The Ultimate Guide to Credit Cards
Wednesday, November 25, 2020
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Best Credit Cards of 2020

Below are ratings of 2020's best credit card offers in the US based on interest rates, rewards deals, and approval rate. Compare top credit card reviews and apply for a new card online.

Average APR
17.04%
Average Annual Fee
$28.80
Rate Trend
0.05%
since last month
All Cards | Air | Cash Back | 0% Intro | 0% Bal Transfer | Points | Business | Secured | Student | Fair Credit | Limited / No Credit
Advertiser Disclosure

2020's Best Credit Card

Chase Freedom Unlimited®

  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • Earn unlimited 1.5% cash back on all other purchases.
  • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
  • No annual fee.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
N/A
14.99% - 23.74% Variable
$0
Good/Excellent

#1 in "Air Miles"

Capital One Venture Rewards Credit Card

Capital One Venture Rewards Credit Card Review

at Capital One'ssecure website

AIR MILES RATING

★★★★★

5.0

OVERALL RATING

4.9/5.0
  • Earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3,000 on purchases in the first 3 months
  • Earn unlimited 2X miles on every purchase, every day
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Receive up to $100 application fee credit for Global Entry or TSA Pre✔®
  • Redeem on travel—from vacation rentals to car rentals and more. Plus transfer your miles to over 10+ travel loyalty programs
  • No foreign transaction fees
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
17.24% - 24.49% (Variable)
$95
Excellent, Good

#1 in "Cash Back"

Chase Freedom Unlimited®

CASH BACK RATING

★★★★★

5.0

OVERALL RATING

5.0/5.0
  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • Earn unlimited 1.5% cash back on all other purchases.
  • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
  • No annual fee.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
N/A
14.99% - 23.74% Variable
$0
Good/Excellent

#1 in "0% Intro APR"

Chase Freedom Unlimited®

0% INTRO APR RATING

★★★★★

4.9

OVERALL RATING

5.0/5.0
  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • Earn unlimited 1.5% cash back on all other purchases.
  • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
  • No annual fee.
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
N/A
14.99% - 23.74% Variable
$0
Good/Excellent

#1 in "0% Balance Transfer"

Citi Simplicity® Card

0% BALANCE TRANSFER RATING

★★★★★

4.9

OVERALL RATING

4.7/5.0
  • No Late Fees, No Penalty Rate, and No Annual Fee... Ever
  • 0% intro APR offers on both purchases and balance transfers (balance transfer fee applies)
  • Choose a payment due date that works best for you — beginning, middle, or end of the month
  • Stay protected against identity theft with Citi® Identity Theft Solutions
  • $0 liability on unauthorized charges
  • 24/7 access to customer service representatives - save time, just say "representative" when you call, to enjoy fast, personal help
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 18 months
0% for 18 months
14.74% - 24.74% Variable
$0
Excellent/Good

#1 in "Points & Gifts"

Chase Sapphire Preferred® Card

POINTS & GIFTS RATING

★★★★★

4.9

OVERALL RATING

4.8/5.0
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®.
  • 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 2x total points on up to $1,000 in grocery store purchases per month from November 1, 2020 to April 30, 2021. Includes eligible pick-up and delivery services.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
15.99% - 22.99% Variable
$95
Good/Excellent

#1 in "Business"

American Express® Business Gold Card

American Express® Business Gold Card Review

at the issuer'ssecure website

BUSINESS CARD RATING

★★★★★

4.9

OVERALL RATING

4.8/5.0
  • Earn 35,000 Membership Rewards® points after you spend $5,000 on eligible purchases with the Business Gold Card within the first 3 months of card membership
  • Earn 4X Membership Rewards® points on the 2 categories where your business spends the most each billing cycle, including airfare purchased directly from airlines, U.S. purchases for advertising in select media (online, TV, radio), U.S. purchases made directly from select technology providers of computer hardware, software, and cloud solutions, and U.S. purchases at gas stations, restaurants, or for shipping. Applies to the first $150,000 in combined purchases from these 2 categories each calendar year.
  • Earn 1X Membership Rewards® points on other purchases
  • Book your flight with American Express Travel using Membership Rewards® Pay with Points and get 25% of those points back
  • $295 annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
14.24% - 22.24% Variable
$295
Excellent

#1 in "Secured"

Applied Bank® Secured Visa® Gold Preferred® Credit Card

Applied Bank® Secured Visa® Gold Preferred® Credit Card Review

at the issuer'ssecure website

SECURED RATING

★★★★★

4.8

OVERALL RATING

4.0/5.0
  • Better than Prepaid...Go with a Secured Card! Load One Time - Keep On Using
  • Absolutely No Credit Check or Minimum Credit Score Required
  • Automatic Reporting to All Three National Credit Bureaus
  • 9.99% Low Fixed APR - Your Rate Won’t Go Up Even if You Are Late
  • Activate Today with a $200 Minimum Deposit - Maximum $1,000. * Increase Your Credit Limit up to $5,000 by Adding Additional Deposits Anytime
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
9.99%
$48
Poor/Fair/Limited/Damaged

#1 in "Fair Credit"

Capital One Platinum Credit Card

Capital One Platinum Credit Card Review

at Capital One'ssecure website

FAIR CREDIT RATING

★★★★★

4.8

OVERALL RATING

3.8/5.0
  • Pay no annual fee
  • Be automatically considered for a higher credit line in as little as 6 months
  • Fraud coverage if your card is lost or stolen
  • Use online banking to access your account, even from your smartphone, with our mobile app
  • Check out quickly and securely with a contactless card, without touching a terminal or handing your card to a cashier. Just hover your card over a contactless reader, wait for the confirmation, and you're all set.
  • Pay by check, online or at a local branch, all with no fee - and pick the monthly due date that works best for you
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
26.99% (Variable)
$0
Average, Fair, Limited

