There are plenty of great credit cards on the market but the best one for you greatly depends on a variety of factors, such as whether the card matches your lifestyle needs; the type of rewards you are looking to earn; the types of benefits you expect of your card; APR and fees associated with the card; your credit score; your own discipline when it comes to paying your credit card bills punctually and in full; whether you are using it to get cash from the ATM; whether you need to use your credit card frequently overseas and more.
Besides cash back credit cards, rewards credit cards, air miles credit cards, airline credit cards and hotel credit cards, there are also business credit cards for business owners, student credit cards for college students, balance transfer credit cards as well as secured credit cards that help people with bad credit rebuild or build their credit.
Rewards credit cards let you earn rewards points, miles or cash back that you can later redeem for things like cold hard cash, travel, air miles, hotel stays, merchandise, gift cards and a lot more. What you can redeem your rewards for will depend on the specific card you hold.
There are several types of rewards cards, the most common types are cash back credit cards (cards that let you earn cash back when you make purchases), travel credit cards (cards that let you earn points or miles on your purchases), hotel credit cards (cards that let you earn points or miles on your hotel stays and/or other purchases), airline credit cards (cards that let you earn points or miles that can be redeemed for frequent flier miles) and bonus credit cards (cards that let you earn a bonus after spending a certain amount on purchases within a specific time period). Other cards like business credit cards, student credit cards and even low APR cards may also offer rewards when you use them to make purchases.
Many rewards cards also throw in generous sign-up bonuses that you can typically earn after spending a certain amount within a stipulated time frame. There may be other requirements that you need to fulfill to get the bonus, such as adding an authorized user or making your first purchase within a limited time after account opening.
Airline credit cards typically let you earn airline miles or rewards points when you use your card to pay for travel and everyday purchases. Some airline credit cards are co-branded with specific airlines, while other cards are not aligned with specific airlines. Co-branded airline credit cards let you earn miles which are automatically credited into your account with that airline's frequent flyer program. On the contrary, you get more flexibility with travel credit cards that aren't co-branded with any airline. Your rewards earned from using your travel credit card can usually be used to offset your travel purchases. If you want, you can also transfer them to the card's participating frequent flyer programs of your choice. Some of these cards even offer free airport lounge access.
Hotel credit cards could be worth considering if you frequently stay at hotels. Not only do hotel credit cards let you earn more rewards when you make hotel bookings, some of the better hotel credit cards also let you enjoy nice perks the likes of free breakfast, complimentary Wi-Fi, upgrades, late check-out, early check-in, upgrades and more. These cards usually also let you rewards when you use them to pay for other types of purchases, such as supermarket purchases, restaurant dining purchases and gas station purchases. Your accumulated rewards can be redeemed for free nights.
As a general guide, some cards limit the amount of rewards (cash back, air miles, rewards points) you can earn, while others let you earn unlimited rewards. Some cards reward you the same on all purchases, while others let you earn extra rewards on different types of purchases. Some rewards never expire so long as your card account is active and in good standing, while others may expire - again, depending on the specific card you hold.
Business credit cards make amazing tools for small business owners to earn and redeem rewards on their business expenses, get a line of credit for their business, employee cards that help them track employee spending as well as organize their expenses in general. Some business credit cards also let you make purchases with the card without having to pay any interest during the first few months thanks to the 0% introductory APR on purchases feature. Some of these cards also let you get employee cards without having to fork out annual fees at all.
Balance transfer credit cards can help you get rid of your credit card debt quicker and in a more manageable manner. How so? When you transfer your existing balance to a balance transfer credit card (or a credit card offering a 0% introductory APR on balance transfers), you can buy more time by paying off your debt with zero interest. Just make sure to pay off your entire balance within the 0% introductory balance transfer APR period to avoid paying any interest on your existing balance. The important things you want to watch out for include: balance transfer fees, the duration of the 0% balance transfer APR period, as well as the ongoing APRs after the 0% introductory balance transfer APR period.
Student credit cards are handy for college students aged 18 and above to start building up their credit history - ideally earning a good credit score - before they graduate and enter the workforce. Having a good credit score is essential for things like mortgage loans, housing rental and employment checks - things that savvy young adults would never undermine. Student credit cards provide a convenient way to pay for everyday expenses like utilities and groceries and some even let you earn rewards on your purchases.
While secured credit cards may extend a rather limited credit line to you, secured credit cards may be for you if you are looking to rebuild or establish your credit. These cards - available to those with bad or no credit - are not the same as prepaid debit cards. Debit cards do not help build credit at all.
