which is a straightforward percentage of the purchase, or in points and miles, in which the value is determined by the issuer’s or brand’s proprietary points system.

Some cards give a fixed amount across the board, like 1.5% cash back, and others have a tiered structure with bonus categories, such as supermarkets or gas stations, that yield higher-than-average rewards. The best cash back credit cards, for instance, will usually offer a combination of the two, along with other benefits, like purchase protection or rental car insurance.

More premium cards often use points, which can be redeemed for much higher value through issuers’ portals, but don’t have as much cash value. These also come with many perks such as insurance policies, statement credits for specific spending and complimentary memberships.

Balance transfer credit cards

Balance transfer credit cards usually have introductory 0% APR offers and lower balance transfer fees so that cardholders can transfer outstanding balances from other cards. The best balance transfer credit cards offer longer introductory periods, from 15 to 21 months of 0% APR, and a lower balance transfer fee — usually 3%, which is lower than the industry standard 5%.

Travel credit cards

Credit cards specialized on travel generally reward users when buying plane tickets, renting cars and booking hotels. The best travel credit cards also provide benefits such as flight cancellation or delay insurance, baggage insurance and rental insurance. Taking it one step further, some of the best options also give statement credits for TSA PreCheck, grant access to airport lounges and more.

Some of the best airline credit cards also offer great travel rewards, as well as flight-specific perks such as free checked baggage, priority boarding and discounts for in-flight purchases.

Bad credit credit cards

Credit cards tailored for bad credit will have much more lenient credit requirements. While there are regular credit cards aimed at people with bad credit, they’ll still have certain requirements and very high APRs. Secured credit cards, on the other hand, offer a much higher chance of approval since there’s a security deposit in case cardholders default.

To be approved for a secured credit card, you must make a cash security deposit — which “secures” the account. Users can typically get their deposit back after a period of time, so long as they’ve been consistently making payments on time. Secured credit cards can also be upgraded to regular credit cards after a certain amount of on-time payments.

Business credit cards

Business credit cards generally have higher spending limits than other cards, and the benefits are tailored for businesses. These can include, for instance, special rewards for advertising or shipping services. Cards can be used by company employees, not just owners or managers, so the rewards can really pile up.

Student credit cards

Student credit cards are made specifically for students enrolled in college at the time of applying. They’re easier to get approved with little to no credit history and can get eventually upgraded when cardholders graduate. They tend to have less benefits than regular credit cards, but the best student credit cards still provide more rewards and perks than other starter cards.

Charge cards

A charge card is a credit card without a pre-set spending limit. Though users can theoretically spend unlimited amounts with the card, each charge is approved individually. This kind of card is mostly used by high net worth individuals with excellent credit or large businesses, and most need to be paid in full each month.

How does credit card interest work?

First things first, it’s important to know that if you pay your credit card balance in full every month, you won’t have to pay any interest at all.

However, if you owe a balance, it will be calculated using your annual percentage rate (APR) divided by 365 and multiplied by your average daily balance (not your full balance). The resulting amount is multiplied by the days in the cycle, and this final number is added to your balance on a monthly basis.

How does the formula work?

Interest on credit cards is calculated using your APR, the daily periodic rate and your monthly balance.

Let’s say your APR is 14.24%. To obtain the daily periodic rate, you divide that amount by 365, for a total of 0.039%.

That 0.039% is then multiplied by your average daily balance, which is your entire monthly balance divided by the number of days in the billing cycle.

For example, if you owe $1,000 in May, your average daily balance would be $33.33. You multiply that by the periodic rate of 0.039 and you get $1.30 (rounded up) of daily interest.

If you multiply that by 30, you’d get approximately $39. This is what will be tacked on to your total at the end of the next cycle.


The annual percentage rate (APR) is the amount of interest added to a debt, whether it’s a mortgage, a car loan, a personal loan or a credit card with an outstanding balance. The annual percentage yield (APY), on the other hand, is a return on investment earned. The APY is used in high-yield savings accounts and certificates of deposit, for example.

