Which Credit Card is Best for Me?

The best credit card for you depends on factors like your financial goals, how you plan to use the card, and your credit score. You’ll also want to consider the card’s costs, such as its annual percentage rate (APR) and fees.
 
There are a head-spinning number of credit cards from which to choose. Getting clear on your needs can help you find the right match.

Types of credit cards

The first step in narrowing your choices is deciding which type of credit card you need. Each has its own purpose and benefits.
 

Rewards credit card

Would you like to get special perks just for using your card? If so, a rewards credit card might be for you.
 
Depending on the card, it may offer:

• Cashback on purchases. Some cards provide an across-the-board reward, such as 1% cash back on all purchases. Others offer rewards for certain categories, such as 3% cashback on groceries or 5% cashback on fuel purchases.
• Points for purchases. Similar to cashback cards, some credit cards award points when you make purchases. You might earn 3 points for every dollar spent, for example. You can then redeem your points for specific rewards.
• Travel rewards. Earn points that can be used for travel discounts and perks.
• Store rewards. Many retailers have their own credit card offering cashback rewards for purchases. Some store cards can be used only at that retailer, while others are, for example, VISA cards that can be used wherever VISA is accepted. Many retailer cards charge no annual fee.
• Other perks. Some credit cards come with unique perks like airline lounge access or free entry to certain museums. Some even offer price protection, so if you purchase an item and the price then drops, you can get a refund for the difference.

You may need an above-average credit score to qualify for cards with the best rewards. If you do get a rewards card, keep in mind that rewards can expire. Also, if you make late credit card payments, you might forfeit your rewards.
 

Secured credit card

A secured credit card can be a great option for someone who has no credit, limited credit, or damaged credit and wants to build — or rebuild — their credit.
 
When you get a secured credit card, you make a cash deposit to your credit card issuer to secure the card. Your deposit amount becomes the amount of your credit limit. So if you deposit $2,000, your credit card will have a $2,000 credit limit.
 
Your cash deposit allows the credit card company to issue you a credit card — even if you have no credit history — without taking a big risk. If you’re unable to make your monthly payments, the card issuer has your deposit to cover their loss.
 
When using a secured credit card (or a traditional credit card), try to keep your utilization rate relatively low, ideally 30% or less. The major credit reporting agencies will keep an eye on your utilization rate when calculating your credit score, and lower is better.
 
Secured credit cards often have an annual fee and may have other fees, which are deducted from your deposit. So, as with all credit card offers, make sure to read the fine print before making your decision.
 
If you make credit card payments on time, your card issuer may reward you with a higher credit limit or may offer you an unsecured credit card.
 

Low interest balance transfer credit card

If you have high-interest credit card debt, transferring that debt to a new low-interest credit card can help you get out of debt more quickly.
 
You can often transfer your balance from one or more of your existing credit cards. Balance transfer cards offer a low or 0% annual percentage rate (APR) for a fixed period of time, often 12, 18, or even 21 months.
 
Once you transfer your existing credit card balances to your new credit card, you make just one monthly payment. And since you’re now paying less interest, or none at all, it becomes easier to pay off that debt.
 
Let’s say you have an $8,000 balance on an existing credit card with a minimum monthly payment of $400 and an APR of 22.5%. If you make the minimum payment each month, it will take you 20 months to pay off that debt and you’ll pay $1,099 in interest. But if you transfer your balance to a card that offers a 0% rate for the first 18 months, you’ll pay it off in just 16 months and will pay no interest.

Save Money with Frequent Payments

Rather than paying your credit card bill monthly, consider making biweekly or even weekly payments. The interest you pay is based on your average daily balance, so making more frequent payments lowers that daily balance — and the interest you pay.

How to choose a credit card

When evaluating credit cards, consider these factors:

• Your spending habits. Do you take road trips or have a long commute? You might want a card that offers cashback rewards when you buy gas. Do you have a large family to feed? Getting a card that offers grocery shopping rewards may be a smart move.
• Your FICO credit score. Visit AnnualCreditReport.com to check your credit for free. A score of 800 and above is exceptional, 740 to 799 is very good, 670 to 739 is good, 580 to 669 is fair, and a score 579 or lower is considered poor. To qualify for a rewards credit card, you often need a higher credit score. If your credit score is on the low side, consider applying for a secured credit card.
• APR. The annual percentage rate is the interest that you pay for your purchases. Do you intend to pay off your balance each month? If so, you can opt for a card with great perks without worrying about its higher APR. If a low APR is important to you, keep in mind that most credit cards have a variable APR, meaning that the rate can change from month to month. Some cards do have a fixed APR, although they’re less common.
• How you’ll use your card. Are you a business owner? Whether you have an LLC or a side hustle, getting a business credit card will help you keep your business and personal expenses separate. It also helps your business build a credit history.
• Fees. Many credit cards charge an annual fee, which can range from under $100 to several hundred dollars. When considering a card with a high annual fee, make sure that its benefits outweigh the cost of that fee.
• Sign-up bonuses. Some credit cards offer a welcome bonus, which can be quite generous. You may be required to spend a large amount with the card, however. If you’re planning to use credit to make a large purchase, it might pay off.

Find the best credit card for you

Your neighbor might rave about his credit card’s cool perks, but when evaluating your options, think about what matters most to you.
 
If you tend to carry a balance on your credit cards from month to month, you may prioritize a low APR over perks. If you haven’t been able to get approved for a traditional credit card, consider applying for a secured card. If you travel and have a favorite airline, it might make sense to get a credit card that’s co-branded with that airline to reap rewards like frequent flier miles, priority boarding and other travel perks.
 
There’s a credit card out there for everyone. Exploring your options, and knowing what to look for, can ensure that you find one that helps you meet your financial goals.