Now that you have a clearer idea of the different types of credit cards that are available, it is prudent that you analyze your spending habits and pick a card that works for your lifestyle. There are cards on the market that come without annual fees, so any rewards that you earn equal pure savings.
The more rewarding cards - typically those with lots of additional perks - usually come with annual fees that range from under $100 to those that even exceed $500. Depending on how much value you get to squeeze from the card of your choosing over the course of a year, you may or may not want to shoot for top-tier cards with high annual fees. Be sure to compare and do the math before committing!
Visa Credit Card vs Mastercard vs American Express (Amex)
Visa, Mastercard and American Express are payment networks. Regardless of which bank your credit card is issued by, the payment network will determine where you can use your card.
As a matter of fact, Visa and Mastercard have incredibly massive networks worldwide. You can find banks and merchants that accept Visa and Mastercard in literally every country across the globe. Although American Express has a much smaller global network compared to Visa and Mastercard, American Express cards are widely accepted in the United States. It is therefore a splendid idea to have a Visa or Mastercard on hand if you are traveling abroad and you mainly use an American Express card in the US.
Visa, Mastercard and American Express also provide cardholders with their own collection of benefits, such as discounts, dining or hotel privileges, insurance coverage, or even concierge services. These are additional perks that you get to enjoy, on top of the benefits offered by your credit card issuer (i.e. bank or credit union).
In case this comes in handy, know that Visa Signature offers more perks than a regular Visa card; and World Mastercard offers more benefits than a regular Mastercard. American Express perks vary from card to card.
Frequently Asked Questions about Credit Cards
Credit cards work by letting you spend on money borrowed from the credit card company. The line of credit extended to you allows you to make purchases, balance transfers and/or cash advances. An unsecured loan by nature, you can usually borrow money to spend up to your credit limit, before paying back all that you have borrowed at the end of every billing cycle.
If you make it a point to always pay off your credit card bill in full within the grace period your credit card company has established, there is no cost of borrowing involved at all. This is why credit cards can be very rewarding if you make it a habit to pay your balance in full and on time month after month. When you aren't carrying any balance, you avoid paying interest altogether. This good habit helps you stay out of debt as long as you spend within your means!
While you can choose to only repay the minimum amount at the end of your billing cycle, keep in mind that any balance will incur interest charges sooner or later. Exactly how much you are charged when interest kicks in will depend on the card you are holding and the APR you qualify for when your credit card application was approved.
Also, take note that balance transfers and cash advances typically do not have a grace period - these transactions begin accruing interest on the transaction date, assuming your card does not offer a 0% introductory APR on balance transfers. In general, it is common to find cash advance APRs higher than balance transfer APRs and purchase APRs.
Some credit cards let you earn cash back, points or miles when you use them to make purchases, these cards are commonly known as rewards credit cards and they are the kind of cards you should be shooting for if you're trying to score free travel or if you want to get rewarded for your spending. If you get a rewards credit card with no annual fee and you are consistent with paying off your balance in full and on time each month, all of your credit card reward earnings are basically pure profit.
Although credit cards and debit cards let you make purchases, they work very differently. Foremost, a debit card only lets you spend what is already in your bank account. It is your own money that you are spending; each time you use your debit card to make a purchase, your linked bank account depletes a little. You do not owe the bank anything at all. On the contrary, a credit card lets you spend on borrowed money, up to your credit limit. You are expected to repay all the money borrowed, as well as the interest incurred, if any.
Secondly, a credit card lets you build up your credit history and credit score over time while a debit card does not. The more responsible you are with your credit card usage, the more robust your credit history will be. We at GET.com highly recommend that you consistently pay off all your credit card bill punctually every month.
APR stands for Annual Percentage Rate. It is essentially the interest rate applied to the balances you carry beyond the grace period (i.e. the amount of time your credit card issuer allows you to pay your balance off in full before any financial charge kicks in). Most credit cards offer a range of APRs, so if you have a better credit score, your APR could very well be lower than your peers'. Unsurprisingly, the lower your APR is, the less interest you need to pay on your balances.
There are several different APRs you want to keep a lookout for when comparing credit cards, these include APR on purchases, balance transfers and cash advances. There could be introductory APRs in addition to the ongoing APRs, too. Some credit cards also come with a penalty APR that kicks in when you make late payments or returned payments.
You can find a credit card's associated APRs - grace period and other fees - on the card's website hosted by the credit card issuer. Click on the hyperlinked phrases ‘Rates and Fees', ‘Pricing' or ‘Terms and Conditions' and you will be able to learn more about the disclosed costs of the card you are interested in.