#1 in "No/Limited Credit"

Capital One Platinum Credit Card

Capital One Platinum Credit Card Review

at Capital One'ssecure website

NO/LIMITED CREDIT RATING

★★★★★

4.8

OVERALL RATING

3.8/5.0
  • Pay no annual fee
  • Be automatically considered for a higher credit line in as little as 6 months
  • Fraud coverage if your card is lost or stolen
  • Use online banking to access your account, even from your smartphone, with our mobile app
  • Check out quickly and securely with a contactless card, without touching a terminal or handing your card to a cashier. Just hover your card over a contactless reader, wait for the confirmation, and you're all set.
  • Pay by check, online or at a local branch, all with no fee - and pick the monthly due date that works best for you
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
26.99% (Variable)
$0
Average, Fair, Limited

Advertiser Disclosure

The credit card offers that appear on this site are from credit card companies from which CardRates.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CardRates.com does not include all credit card companies or all available credit card offers.

Review Breakdown: Best Credit Cards

What is the best credit card to have for 2020? Below is a simple summary of our top credit card reviews, along with current features for each offer. Simply click the card name to visit the issuer's official site and apply for the card that's right for you.

Here are the best credit cards of 2020:

Best Credit Cards 2020
Best For Card Name Feature Expert Rating
Best Overall Chase Freedom Unlimited® 1.5% cash back ★★★★★ 5.0
Air Miles Capital One Venture Rewards Credit Card 50,000 miles ★★★★★ 5.0
Cash Back Chase Freedom Unlimited® 1.5% cash back ★★★★★ 5.0
0% Intro APR Chase Freedom Unlimited® 0% Intro APR for 15 months ★★★★★ 4.9
0% Balance Transfer Citi® Diamond Preferred® Credit Card 0% Balance Transfer ★★★★★ 4.9
Points & Gifts Chase Sapphire Preferred® Card 2X points ★★★★★ 4.9
Business American Express® Business Gold Card Business ★★★★★ 4.9
Secured Applied Bank® Secured Visa® Gold Preferred® Credit Card Secured ★★★★★ 4.8
Fair Credit Capital One Platinum Credit Card Pay no annual fee ★★★★★ 4.8
No/Limited Credit Capital One Platinum Credit Card Pay no annual fee ★★★★★ 4.8

How to Choose Among the Best Credit Cards

Eric Bank
By: Eric Bank
Finance Expert
Updated:
How to Choose Among the Best Credit Cards
CardRates.com Guide: Best Credit Cards

Selecting the best credit cards for your wallet or the best car for your garage involves a wealth of choices. But consider this — the credit card and automobile industries are alike in that both have specific offerings to fit different well-defined markets.

Whether you want an economical product with just the basic features or a fancy version sporting all sorts of bells and whistles, there awaits a car and a card that will suit you to a T.

Types of Credit Cards | How to Choose the Right Card | FAQs

Evaluate the Different Types of Credit Cards

With literally hundreds of credit cards available on the market today — thousands if you include those offered by local credit unions and community bank cards — it may be hard to decide which piece of plastic is right for your wallet.

When it comes time to select your next credit card, use these tips to help you choose the one — or more — for your needs.

Credit Cards for Bad Credit

Consumers with bad credit can obtain unsecured credit cards even when they have subprime credit scores. The issuers of these cards are willing to take a leap of faith that you’ll pay your bill on time despite the blemishes on your credit report. But before you get all misty-eyed about their merciful attitude, know that the issuers of these cards take several precautions before approving your application.

Expect to encounter high APRs, high fees (and plenty of them), and low credit limits. These precautions help cushion issuers against the risk of you defaulting on your payments. With rare exceptions, rewards are meager, and benefits are basic.

Nevertheless, when you need to rebuild your credit profile, these cards can do the trick if you play by the rules.

Credit Cards for No/Limited Credit

You gotta start somewhere, and in the credit world, that means establishing a profile based on how you handle debt. If you’ve not had much experience in that regard, a credit card for no or limited credit is a great way to begin.

If you are a millennial, you have a well-founded reputation for being skeptical about debt and credit. You’ve lived through the Great Recession and saw how it affected your family. But as time passes and you establish your own household, you may begin to warm to the idea of owning your first credit card.

The characteristics of cards in this category overlap with those marketed to folks with bad credit. They are high-fee, high-APR cards with tight credit limits. Their utility lies in the fact that they report your card payments to the three major credit bureaus (Experian, TransUnion, or Equifax).

By paying on time, staying within your credit limits, and using the card responsibly, you should see your credit score established quickly. That score should improve as you continue your creditworthy behavior month after month. In fact, some cards may offer you a higher credit limit when you pay your bills on time for at least six months in a row.

Credit Cards for Fair Credit

A fair credit score ranges from 580 to 669 on the FICO scale. If you fall into this category, you should be able to access a broad variety of credit cards.

However, you’ll need to boost your score if you want to obtain cards with the best rates and terms. This involves practicing the universal virtues of always paying on time and keeping your account balances low.

You should expect some nice features from the cards for fair credit consumers. These include membership rewards, such as points or cash back, and the convenience of mobile apps to manage your account.