How to use a credit card

There’s more to using a credit card than just swiping away at the mall. When used correctly, a credit card can help you build credit, protect you from fraud and even reward the spending you already do.

  • Credit utilization. Credit utilization is how much of your available credit you’re using. This percentage is known as the credit utilization ratio, and it’s one of the most important factors in determining your credit score and overall creditworthiness.
  • Payments. Credit card payments are usually expected at the end of a monthly cycle. If you fail to pay, credit card companies can charge you a late fee, raise your APR or, at a certain point, report you to a credit agency.

You can pay a minimum amount (which will depend on your balance) to avoid penalties, or you can pay the full amount to avoid interest.

  • Best practices. If credit card debt is left unpaid, it can affect your credit and hurt your chance of getting approved for other cards or loans. If you have a large balance and don’t pay it off, it can accrue significant amounts of interest.

A good rule of thumb is to use credit cards as if it were your actual money; in other words, if you can’t actually afford it, don’t buy it. While having a high credit limit is tempting, credit cards have some of the highest interest rates of any type of loan, and financing purchases this way is a surefire way to wind up paying far more than you intended.

If you’re able to pay the balance off completely at the end of the month, it may be smart to use credit cards to pay most of your expenses, especially with cards that provide purchase protection, rewards points and extended warranty periods on high-value items.

What is a good credit utilization ratio?

Generally, experts recommend that you use less than 25% of your overall credit card limit, and that new cardholders with little credit history keep it as low as 10%, if possible. A low utilization rate can help improve your credit score enormously, and is especially important if other factors (length of credit history, number of open accounts and payment history) are somewhat rocky.

Also, while your overall credit utilization might be low, keep in mind that having a high balance on one card could hurt your chances of getting additional cards or loans, especially with the same credit card issuer.

How to choose a credit card

Choosing the right credit card should not be limited to the offers you constantly get in the mail. If you want to get the most out of your credit card, do your research and be deliberate about choosing and applying for the right one.

Approval odds. To lessen the risk of rejection (and of adding an unnecessary extra inquiry to your credit report, which can impact your score negatively), look at each card’s credit requirements before you apply.

While some banks specify the kind of credit they will accept (fair, good or excellent, for example), few banks will disclose the exact minimum credit score you need for approval. This is due to the fact that they take into account many factors other than just your FICO or Vantage Score in their underwriting process. They’ll review your personal finances, including your debt-to-income ratio, credit utilization, income and length of credit history before determining approval.

Before you apply for a credit card, make sure to get a credit check with all three major credit bureaus (Experian, Equifax and TransUnion) to at least have an idea of your overall approval odds.

If you already have a credit history, banks will send you pre-approvals or pre-qualifications by mail. Sometimes you might receive an offer for a card you already wanted.

APR. Each card has an APR range of, say from 12.24% to 24.24%. You’ll be offered a number within that card’s range depending on your creditworthiness.

Unfortunately, picking a card with a very low minimum APR doesn’t guarantee that rate for you. But if the overall range is lower, it might be a better choice for you. For example, a card with a maximum APR of 21.99% will probably give you a better rate than one that goes as high as 25.99%.

If you have an excellent credit score and a high income, though, you are more likely to qualify for the lower end of a card’s APR range. Some cards offer APRs as low as 10%.

Fees. Many credit cards charge annual fees, ranging from $95 to $795. Some cards, however, do not charge one at all. Typically, credit cards that charge annual fees offer more generous rewards and better perks than those that don’t.

If you just want the occasional perk or discount, a card with a high annual fee might be counterproductive. If, however, you use your card heavily, or features like travel insurance or cash back in dining are essential to your job or lifestyle, an annual fee might be offset by cash back or other perks.

If you travel outside of the United States often, foreign transaction fees are also something to keep in mind. After all, you won’t be happy paying 3% extra on every purchase made during your trip. These fees aren’t clearly specified in most cards’ promotional materials (unless it’s a travel card), so you’ll have to look for the cards’ terms and agreements to make sure.

Many cards also charge a balance transfer fee (typically from 3% to 5%) when you transfer a balance from one card to another. While the best balance transfer credit cards offer introductory periods without interests on these transfers, the initial fee will still be charged.

