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A Guide to Finding the Best Credit Card Offer for You
The credit cards in your wallet are some of the most important financial tools in your life. You might be on the hunt for the perfect balance transfer offer to help you pay off your holiday shopping. Or you could have your eye out for the right cash back credit card offer in preparation for spring renovations.
What is the best credit card in January 2021?
January brings a fair number of bills due, and relief would be much welcome for many of us. Whether it was spending on outdoor decorations (which we were all apt to do in 2020, since we were homebound) or on gifts for the family (and ourselves), there’s a decent chance you have a fair amount of card debt to get through.
That’s why we’re naming the Citi® Double Cash Card the best credit card for January 2021. With the Double Cash, you can transfer a balance (or two), then pay 0% intro APR for 18 months (then it’s 13.99%-23.99% variable after that). And when you are done paying off the debt, you have a rewards card with longevity – earn 1% cash back when you make a purchase and earn another 1% cash when you pay for the purchase.
Of course, just because we love the Double Cash, that doesn’t mean it’s the best card for you. Simply put, the best credit cards are the products that best suit your needs. Below we talk about other great cards that could work for you.
Credit Cards 101: How do they work?
We talked earlier about what credit cards are; next on the checklist is how do they work, why you can trust them and which card issuers are consumers’ favorites.
Here’s how credit cards work: You present your card or account number to a merchant when you want to make a purchase, and if it’s a rewards card, the card issuer credits you with cash back, points or miles. You get a monthly bill, by email or online, with the purchase charges and any interest charges.
If you don’t carry a balance month to month, then you don’t pay interest. Carry a balance, and the interest starts accumulating. There are ways to mitigate those charges, which we’ll get into in a bit.
Which type of card is best for you?
There are a few core reasons why you may be looking for a new credit card. Take a look at our prompts, see what matches your needs and click on the card type that seems to best suit you.
|Card category||Does this sound like you?|
- Do you want to fund your next trip through rewards?
- Are you looking to maximize your earning potential?
- Do you want to earn rewards without thinking about which card to use?
|0% intro APR/balance transfer|
- Do you have a credit card balance and want to save on interest rates?
- Do you want to consolidate card balances?
- Do you have a large upcoming purchase?
- Do you often turn to a favorite airline or hotel brand for travel?
- Do you often shop with a single merchant, such as Amazon.com or Target?
- Have you never had a credit card before?
- Do you have a low credit score and want to build it?
- Do you want the convenience of a credit card?
- Do you have a small business or are you a sole proprietor and need access to capital?
- Do you want to provide employees cards?
- Do you want to separate your business and personal purchases?
- Do you need to build credit?
- Do you want to take advantage of student cards’ special features?
- Are you looking for shopping convenience?
- Do you want to learn how to use rewards?
Get rewarded with points, miles or cash back when you use these cards. Often, rewards cards fall in one of two buckets: cash back and travel, although there are others, as indicated here.
Types of cards
- Cash back
- Flat rate – This card often has no annual fee, but typically requires good or excellent credit. The regular percentage rate is often quite low. There is often a sign-up bonus. Suggested card: Citi® Double Cash Card
- Rotating category – While this card may not have a sign-up bonus, there may be a year-end reward. There’s usually no annual fee and the regular APR is usually low. Suggested card: Discover it® Cash Back
- Tiered – There can be an annual fee on this type of card, but the sign-up bonus is often quite generous. The regular interest rate varies. Suggested card: Capital One SavorOne Cash Rewards Credit Card
- Airline or hotel – The annual fee can get into the hundreds, and the regular interest rate is pretty high, but the sign-up bonus and ongoing rewards are among the best in the industry. Suggested card: Southwest Rapid Rewards® Plus Credit Card
- General purpose – General purpose travel cards are great for the traveler who craves flexibility. A few come with no annual fee, although the sign-up bonus on those can below. Benefits can include cancellation insurance and other features. Suggested card: Capital One Venture Rewards Credit Card
- Other types
A 0% intro APR card can be used for balance transfers or new purchases, and typically have a promotional period of anywhere from 6 months to 21 months. Once the offer ends, the regular APR usually kicks in, making it worth your while to pay off the balance during the offer.
Types of cards
- Purchases – There’s often no annual fee, and business cards will sometimes have a new purchase offer. The regular APR rate can range widely, and a number of these cards offer rewards. Suggested card: American Express Cash Magnet® Card
- Balance transfers – An annual fee is typically not an issue with these cards, but there may not be rewards. The regular APR rate ranges widely. Suggested card: Citi® Diamond Preferred® Card
Some cards are co-branded, meaning that the card issuer partners with a brand such as an airline, a hotel chain or a merchant of some kind. In some cases, a card that isn’t co-branded will reward for brand loyalty. In either case, your rewards are boosted for purchases of certain brands.