Some of these cards waive annual fees and foreign transaction fees and may offer you a higher credit limit after six months of timely payments. APRs for this group are generally lower than those for bad- or no-credit consumers.

A fair credit score frees you from having to consider a secured card with its deposit requirements and modest credit lines. You can instead turn your attention to factors that are keeping you from a good credit score.

The best place to start is by reviewing your credit reports and disputing any erroneous information. Removing inaccuracies from your reports can increase your score by dozens of points or more.

By the way, sometimes the names of credit cards are grander than their benefits. Many cards for fair credit have names like “Platinum card” or “Select Platinum card”. That’s American marketing at its best.

Credit Cards for Good Credit

A good credit score (670 to 739 on the FICO scale) makes you eligible for most credit cards. It gets even better if your score is very good (740 to 799). With a good score, you not only get multi-featured credit cards, but also easier approval for new credit, utility accounts, and rental properties.

One thing you immediately notice among credit cards for good credit is that most offer introductory promotions with which you earn bonus rewards. You earn these by spending the required amount on purchases during the first three months after opening the account. You’ll also find many cards with introductory periods ranging from six to 18 months of 0% APR on eligible purchases and balance transfers.

Rewards are the rule for cards in this category, in the form of cash, miles, or points. The reward programs may be as simple as a flat rate on all purchases or more complex tiered and rotating-category schemes. You’re free to consider the cards that best match your lifestyle, whether you are a frequent traveler or a cost-conscious shopper.

Credit Cards for Excellent Credit

Exemplary credit habits can deliver you into the rarefied universe of credit cards for excellent credit (800 to 850 on the FICO range). You now can own cards with fabulous rewards, high credit limits, and nosebleed annual fees.

This is not to say you can’t also choose a card with nice benefits and an annual fee below $100. But if you dare not settle for second best, then you’ll love the generous reward programs and elegant benefits, such as free airport lounge access, travel/baggage insurance, and exclusive tickets to events and venues, that the most exclusive cards offer.

Cards in this range offer the lowest APRs and the highest credit limits in the industry. Five-figure credit lines are not uncommon, and some cards are rumored to offer six-figure lines.

The very top cards demand more than a FICO score of 800+, as some also set minimums for income and card spending. We can quote you some of these minimums, but if you have to ask….

Cash Back Credit Cards

There is something simple and comforting about cash back cards, almost like the chicken soup of rewards. No points or miles to juggle, just cash in on all its glory. With numerous cash back cards to choose from, you should be able to find a card you like even if your credit score is less than perfect.

But don’t assume that all cash back reward cards are basically the same. A flat-rate cash back card is designed for busy folks who don’t have time to track points or activate bonus categories. If you consistently favor a particular type of spending, such as travel, dining, or grocery/gasoline purchases, you may prefer a tiered card with higher rewards for select spending.

Types of Cash Back Credit Cards

If you’re looking for the highest rewards with a little variety thrown in, consider cards with quarterly rotating categories of bonus rewards. You must remember to activate the new category every three months, but you’ll be amply rewarded with up to 5% or more cash back on the quarter’s featured purchases and 1% on everyday purchases.

Also, be on the lookout for cards that offer matching cashback and/or extra redemption power that lets your cash go further.

Air Miles Credit Cards

Enduring an airplane trip should be more rewarding than simply arriving at the correct destination. With air miles credit cards, you can earn frequent flyer miles on eligible travel purchases. When you accumulate enough miles, you can redeem them to reduce or eliminate fares, upgrade your seat, or reduce the cost of other eligible travel purchases.

Mileage cards are travel-oriented, so you should expect benefits and travel rewards that coincide with that theme. For example, better mileage cards may offer free travel insurance, car rental collision damage waiver, and free stays at selected hotels and resorts. Many mileage cards allow you to transfer your miles to the frequent flyer programs of travel partners.

If you always fly a particular airline, you can acquire a co-branded mileage card with the best travel rewards available for flying on that carrier. If your choice of airlines is more flexible, consider a general-purpose mileage card that earns rewards on all flights.

Look for cards that don’t impose blackout dates and brand restrictions. Some cards add extra value to your miles when you redeem them for travel through the card’s reward website. Most mileage cards let you redeem your miles for cash if you prefer.

Points Credit Cards

Flexibility is the chief attraction of points credit cards because you can use points in so many ways. You can get points cards for travel, business, dining, gas, hotels, and airlines, among other categories. Moreover, you can redeem points for warm, friendly cash. Whatever your preference, pay attention to ways you can maximize credit card points and perks.

When you compare competing points cards, consider the total package of benefits and rewards. For example, if you don’t travel much, a card that offers 5X points for hotel stays may not be a better choice than another card with 3X points on all purchases. And a gas points card is of little value to my non-driving friends in Manhattan.

External events like the pandemic may influence your choice of points cards. We all must eat, but maybe you are a little hesitant about dining out right now.

In that case, you’ll prefer a card that offers extra points for grocery shopping and/or meal deliveries. If you’re planning a big-ticket purchase, a points card with a generous welcome bonus offer softens the sticker shock.

Balance Transfer Credit Cards

Let’s be honest – sometimes credit card debt gets out of hand. If you’ve maxed out several cards and are having trouble making multiple payments each month, a balance transfer can help you regain control. Balance transfer credit cards let you consolidate all that debt onto a single credit card and then concentrate on paying down the balance.

While many credit cards permit balance transfers, certain cards specialize in this offering. They offer a low fee on transferred amounts, as well as an extended introductory period (as long as 18 months) of 0% APR on transferred balances.