There are also late payment fees, which vary from bank to bank, although some will just raise your APR if you miss the deadline to make a payment.

Cash back and points. Cash back rewards return a percentage of each purchase back to the cardholder. It basically amounts to a discount every time you buy something with the credit card; you’ll see that money in your account’s home page or mobile app, and from there you can use it as a statement credit or redeem it through the portal for travel or other offers.

Different cards have different ways of giving cash back and points. Some offer a set reward percentage across all purchases, while others have bonus categories, such as 3% at restaurants or 5% at an affiliated store (Amazon, for example).

Some cards work with a points system proprietary to the issuer. These points can be redeemed for gift cards, statement credit or for purchases through the issuer’s program, such as American Express® or Chase Ultimate Rewards®.

These points can vary in value, depending on the issuer and how you use them. If you plan to pay back the card with points, it might reduce their value. If you want to trade them in to buy airline tickets through their platform, it will generally increase their value.

Rewards. Rewards come in many different forms. While people often use “cash back” and “rewards” interchangeably, they aren’t exactly the same thing. Many of the best rewards credit cards actually use a proprietary system of points and statement credits. Rewards can come in the form of gift cards, annual statement credits for using a specific service (such as TSA PreCheck or Uber) and sometimes discounts with partner companies.

Depending on your lifestyle and spending habits, these rewards can sometimes be more tempting (and valuable) than points or simple cash back. Partner hotels, for example, offer free nights, and some airlines offer free companion tickets after you spend a certain amount. However, not everybody will spend enough to enjoy these perks, so be sure that the card you’re getting offers rewards for your level of spending.

Introductory offers. Welcome offers are a big selling point for new cardholders. Sign-up bonuses and intro APR offers can save you money both in the short and long term. If two cards are almost the same, but one offers a $200 bonus, it can be a major deciding factor.

Added benefits. In addition to cash back and freebies, some credit cards can offer other benefits. For example, the best travel credit cards come with a wide array of insurance policies, such as travel accident insurance, flight delay and/or cancellation reimbursements, rental car insurance and even extended warranties for purchased items.

Of course, you can always purchase travel insurance separately (and you can check out our list of the best travel insurance if that’s what you’re looking for), but having it already included with your purchases is a great advantage.

There can also be perks such as complimentary subscriptions to DoorDash’s DashPass program, access to exclusive airport lounges and free checked bags on flights.

How to get a credit card

There are a few ways to get a credit card. If this is your first time ever filling a credit card application, you might have to start with a secured card, giving an initial security deposit to ensure the bank approves a credit line.

If you do have a lengthy credit history, make sure to get a copy of your credit report from all three bureaus, which will give you an idea of the types of cards you’ll be approved for and the APR rates you’ll be offered. People with high credit scores will be offered the best (e.g. the lowest) rates.

You can apply for a credit card in different places:

Online. The days of having to visit a brick-and-mortar bank branch in order to apply for a card or loan are long gone. You can apply for pretty much any credit card online by providing your personal information (including your Social Security number) and be either approved or denied in a matter of minutes.

Credit card offers. Sometimes, banks send offers directly to your mailbox. These offers can mention that you’re pre-selected or pre-approved for a certain card, and they often provide a code to apply online and get the points or benefits mentioned in the letter. Before taking advantage of these offers, make sure it’s really the best card for you by following the criteria in the section How to Choose a Credit Card.

Your bank. Most banks offer some sort of credit card. While it’s not guaranteed, having an account with the bank generally increases your chances of getting approved for one of its credit cards, and perhaps even being given special offers.

Apply at a store. Many stores have branded credit cards with special benefits for purchases made with the retailer; however, they often have higher than average APR rates.

How to get a credit card with no credit

If you have poor to fair credit, or no credit at all (not even a student loan), you might be wondering how to build credit. Here are some ways to do it.

Get added as an authorized user. A parent, family member or even a (very generous) friend can add you as an authorized user on a credit card. You can piggyback off their credit history to build your own and, depending on the agreement with the other person, even enjoy the card’s perks and rewards.