Types of cards
- Airline – While airline cards’ rewards options are specific to a brand, some have branched out to reward for other types of spending. Annual fees are common, good to excellent credit is expected, and regular APR rates are usually pretty high. Suggested card: United℠ Explorer Card
- Hotel – Hotel cards reward heavily for favoring a specific hotel brand, but they might have no annual fee. Good to excellent credit is a must, and regular APR rates are high for these cards as well. Suggested card: Marriott Bonvoy Boundless™ Credit Card
If you are looking to build credit, there are a number of options, depending on your current credit rating.
Types of cards
- Fair credit – If you are trying to improve your credit into the good or excellent category, a card that accepts fair or average credit is a good choice. There may be an annual fee, regular APR may be higher, and a 0% intro APR is unlikely. Suggested card: Credit One Bank® Platinum Rewards Visa
- Bad credit – You can find a card that accepts bad credit with no annual fee, but many of these cards have weird, little one-off fees that you need to watch out for. The regular APR will almost certainly be high, although some offer rewards. Suggested card: Indigo® Platinum Mastercard®
- No credit – This is a good choice if you have no credit history. Some of these cards offer rewards, but watch out for fees, and the regular APR can be high. Suggested card: Discover it® Secured
Business credit cards aren’t just for the owner of a business – the solopreneur or gig worker can also benefit. These cards are good for sorting out your personal from your business expenses, and there’s a strong likelihood of rewards offered.
Types of cards
- Rewards – While it’s rare to find a business card that offers 0% intro APR on balance transfers, rewards are plentiful. They can reward you for business-specific purchases, as well as travel. Suggested card: American Express Blue Business Cash™ Card
- Luxury – These cards generally offer luxury benefits for the frequent traveler, such as access to airport lounges, or waived fees on Global Entry or TSA Pre-Check. Suggested card: The Hilton Honors American Express Business Card
Student cards are similar to other credit cards, although they can offer features that are special to the college student. Heads up that you have to have an independent income if you are under 21 in order to land any credit card. That said, they will often accept applicants with no or limited credit.
Types of cards
- Rewards – Student cards often offer competitive rewards, although a sign-up bonus is rare. Annual fees are a rarity, but credit limits are typically low, depending on your income. Suggested card: Discover it® Student Cash Back
- Credit building – Probably the most important part of getting your first card is that you have the opportunity to build credit, provided you pay in full and on time each month. Suggested card: Discover it® Student chrome
What are the most popular credit cards?
The reasons why you choose a credit card can vary widely. But whether you want a cash back card or travel perks, we all want a quality product. Well, J.D. Power comes through every year with its J.D. Power U.S. Credit Card Satisfaction Survey, designed to tell us where each of the national credit card issuers stand with customers.
This year, American Express led the national credit card issuers, with Discover as a close second. At the bottom were U.S. Bank and Credit One Bank, with scores of 786 and 739 respectively. Here are the top 6:
|Credit Card Issuer||Satisfaction Score|
|Bank of America||812|
|Credit One Bank||739|
Source: J.D. Power 2020 U.S. Credit Card Satisfaction Survey
What is the most surprising aspect of your credit card?
We checked in with experts about surprising aspects of cards. Here’s what they had to say:
Choose rewards wisely
“It’s really easy to get wowed by a reward card’s earning rate – our brains like to equate ‘bigger number’ with ‘more cash back’ or ‘better card.’ But in truth, you want to choose a rewards card that best aligns with where you spend most, not necessarily one with the highest earning rate. A card with a 5% earning rate on travel isn’t going to do much for you if you don’t travel very often! A card that offers 3% back on groceries, on the other hand, could end up creating much more value over your average year.”
Editor’s pick: Blue Cash Everyday® Card from American Express
Annual fee vs. perks
“One surprising thing to think about when choosing a credit card is the annual cost. Some of the higher-end credit cards that offer perks will have an annual fee. If you want one of these cards, calculate how much money you’ll save by using the perks vs. the cost you’re paying for the card.”
Editor’s pick: Chase Sapphire Reserve®
How do I apply for a credit card?
Now that you have an idea of which card you’d like to pursue, it’s time to apply. Here’s how that works:
- Look for the card’s category at the top navigation bar of our site. (Hint: If you know the card issuer, you can just direct your attention to that page.) Alternatively, you can call the issuer.
- Click the bright blue button on the right of where your card is presented. This will direct you to the issuer’s site.
- Fill out the online application. You may be asked for your Social Security number, your residency status, citizenship and other personal details.