Chart of Potential Balance Transfer Savings

As you narrow your choices, consider the rewards and perks of each card to see which works best for you. Pay attention to whether the card sets a deadline for eligible transfers that is well before the end of the introductory period.

To improve your debt situation, consider balance transfers to be a process rather than individual events. Adopt a general moratorium on additional credit card purchases until you’ve substantially paid down your current balance.

Always pay more than the minimum amount due. Ideally, you will be able to retire your account balance by the time the introductory 0% APR period expires.

Finally, don’t close the credit card accounts that you emptied during the transfer, even if you don’t plan to use them. Canceling card accounts doesn’t help your credit score and could hurt it by increasing your credit utilization ratio. Just remember to use the card at least once a year to keep it from going dormant.

0% Intro APR Credit Cards

Part of the American dream is to purchase items with your credit card, stretch the payments over a period of six to 18 months, and pay no interest on the unpaid balance. Behold, that dream is a reality when you get a 0% intro APR credit card. Eventually, the offer expires, but that’s when many folks look for another card providing a similar promotion.

During the introductory period, your eligible purchases will automatically escape interest charges without any special effort on your part. Naturally, you’ll want to consider the cards with the longest no-interest periods. That translates to 15 to 18 months of 0% APR on new purchases and up to 21 months on no-interest balance transfers.

Keep a few things in mind when applying for a 0% APR credit card. Every card application reduces your credit score by five to 10 points, although the impact dissipates after one year. In addition, you reduce your average account age whenever you get a new card, which is another negative factor for scores.

Don’t confuse a 0% APR offer on a regular credit card with a special financing offer on a store-brand card. On a regular card, your interest is forgiven during the introductory period, whereas interest is deferred on the store card. That deferred interest is only forgiven if you fully repay your balance by the designated deadline, otherwise, you’ll retroactively owe the full amount of deferred interest.

Low APR Credit Cards

If a credit card with a 0% APR introductory offer can be compared to a honeymoon, then a card with a permanent low APR is more akin to a long marriage. After the introductory period expires, you’re left with the reality of paying interest on balances you carry over multiple billing periods. Low APR credit cards can make the transition smoother and inflict less damage on your budget.

Virtually all credit cards offer a variable APR that rides up and down with the Prime Rate or similar index. The lowest APRs on unsecured cards generally begin around 13%, while secured cards start at about 10%. You’ll need good to excellent credit to get the lowest-APR unsecured cards, but your credit score is immaterial for a secured card.

Average APR by Credit Score

The best way to avoid interest is to pay your account balance in full every month. Most cards have a grace period of at least 21 days after the end of a billing cycle in which you can pay in full to avoid interest.

If your current card doesn’t have a low APR, you may try negotiating with the issuer for a rate reduction. It always helps to improve your credit score to qualify for a lower APR.

Student Credit Cards

Whether you are a student who attends college on campus or online, you have access to a nice selection of student credit cards designed just for you. Typically, these cards share certain characteristics, including no credit history requirement, no or low fees, cash back rewards, and special perks just for students. For instance, a student credit card may offer you a cash bonus for good academic grades.

Student cards are unusual in that they offer rewards even though the owner may have no credit score. Some cards offer flat-rate cash back while others may offer bonus rewards on student-friendly categories like grocery stores, gas stations, and restaurants. A student card from Discover will offer Cashback Match for the first year after opening the account.

If you are planning to study outside the United States, check out the best study-abroad credit cards for various useful features. These include student cards that charge no foreign transaction fees, offer generous dining rewards, don’t require credit history, and provide chip and PIN technology. Before you go abroad, it’s a good idea to notify the card company so it won’t put a security hold on your first foreign transaction.

Business Credit Cards

Business credit cards can provide financing

and rewards that reduce the cost of operating a business. The best business credit cards provide cash back on purchases, large introductory bonuses, high credit limits, periodic summaries, and employee cards at no additional cost.

The cash back credit card rewards are frequently tied to business-oriented expenditures, such as those for office supplies and phone and internet services. Travel, gasoline, and restaurant purchases are also popular cash back categories for business credit cards.

Naturally, you’ll prefer to receive a card’s benefits without having to pay annual or foreign transaction fees. If your business requires extensive travel, you may select a card that offers miles or points. And a reward rate higher than 1% for everyday purchases is a plus.

Additionally, a long introductory period (at least 12 months) of 0% APR makes it easier to finance unavoidable purchases. If you think you’ll need to borrow in the short term, look for business credit cards with lower-than-average cash advance APRs.

Secured Credit Cards

Secured credit cards

are aimed at consumers with poor or no credit. You obtain them, usually with no credit check, by depositing cash collateral in an amount that in most cases matches the card’s credit limit. The deposit remains with the issuer until you close the account, at which time the balance is refunded.

How to Use a Secured Credit Card

The credit limits on these cards are often quite modest, as low as $200. However, some cards allow you to secure credit lines of several thousand dollars. All things being equal, the APRs for secured credit cards are lower than those for comparable unsecured ones, thanks to the risk reduction provided by the cash collateral.

The best secured cards offer rewards on purchases, charge no annual fee, and after six months automatically consider higher credit lines requiring no additional deposits. All these cards report your payments to at least one of the major credit bureaus, which gives you the opportunity to improve your credit score by always paying on time.

Prepaid Cards

Prepaid cards

resemble debit cards with one important difference — you don’t need a checking account to own a prepaid card. Instead, you load (or reload) the card with cash. These cards look just like debit cards and are accepted at the same places.

