Choosing a credit card is an important decision that shouldn’t be taken lightly. There is no single ‘best’ credit card because we all spend differently. The best credit card for you is the one that has the rewards program that best matches your lifestyle. As you’ll see there are many offers and spending considerations. To that end, Clyde’s AI finds your best credit card based on how you spend. It’s an easy and free service that takes the pain out of comparing credit cards.
Here are some of the biggest categories and questions you need to consider when choosing a credit card, as well as our top picks for credit cards in every category. If you want this process done for you, Clyde
What am I Going to Use My Credit Card For?
The use of your credit card will really determine what kind of card you get.
- If you want to use your credit card for regular purposes: get a card with a low APR and high rewards points on the categories you spend most on (like groceries). Our best recommendations are the Chase Freedom Unlimited, Bank of America Premium Rewards, American Express Blue Cash Preferred and Citi Double Cash card
- If you want to use your credit card for travel: get a card with a robust travel rewards program and miles transferability as well as additional perks like travel insurance and TSA precheck credit. Our best recommendations are the American Express Platinum Card, the Discover it Miles card, the Chase Sapphire Reserve and the Capital One Venture Rewards Card
- If you want to make a big purchase: get a card with a long introductory period and 0% introductory APR. We recommend the Discover it Cashback card, the American Express Blue Cash Everyday and the Citi Diamond Preferred card
- If it’s your emergency card: get a card with a low-interest rate and low fees
- If you’re a student: it’s likely that you’re just getting started on your credit building journey. You can get a student card which will help you out with this. You should check out the Discover it Student Cashback card and the Citi Rewards+ Student Card
What is the Interest Rate?
Your interest rate can either be fixed or variable and can be lower for a beginning promotion period (for example, the Capital One SavorOne Rewards card has a 0% APR for 15 months). With a fixed rate, you’ll know exactly how much you need to pay every month whereas with a variable rate your amount might fluctuate. Make sure to choose an interest rate that isn’t too high for you.
What is the Credit Limit?
This is how much credit you have access to through your card. This is generally dependent on your creditworthiness (determined largely by your credit score). If you are planning on making large purchases, you should get a card with a high credit limit (although, this will probably be more expensive and require a higher credit score). Also ensure that your purchases will not exceed the credit limit, as this can have consequences like penalties or your credit limit being cut.
What is My Credit Score?
A credit score is an extremely important component in determining what kind of credit card you will be eligible for. If you have a credit score of 700 or greater, you will usually be eligible for the best rewards cards. If you have a relatively low credit score and are just starting out, you would be better off getting an unsecured card, which helps build your credit score as long as you make your payments on time.
What Dees Does the Card Have? Do the Rewards Justify the Fees?
Cards can come with tons of fees like annual fees, balance transfer fees, foreign transaction fees. There are some cards that come with hefty annual fees, such as the American Express Platinum card with a whopping $550 card fee but also tons of rewards points and extra perks like restaurant and lounge access which far outweigh it.
You should only pick a card whose perks you believe to have more value than its annual fee. If you are starting out, you can look at a $0 annual fee card. We recommend the Citi Rewards+ Card and the Discover it Secured Card. If you are planning to make balance transfers with your card, you are better off getting a card with no balance transfer fees like the Amex Blue Cash EveryDay card. If you travel a lot or send and receive money from abroad, you should get a card with no foreign transaction fees like the Chase Sapphire Reserve and American Express Green Card. Also, ensure that you review the minimum payment and check whether it can work with your current finances.
What Kind of Rewards Program Do I Want?
Rewards programs can be a bit complicated. Credit cards tend to have either a cashback rewards program or a point-based reward program. This is the first choice you need to make- whether you want your rewards directly in cash or whether you would like to redeem them in other ways, such as airline miles. Once you have decided this, you should consider whether you want flat-rate rewards (such as the CapitalOne QuicksilverOne Cash Rewards, which has a flat 1.5% cashback on all purchases) or more points for certain expenditures. If you choose the latter option, analyze the categories that you spend the most on and see that your rewards card fits into that. For example, if your biggest expenditure is on groceries, the American Express Gold Card could be a good choice for you because it gives 4x points on US supermarket purchases for up to $25,000 (and 1x after). Some credit cards, like the Chase Freedom, have rotating categories for rewards. Make sure that you’re getting the maximum bang for your buck by choosing the card that will give you the greatest rewards for your most frequent expenditures, as well as checking whether the redemption timeline works out for you.
Something you should also consider is a co-branded credit card, that many providers often provide. For example, if you fly American Airlines religiously, the AAdvantage Executive World Elite from Citi may make a lot of sense for you, as your rewards will be in the form of American Airlines miles, which may be more useful than cashback on groceries.
What Signup Bonus Does the Card Have?
Many credit cards come with very lucrative signup bonuses. These are usually in the form of some statement credit or bonus rewards points. However, the rewards bonus should only be considered after considering all the other factors. Once you’ve narrowed down your search to a couple of cards, make sure that the one you pick has the best signup bonus.
Therefore, there is no one credit card that is ‘right.’ The best credit card for you depends on your lifestyle, credit score, and priorities. Make sure to ask yourself all these questions when choosing your next credit card.
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