- You may be approved right then and there – yay! Or you may be told that a decision is coming. If you are rejected, you will get an answer to why in the mail in about 7-10 business days.
- Don’t apply for cards in quick succession, because it can harm your credit score for a period of time. Instead, be deliberate about your choice, and if you were rejected, understand why the first issuer made that decision. Then, look at cards that you have a greater chance of getting.
What’s the difference between a credit report and a credit score?
We mentioned that your credit score directly impacts whether you can get a card. But what is it, and how does it differ from a credit report?
Credit reports: These reports are generated by the 3 major credit bureaus: Experian, Equifax and TransUnion. They collect credit-related data from lenders, who send your payment habits to the credit bureaus. You can get your free credit reports once a year from AnnualCreditReport.com.
Credit scores:There are 2 primary scoring models – the primary one, FICO, and the newer one, VantageScore. Both provide the credit bureaus with models for how your credit habits are weighted, and the bureaus in turn generate your score. Score ranges are 300-850, with the higher the number the better. You can get your FICO score from a number of sources, including for free from many credit card issuers and from FICO itself, which charges a fee.
When is the best time to apply for a credit card?
If you go strictly by the calendar, more people prefer to apply for new credit cards late in the year when holiday shopping gears up and juicy sign-up bonuses appear. Equifax data from 2008 to 2017 shows that credit card applications were 15% higher from October through December than January through March.
But what if your circumstances aren’t tied to the calendar and you have other reasons for getting a new card? Figuring out when to apply for a credit card depends on several factors, some that are within your control and others that are entirely external.
Here are some questions to consider:
What’s your current credit status?
Have you applied for any other lines of credit recently (mortgage, car loan, etc.) and do you expect to seek them out in the near future? Credit applications that trigger hard inquiries on your credit report will temporarily lower your credit score.
A credit card that offers pre-qualification without a hard inquiry can help you gauge your chances of approval, but the actual application would still affect your credit in the short term. The best time to apply for a credit card might be when you have no immediate plans for taking out other credit lines.
What kind of offers are available?
A generous sign-up bonus offering travel miles, loyalty points or cash back can provide a strong incentive to apply for a credit card. So can special promotions that become available as issuers respond to consumer preferences and economic trends.
Just make sure the card fits your spending habits and makes sense as a long-term financial commitment. A big sign-up bonus coupled with a big annual fee could mean diminishing returns over the long haul.
How to choose a credit card
You understand now how cards work and why they are important, but how do you choose one? When you’re trying to select a credit card, there are a number of moving parts, including rewards, fees, 0% intro APR offers, and of course, your credit score. Here, we jump into the factors to consider and types of cards that are the best for your goals.
Choose a card that accepts your credit score
Card issuers primarily look at your credit score and income to decide whether you should be granted the card you want, so this is your first stop. Typically, the higher the score, the better the benefits and rewards, although good credit will get you access to the bulk of cards. If you are new to cards or are trying to improve your credit, there are also cards for you.
Types of cards for credit building
- No credit – This is a good choice if you have no credit history. Some of these cards offer rewards, but watch out for fees and the regular APR can be high. Suggested card:Discover it® Secured
- Bad credit – You can find a card that accepts bad credit with no annual fee, but many of these cards have weird, little one-off fees that you need to watch out for. The regular APR will almost certainly be high, although some offer rewards. Suggested card:Indigo® Platinum Mastercard®
- Fair credit – If you are trying to improve your credit into the good or excellent category, a card that accepts fair or average credit is a good choice. There may be an annual fee, regular APR may be higher, and a 0% intro APR is unlikely. Suggested card:Credit One Bank® Platinum Rewards Visa
Bottom line: Pick a card that has a high likelihood of accepting your credit score. Your opportunity to get that amazing cash back card or airline card might need to come another day.
Are you looking for rewards?
Prime reasons for getting a credit card today are to earn rewards and benefits. Whether you are looking to travel in 2021 or you would like to earn some cash back for your spending, there are myriad types of cards to choose from. Benefits such as different kinds of insurance, travel credits and airport lounge access are also often available. There are also sign-up bonuses to consider, which can make your new card well worth it.
Types of cards for earning rewards
- Travel – General purpose travel cards are great for the traveler who craves flexibility. A few come with no annual fee, although the sign-up bonus on those can be lower. Benefits can include cancellation insurance and other features. Suggested card:Capital One Venture Rewards Credit Card
- Co-branded – Co-branded cards can include joint ventures between card issuers and airlines, hotel brands, stores and even Amazon.com. You often earn boosted rewards when you shop with the brand. Suggested card:United℠ Explorer Card
- Cash back – There is a broad range of cash back cards, including flat-rate cards, rotating category cards and tiered category cash back cards, each with their own advantages. For example, the consumer who wants to earn rewards without thinking about which card to use would enjoy a flat-rate card, while the cardholder who is looking to maximize rewards might consider a tiered or rotating category card. Suggested card:Capital One SavorOne Cash Rewards Credit Card
Bottom line: Do the math and make sure your choice of card will be used to its fullest potential. For example, if you aren’t loyal to a specific airline, why are you choosing an airline card?