You can reload your prepaid card with cash at various retail locations or online. Additionally, many allow you to use government benefits deposits or payroll direct deposits to replenish the card balance, often without a fee. A card may allow you to reload using mobile check capture, and some prepaid cards offer cash back rewards and personalized offers.

Prepaid cards provide peace of mind by avoiding overdrafts, penalty fees, interest charges, and late fees. Typically, these cards require you to pay a fee monthly or for each transaction, but they may waive fees for access to select ATMs. Some prepaid cards have a companion mobile app you can use to manage your account.

How to Choose the Right Card

With so many choices available, it makes sense to spend a little time analyzing what you want to get out of a credit card. Explore the features, bonuses, and fees within each card category before picking the one that’s perfect for you.

1. Determine Your Goals

Knowing what you want out of a credit card is important. Do you want to score free flights? Are you interested in earning cash back? Are you looking more for a safety net when cash is low? Or perhaps you want to consolidate high-interest debt from other cards?

Depending on your goals — and, particularly, whether you plan to carry a balance — your needs will be quite different. A rewards credit card tends to have a higher interest rate than a non-reward credit card, making it less-than-ideal for carrying balances from month to month.

If you are only interested in transferring a balance or plan to carry a large balance, you may be better off applying for a card without rewards or an annual fee. In exchange for rewards, these cards offer a low interest rate, making them the preferred choice if you know you’ll roll a balance over from time to time.

Instead, choose a card with an introductory 0% APR offer to get interest-free financing for 12 months or more.

2. Decide Which Kind of Rewards You Want

If you’ve decided to go with a rewards card, you have several options.

Cash back credit cards earn a percentage of your spending back in cash. Points credit cards earn points based on the dollar amount you spend. These can usually be redeemed for cash back, gift cards, travel, merchandise, and events, among other options. Then there are air miles credit cards that reward you with free flights and hotel stays.

Credit Card Rewards Comparison Chart

Selecting the right rewards card for you will come down to your spending habits and lifestyle. If you spend a lot on dining out and entertainment, select a card that offers a high rewards rate for those purchases. There’s a card with a bonus category for nearly any type of purchase, as well as cards with high unlimited rates.

No matter which type of rewards card you select, make sure you never charge more than you can afford to repay. Carrying a balance from month to month will result in interest fees — unless you have an active 0% APR offer — which will almost always be more expensive than the rewards you earn.

3. Consider Introductory Offers

While you can easily avoid paying interest charges on your credit card purchases by paying your balance in full each billing cycle, some purchases simply take longer to repay than others. In these cases, credit cards that offer introductory 0% APR offers can be extremely valuable. Thanks to the Credit CARD Act of 2009, these introductory offers must be at least six months long, with some of the best offers providing interest-free financing for 12 months or more.

Most intro-APR deals are good on new purchases, though many will also apply to balance transfers. If you already have credit card debt and want to reduce your interest fees, transferring the balance to a card with a 0% APR deal can create instant savings, helping you pay down your debt faster.

Keep in mind that many cards will charge a balance transfer fee, so read the terms and conditions carefully to know if you’ll be charged a fee.

4. Figure Out the Fees

Determining which credit card fees will be worth it for you is important. It is common for rewards cards to have annual fees, though most issuers now have two tiers of cards: one card with no annual fee and lesser rewards or a low APR and one card with an annual fee (often close to $100 or more) but with better rewards.

Before you get a card with an annual fee, do the math to make sure the rewards and benefits will add up to make the fee worth it. If you won’t be able to earn enough rewards to cover the cost of the annual fee, it isn’t worth it.

For example, you may find a credit card with no annual fee that offers 3% cash back on dining purchases, and then another tier card with a $95 annual fee that offers 4% cash back on dining purchases. If you spend enough on dining each year that the higher rewards rate will earn you a better net return, then the annual fee may be worth paying.

Required Spend to Make Up Annual Fee with 1% Rate Differential

Of course, annual fees aren’t the only credit card fees you need to pay. Interest fees are a part of credit card life, so a low APR is a big boon if you may carry a balance. Additionally, certain transaction types, like cash advances and balance transfers, also tend to come with fees on most cards.

What is a Credit Card?

A credit card is a piece of plastic (or metal or carbon fiber) that contains information linking it to an account you maintain with the card issuer. Credit cards carry electronic data in the form of a swipe strip and/or embedded chip that identifies the card account. Chipped cards contain additional identifying information as well as your credit limit, current available balance, and other important data.

A charge card is like a credit card except that it must be fully repaid each month. American Express is the largest issuer of charge cards. Debit cards resemble credit cards, but your charges are applied to your checking account instead of a credit line. A co-branded credit card is a store card issued by a partnering bank or card network.

Credit cards are comfortably sized (3 3⁄8 in × 2 1⁄8 in) to fit into your wallet. They are usually embossed or printed with your name, the account number, the expiration date, and a security PIN. The credit card network is also identified on the card. Cards have a signature area on the back which merchants may use for verification.

You use a credit card to make purchases in person or online that otherwise would require some other form of payment, such as cash or a check. You insert the card into a reader at cash registers or ATM machines, and either enter your signature or PIN on the terminal. The card is verified, and the purchase amount is added to your card balance.

Chipped cards may be contactless, meaning they don’t have to be inserted into specially equipped card readers. The chips use short-range wireless technology that allows you to simply tap the card on a contact-enabled payment terminal.

You can also use your card to make online purchases. You simply type the card number, expiration date, and other data onto the checkout page. The information is verified, and the transaction is entered into your account ledger where it updates your balance and other data.