Just apply. While not the most recommended method, some issuers will just approve you if you have absolutely no credit history (having bad credit is a different story). This is more feasible for people who do have a steady income and the card you apply for has lenient credit requirements. Bear in mind though that applying for new credit involves a hard credit pull, which leaves a slight mark on your report.

Secured cards. Secured cards are credit cards for which you pay a security deposit upfront to ensure the bank doesn’t lose any money if you default. These tend to be the best student credit cards, and they’re normally used to build or rebuild credit by people who can’t qualify for unsecured credit cards. Depending on the issuer, the card’s credit line might be equal to the money you deposited, or it could be more if your credit score and income are high enough. After some time of making on-time payments, banks will typically upgrade you to a regular credit card and give you back your initial deposit.

How many credit cards should you have?

There isn’t a magical number for how many credit cards you should have. It all depends on your situation, lifestyle and your ability to pay your cards back on time. The more cards you have, the higher your credit line, which can reduce your utilization ratio. However, having more credit cards opens up the possibility of incurring higher debt and having lower approval odds due too much revolving credit.

Credit Cards FAQ

What is a secured credit card?

A secured credit card is a card that requires an upfront security deposit in cash. It's a way for banks to cover their losses if the individual defaults. People with bad credit or with no credit history at all often seek out secured credit cards because they might not be approved for regular (unsecured) cards. The security deposit is given back once the account is upgraded by the bank due to a history of timely payments, or when the card is canceled by the user.

What is APR on credit cards?

APR stands for annual percentage rate, which is the interest charged on the outstanding balance of a credit card account. The rate is decided depending on the applicant's credit score, income, debt-to-income ratio and other factors. It normally ranges from 12% to 25%, but it changes often. Credit card interest is calculated by dividing the APR by 365 and then multiplying that by your average daily balance. This result is multiplied by the days in a billing cycle and the total will be added to your monthly statement.

When were credit cards invented?

Although credit and loans have a history that spans centuries, what is known as a credit card today is mostly attributed to the Diners Club card, created by Frank McNamara and Ralph Schneider in 1950. Some significant precursors include Western Union's Metal Money (1914), American Airlines' Air Travel Card (1936) and John Biggins' Charg-It Card (1946).

How do you cancel a credit card?


In order to cancel a credit card, you can simply call the card issuer directly and ask to close the account. Some banks also offer easy cancellation online. Before closing the account, it's best to pay off any remaining balance to ensure no fees or damage to your credit. It's also a good idea to confirm the cancellation through a second method (online then calling, for example) to avoid any fees or payments.

However, keep in mind that canceling a credit card can lower your credit score. When you cancel a card, it lowers your credit limit (which in turn raises your utilization ratio) and reduces your number of open accounts.

How We Chose the Best Credit Cards

In order to find the best credit cards for each situation and lifestyle, we looked at over 70 cards across all issuers, and considered several factors:

  • Transparency: Transparency is a big deal for us, so we value issuers that make documents easily accessible and communicate clearly about their rewards programs, interest rates and offers.
  • Rewards: We looked at the rewards offered by each card, whether it be cash back, points or annual statement credits, and compared their value to their annual fees.
  • Intro offers: Intro offers alone can sometimes be enough to offset a card’s annual fee, so we looked at issuers that offer high welcome bonuses and/or long-term 0% introductory APR on purchases and balance transfers.
  • Coverage: One of the main advantages of using a credit card is protecting your actual money. While all cards have methods of dealing with fraud, some have additional protections like extended warranties, rental car insurance and flight cancellation coverage, to name a few, that pushed certain cards to the top of our list.

Latest News on Credit Cards

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Summary of Money’s Best Credit Cards of May 2023

* Insurance disclosures for American Express Cards on this page:

Trip Delay Insurance: Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.

Global Assist Hotline: Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit for more details. Card Members are responsible for the costs charged by third-party service providers.

Extended Warranty, Purchase Protection, Baggage Insurance Plan: Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit for more details. Underwritten by AMEX Assurance Company.

Car Rental Loss & Damage Insurance: Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.