Pay attention to fees and penalties
When choosing a credit card, be mindful of such charges as annual fees and foreign transaction fees. There can also be penalty APRs and late fees to worry about.
Cards without certain fees
- No annual fee – If you are an occasional card user or just don’t treasure the idea of paying a fee each year for the honor of holding the card, take a look at cards with no annual fee. Keep in mind that some annual fee cards waive the fee the first year. Suggested card:Blue Cash Everyday from American Express
- No foreign transaction fee – Increasingly, travel cards waive these fees, and Discover and Capital One have long offered all of their products without a foreign transaction fee. These cards are ideal for overseas travel and making purchases that run through a foreign bank. Suggested card:Capital One Quicksilver Cash Rewards Credit Card
- Other fees – Some cards offer no late fee the first time and no penalty APR, such as the Discover cards, so check the card’s Schumer Box for these goodies. Suggested card:Discover it® chrome
Bottom line: Not all fees should necessarily be avoided at all costs (and you probably can’t, anyway). For example, if you are willing to pay an annual fee, you may get better benefits and rewards and actually come out ahead financially. We compare annual and no annual fee cards below for you in our handy-dandy chart.
Do you have credit card debt?
Whether you have a large purchase coming up, a balance on an older card or you just have a habit of carrying your balance over to the next month, 0% intro APR cards and low interest products can be good options. The 0% intro APR cards typically offer that rate for 6 months to 18 months, while the low interest offers are usually ongoing.
0% intro APR and low interest cards
- Purchases – These are excellent cards for when you face a large, upcoming purchase and you want to avoid paying interest for a period of time. Suggested card:American Express Cash Magnet® Card
- Balance transfers – These are ideal when you have debt on older cards and you want to pay them down while not paying interest for a period of time. Suggested card:Citi® Diamond Preferred® Card
- Low interest – Low interest cards usually offer a range that is variable, but if you are a low risk, rock-bottom rates can be yours. For example, the Discover it cards’ rates are typically among the lowest of national brands. Suggested card:Discover it Cash Back
Bottom line: Most cards’ regular interest rates are variable, and even if the card’s rate starts on the low end, you may be granted a higher rate for a number of reasons, including if you show yourself to be a credit risk.
Are you in the market for a specialty card?
There are other types of cards to choose from, such as cards that offer special features for the college student and cards that offer rewards specific to the consumer in business.
Business and student cards
- Student cards – These often offer competitive rewards, although a sign-up bonus is rare. Annual fees are a rarity, but credit limits are typically low, depending on your income. Suggested card:Discover it® Student Cash Back
- Business credit cards – These aren’t just for the owner of a business – the solopreneur or gig worker can also benefit. These cards are good for sorting out your personal from your business expenses, and there’s a strong likelihood of rewards offered. Suggested card:American Express Blue Business Cash™ Card
Bottom line: Heads up that business cards aren’t required to offer the legal protections of consumer cards, and student cards are basically the same as their mainstream counterparts, but without the sign-up bonus or credit limit. That said, the features of a business card or student card may outweigh those considerations.
How many credit cards should you have?
While there’s no hard-and-fast rule as to how many credit cards you should have, it’s a good idea to hold onto at least two cards – each from a different card network and each offering a different type of rewards (cash back, travel rewards, etc.). This should make it easier to tailor your earnings to your spending patterns and enjoy greater variety and flexibility in how you redeem rewards. Having two cards with different networks also increases the likelihood that you will have a card that will be accepted by a merchant.
In some cases, you can also “stack” cards from a single issuer to get even more value out of your rewards. For example, you could pair the Chase Ink Business Unlimited Credit Card (which earns 1.5% cash back on every purchase) with a premium Chase card like the Chase Sapphire Preferred Card (which gets you 2 points per dollar on travel and restaurant purchases). This allows you to convert the cash back from your Ink Business Unlimited card to Ultimate Rewards points and enjoy a 25% boost in point value when you redeem them for travel through the Chase travel portal.
Of course, if you’re still new to credit cards, you should stick to just one or two until you get used to them. If tracking your spending from quarter to quarter or swapping out cards between the gas station and grocery store sounds like more of a headache than it’s worth, a card that offers travel rewards or cash back at a flat rate on every purchase may be a better fit.