How Do Credit Cards Work?

Credit cards

are issued by banks, credit unions, and other financial companies. If you apply and are approved, the issuer will mail you your credit card. You should receive it in about a week, though some issuers offer expedited delivery.

The credit card you receive will have a credit limit, which is the maximum balance you can run up on the card. The issuer sets your credit limit based on your creditworthiness as measured by your credit score. Higher credit scores are eligible for higher credit limits and more card features, such as rewards, bonuses, and perks.

Credit card accounts are revolving, meaning your balance grows whenever you use the card to pay for a purchase or receive a cash advance. You must repay at least a minimum amount each billing cycle, and the payment reduces your outstanding balance.

Billing cycles are usually monthly. If you pay a cycle’s closing balance in full by the payment date, you don’t have to pay any interest on your balance. Otherwise, interest accumulates until your balance is fully paid.

The interval between the closing date and the payment date is called the grace period and usually lasts at least 21 days. You incur interest on any balances that remain after the payment date.

Information flows among merchants, issuers, and cardholders through one of the credit card networks. These networks ensure that your transactions and payments are transmitted properly and that merchants receive their payments on a timely basis. In return, the credit card networks charge merchants fees for the services rendered.

How Do I Apply for a Credit Card?

Visiting Cardrates.com is a good first step because we offer dozens of credit card reviews and articles that help you determine the best card for your purposes. You can apply for a credit card at any time, though sometimes you may choose to respond to an invitation mailed out by the card issuer. Nowadays, most people apply online at the issuer’s website.

The application process is straightforward. You provide basic information about yourself, your income, and your expenses. If you are applying for an unsecured card, the issuer will likely pull your credit report from one of the three major credit bureaus. Based on all the assembled information, the issuer will approve or decline your application, often in under a minute’s time.

If approved, you’ll be sent an agreement form that discloses all the important points regarding the card, including APRs, fees, credit limit, benefits, bonus opportunities, grace period, and other information. Read the agreement carefully before signing. When you receive your credit card in about a week, call the number or visit the website on the card’s sticker to activate the account.

What Are the Different Credit Card Companies?

The U.S. credit card industry is huge, generating $4 trillion in activity and $1 trillion in debt via more than 44 billion card transactions in 2019.

Largest Card Issuers by Market Share

It’s important to distinguish credit card issuers from credit card networks. Credit card issuers dispense cards to consumers and make money by collecting fees and interest. Credit card networks process transactions on behalf of issuers, and two card networks (American Express and Discover) are also issuers.

Issuers recruit and approve new cardholders, set credit limits, distribute and activate credit cards, create statements, and process payments. They also decide the benefits, rewards, interest rates, and fees for each of its cards.

Issuers are responsible for reporting cardholder activity to the major credit bureaus. Importantly, issuers receive merchant fees, which are a cut of the sales made using the credit card.

Don’t be confused by co-branded credit cards, which feature the name of a merchant, airline, hotel, or some other business. Co-branding is a partnership between the retailer and the issuing bank or credit union. The co-branding partner sells reward miles or points to the issuer who then distributes them to cardholders.

For example, the Marriott Bonvoy Boundless Visa is a co-branded card issued by Chase.

The job of the credit card issuers is to finance the transactions of its cardholders. When you make a purchase with your card, you are borrowing money from the issuer. The issuer sends the borrowed purchase amount to the merchant via the credit card network.

Issuers undertake the risk of nonpayment because they pay merchants faster than cardholders pay issuers. When you make a credit card payment, your money reimburses the issuer.

The top 10 credit card issuers are:

  1. Chase (16.6% market share)
  2. Citi (11.6%)
  3. American Express (11.3%)
  4. Bank of America (10.7%)
  5. Capital One (10.5%)
  6. Discover (7.6%)
  7. Wells Fargo (4.3%)
  8. U.S. Bank (4.1%)
  9. Barclays (2.6%)
  10. Synchrony Financial (2%)

While the top 10 consist of big banks and issuing networks, there are many smaller issuers, including credit unions and community banks.

What are the Different Credit Card Networks?

Credit card networks are the glue that holds the credit card industry together. They route transactions and cash between card issuers and merchants. Their revenues come from merchants who pay interchange fees for transaction processing.

In addition, networks often have industry partners in the entertainment, dining, transportation, and travel sectors. These partnerships give cardholders access to purchase protections, fraud protection, travel perks, and more.

The four U.S. credit card networks are Visa, Mastercard, American Express, and Discover. The latter two are also issuers. American Express is unique in that it offers charge cards as well as credit cards.

Visa is the oldest and largest network, with roots going back to the first mass-marketed consumer credit card issued by Bank of America. Mastercard is Visa’s closest competitor, while Amex and Discover are smaller networks.

The networks offer similar services but differ in the details. For example, fewer merchants accept American Express cards compared to cards on the other three networks. However, most major retailers accept cards from all four networks, although some merchants have exclusive deals with one network (such as Costco and Visa).

The amount merchants must pay to accept cards from each network also varies. This amount is called the discount rate, and it comprises assessment and interchange fees. The average discount rates for each network are:

  • Mastercard 1.55% – 2.6%
  • Visa 1.43% – 2.4%
  • Discover 1.56% – 2.3%
  • American Express 2.5% – 3.5%

As you can see, American Express is more expensive than the other three, which may be the reason why Amex acceptance lags the others. Merchants may also have to pay other fees for merchant services and card reading devices.

Merchant service providers (or “acquirers”) handle all the processing of credit card payments for a merchant’s business. They collect an interchange fee dictated by the network. In addition, the networks directly collect an assessment fee, and Discover is known to charge the least for this fee.

If you want a card from a specific bank or credit union, you may be locked into a Mastercard or Visa card, since only they partner with financial institutions. Discover and American Express issue their own cards instead of partnering with banks.

Another difference among the networks is the package of benefits that comes with each card. Some of these benefits are offered by all four networks, others may offer some unique items, such as 24/7 concierge services, Cashback Match, or travel upgrades. If you want a specific benefit, you may have to pick a card from a network offering it.

How Many Credit Cards Should You Have?

Your ideal number of credit cards may depend on who you are. Jet-setting socialites may require a dozen credit and store cards to support their shopping habits, whereas many millennials do not want to own any credit cards. However, American adults on average own four credit cards each, and 61% have at least one card.

There are some compelling reasons to own more than one credit card, starting with the all-important credit utilization ratio (CUR). This is the total of your credit card balances divided by the total of your cards’ credit limits. Your CUR helps determine 30% of your FICO credit score.

Freddy's Utilization Rates After Closing a Card

Ideally, you’d like a CUR below 10% to maximize your credit score. One way to achieve a low CUR is to have several credit cards that you use sparingly. Their unused credit lines will push down your CUR and boost your credit score.

Practicality is another reason to own multiple cards. Having at least one backup card will come in handy if you lose your primary card or that card is declined at your favorite restaurant. Also, you may need to make a big-ticket purchase that requires multiple cards to cover.

You may like to own several cards that each offer specialized rewards and benefits. For example, a travel card will give you more flight benefits than would a card geared to grocery shopping or fill-ups at the pump.

If you have a big expense coming up, you may like to get a new card with a generous sign-up bonus and introductory 0% APR promotion. That way, you’d get a de facto discount on your purchase and a time period to finance the purchase for free.

Perhaps you and your significant other maintain your finances separately. Your household would then likely need at least two credit cards, although they could be the same card with two separate accounts. In the end, the right number of credit cards is your personal decision.

What are the Benefits of Having a Credit Card?

The benefits your credit card bestows upon you depend to a large extent on your credit score. If it’s fair or poor, you may not qualify for a card that’s chock-a-block with perks. On the other hand, a good or excellent score gives you access to a wide universe of benefits, and if you can afford a high annual fee, then the world is truly your oyster.

Good cards offer a generous welcome bonus as well as hefty rewards in the form of points, miles, or cash back. But many cards offer additional rewards that enrich your lifestyle and comfort level. For example, if you like to travel, you may prefer a card with high rewards for hotel stays and plane tickets, free access to airport lounges, and free insurance for flights, baggage, and car rentals.

Practical-minded individuals may really appreciate extended warranties on purchases and various types of fraud detection. If entertainment is your thing, several cards offer access and discounts to exclusive venues. Gourmets and gourmands will gravitate toward cards that offer extra rewards for dining out and grocery shopping.

Of special note are cards that magnify the value of points and redemptions through special shopping websites. For example, Chase Ultimate Rewards offers bonus points on selected purchases and makes points go further when you redeem them for selected travel or gift cards.

Other interesting rewards include reimbursement for TSA Pre✔® or Global Entry, 1:1 transfer of points to selected airline and hotel loyalty programs, and annual travel credits. For the rich and famous, cards with high annual fees also come with high credit limits.

How Can a Credit Card Help Me Build Credit?

The basis of credit is trust – trust that borrowers will repay their debt. After all, why would anyone lend money without the prospect of repayment? Fundamentally, you build credit by redeeming your creditors’ trust, and a credit card is a powerful tool for demonstrating your creditworthiness.

In the United States, we use credit reporting to measure creditworthiness. This well-established practice relies on three major credit bureaus (Experian, TransUnion, and Equifax) that compile, evaluate, and report consumer credit-related behavior.

The bureaus primarily use the FICO credit scoring system, the main metric used by the financial industry to quantify consumer creditworthiness. FICO scores range from 300 to 850, with the following breakdown:

  • Poor credit: 300 – 579
  • Fair credit: 580 – 669
  • Good credit: 670 – 799
  • Excellent credit: 800 – 850

The FICO system uses five factors to calculate a consumer’s credit score:

  1. Payment history (35% of score): The scoring system looks at on-time and late payments, collections, write-offs, bankruptcies, foreclosures, and certain other negative events. Only on-time payments can improve your credit score — everything else can hurt it and remain on your credit report for up to 10 years.
  2. Total amounts owed (30%): This includes your credit utilization ratio and amount of debt by type. Paying down your debt can quickly improve your credit score.
  3. Length of credit history (15%): You are considered more creditworthy if you have a long credit history that you’ve successfully managed. FICO looks at the longest, shortest, and average account age when calculating this factor.
  4. New credit application (10%): Creditors become uneasy when you frequently apply for new credit, especially when you do so within a short time period, because it may signal financial distress. Therefore, FICO looks at the number of requests (or hard inquiries) for an applicant’s credit report and reduces credit scores when too many requests are reported.
  5. Mix of credit types (10%): This is a minor factor that enhances your score if you have a variety of credit types, such as credit cards, home loans, retail accounts, finance company accounts, and installment loans. You should have at least one credit account, such as a credit card.

The role of credit cards in helping to set your credit score is key:

  1. Consumers charge purchases using credit cards and are obligated to repay those charges at a later date, either in a lump sum or over monthly installments of at least the minimum amount due.
  2. Each month, card issuers report consumer activity to one or more of the three credit bureaus. This activity includes charges, payments, and missed payments.
  3. Payments that are over 30 days late can trigger a cascade of negative impacts to your credit score, including penalty fees, delinquencies, account closings, collections, and legal actions (including bankruptcies).

If you pay your credit card bills on time, you’ll help build your credit score. You’ll also want to keep your credit utilization ratio below 30%, and ideally below 10%.

It’s a good idea to keep credit card accounts open, even if you only use the card occasionally because it lengthens your credit history. Everything else can hurt your score and threaten your access to credit.

When you apply for a new credit card, the issuer will usually assess your credit score to determine your APR and credit limit. However, some credit card issuers specialize in serving consumers with bad credit and consider alternative measures to determine whether to approve or decline your card application. This type of arrangement comes with a relatively high APR and low credit limit.

You can sidestep the impact of a low credit score by applying for a secured credit card. Your deposit acts as collateral for your credit line, thereby substantially reducing the issuer’s risk of loss. This should translate into a lower APR, while the credit limit is usually equal to the deposit amount.

How Does Credit Card Interest Work?

Every credit card must disclose its annual percentage rate, which is the interest you’ll incur on unpaid balances plus any fees that increase your loan principal. You incur interest only when you don’t repay your account balance in full by the payment date.

That payment date is typically 21 to 25 days after a payment billing cycle ends. Billing cycles are usually one month long but may be a few days more or less. The grace period is the period between the end of a billing cycle and the date your payment is due.

Virtually all card issuers compound your interest charges daily or continuously. Daily compounding means that yesterday’s interest is added to the balance you owe — in effect, you are paying interest on interest.

Paying your entire balance every cycle ensures you a 0% APR since you won’t be charged any interest. But if you finance your purchases over multiple billing cycles, then the credit card company will charge you interest that is calculated as follows:

  1. Determine daily period rate (DPR): Divide your APR by 360 or 365 (the day count is up to the card issuer and can be found in your card agreement). For example, a 25% APR divided by a day count of 360 produces a DPR of 0.06944%.
  2. Calculate average daily balance (ADB): This is the sum of each day’s account balance divided by the number of days in the billing cycle. For our example, let’s assume an ADB of $3,500 over a 30-day billing cycle.
  3. Calculate the interest charge: This is the product of ADB x DPR x days in cycle. In our example, interest charge = $3,500 x .06944% x 30 days, or $72.91.

As noted, this calculation only applies when you owe a balance beyond the payment date. If and when you pay off your current balance, interest no longer is charged.

Note that cash advances do not have a grace period, and you incur interest from the first to the last day of the advance. The cash advance APR may differ from the purchase APR. There also may be a fee charged for each cash advance.

Some credit cards aimed at the subprime market do not have grace periods. They start charging you interest on unpaid balances as of the billing cycle end date, which is also the payment due date.

Most, but not all, credit cards charge a late fee when you don’t make at least the minimum payment by the due date. They also may assign a higher penalty APR to the amount due.

How Do I Redeem Credit Card Rewards?

It would be a shame if you accumulated rewards on your credit card account and failed to redeem them. Yet, a 2017 study found that 31% of cardholders are not redeeming their rewards. Perhaps some in this group are uncertain about how to redeem their rewards.

Redeeming rewards should be no great mystery. You usually just have to go to the card’s web site or mobile app, look up your reward total, and request a redemption. The procedure depends on the type of rewards your card provides.

Cash back rewards can be redeemed in several ways, depending on the card’s policies. These include a cash check mailed to you, a statement credit, credits on online purchases at selected merchant websites (such as Amazon.com), and purchases of gift cards.

Points or miles can be redeemed for cash or for purchases. You may also be able to transfer points or miles to a frequent flyer program that partners with the card issuer. The best deals give you a 1:1 point/mile transfer to partner programs.

Chart Comparing Values of Common Credit Card Rewards Points

Some issuers have special reward sites where you can make purchases using your accumulated rewards. For example, Chase Ultimate Rewards offers special deals where you can earn up to 15X bonus points on purchases at more than 450 stores.

Furthermore, your Chase card, such as Chase Freedom, redemptions can go farther at the Ultimate Rewards site. For example, one of our favorite cards is the Chase Sapphire Preferred Card. This card’s points are worth 125% of their value when you redeem them for airfare, car rentals, cruises, and hotels through Chase Ultimate Rewards.

Citi cards, such as the Citi Double Cash Card, offer an unusually flexible set of redemption methods for its credit card ThankYou Points. These include cash back, a statement credit, paying with points, shopping with points, gift cards, charitable contributions, mortgage payments, and student loan payments. You can also transfer points to participating loyalty programs and share points with others to get larger rewards.

The better credit cards offer perks that go beyond points and cash back. Check your card for benefits like concierge services, travel-related insurance, waived currency conversion rates, extended warranties, roadside assistance, return protection, and price protection.

We’ve covered a lot of ground in this article, but the bottom line is that the best credit cards are the ones that are the best for you.

Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

The information on this page was reviewed for accuracy on .

About the Author

Eric Bank Eric Bank Finance Expert

Eric Bank has been covering business and financial topics since 1985, specializing in taking complex subject matters and explaining them in simple terms for consumer audiences. In addition to his work on CardRates.com, Eric has appeared regularly on Credible.com, eHow, WiseBread, The Nest, Get.com, Zacks, Chron and dozens of other outlets. A former software engineer, Eric holds an M.B.A. from New York University and an M.S. in finance from DePaul University.

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