There is no correct answer as to what APR constitutes ‘good', but you might want to pay more attention to a credit card that offers as low an interest rate as possible, just in case you ever end up carrying a balance. It is also important to remember this: The better your credit score, the lower your APR can be.
Some credit cards offer a lower or a 0% introductory APR on purchases and/or balance transfers for a period of time after account opening, while others do not. For instance, if you know you are going to be making big purchases and you are unable to pay off your credit card bill in one shot at the end of the billing cycle, you definitely want to get ahold of a credit card that offers a 0% introductory APR on purchases. Try to pay off your entire balance before the 0% introductory APR period ends or you'll have to deal with the ongoing APR that's typically much higher.
Yes. Keep in mind most credit cards have a variable APR tied to the prime rate. The prime rate can change when Federal interest rates change, and when that happens, your variable APR will also change. Your APR can also go up after your introductory APR period ends, or if there is a drop in your credit score for some reason.
You can try lowering your interest rates by calling your credit card issuer to request a lower interest rate after beefing up your credit history. If you have any existing balance, you can also consider transferring your balance to a balance transfer credit card that offers a lower or 0% introductory APR on balance transfers. This lets you buy more time in getting rid of existing debt in a more manageable way. However, bear in mind you are liable for any balance transfer fee that may be incurred.
A statement credit will appear in your credit card account if you accidentally overpay or if you have redeemed your credit card rewards for cash rewards to offset your credit card bill. This positive amount on your credit card bill will bring your balance down.
There is no fixed answer to how many credit cards you should own. As a matter of fact, you do not need many credit cards in order to build up a solid credit history. If you are new to the world of credit cards, you might want to start your journey off with one or two credit cards and commit to making repayments in full punctually and consistently every month. Once you're used to making your payments on time and know that you can use your cards responsibly you can choose to use several rewards cards in order to maximize rewards from different types of spending.
There are rewards credit cards, cash back credit cards, air miles credit cards, hotel credit cards, airline credit cards, balance transfer credit cards, business credit cards, student credit cards and secured credit cards. As you can probably already tell, some cards are great for you to earn rewards, some help to build up your credit over time while others help you get rid of debt.
A rewards credit card lets you earn and redeem rewards (points, cash back, air miles) when you make purchases using your card. You will normally have to accumulate a certain amount of rewards before you can redeem them for things like cash back, travel, air miles, merchandise, gift cards, etc.
There are many great rewards credit cards on the market right now but the best one for you should fit seamlessly with your lifestyle needs. Some things to consider are the type of rewards you want to earn (also check if you can earn extra rewards on different types of purchases and what you can redeem your rewards for), the types of benefits you expect of your card, APRs and fees associated with the card, and your credit score.
You can think of cash back as cash rewards you earn when you use your card to make purchases. Your credit card company gives you back a certain percentage of what you spend on your credit card in the form of cash rewards. Note that cash back could come in the form of a credit card statement, as well as rewards points that you can redeem for vouchers, merchandise, gift cards, travel, air miles and more. The type of rewards you can redeem your cash back for depends on your credit card issuer's rewards program.
This depends greatly on whether your credit card rewards have an expiration date. Some programs let you earn, accumulate and redeem rewards as you please as there are no expiration dates at all. In such cases, you can redeem your rewards when you have accumulated enough and when it's convenient for you to do so.
On the other hand, other programs may impose a ‘shelf life' for credit card rewards earned, say 1 calendar year, 3 calendar years or 5 calendar years. The stricter programs require you to redeem your rewards within a certain window or risk forfeiting your hard-earned rewards altogether. Make sure you read your Credit Card Agreement carefully!
Not really, and this is important to take into account. The truth is that you will not have to pay any interest at all on your purchases if you pay off your balance in full every month - if you use credit cards responsibly they can be a great tool to earn rewards and maximize every purchase you make. However, if you only make the minimum payment or don't pay off your balance then you will have to pay interest. The interest that you pay on your purchases is called purchase APR (Annual Percentage Rate) and this is something that you definitely want to avoid paying. Paying off your balance in full before the due date is the best way to avoid paying interest on your purchases.
Some cards come with an intro APR period which is a period where you pay little or no APR on your purchases. For example. if your credit card offers a 0% introductory APR on purchases for a certain amount of time, say 9 months, then you will not have to pay any interest on your purchases for that period of time as long as you keep up with the minimum monthly payment. Always strive to pay everything off before that 0% introductory APR period is over to avoid incurring high interest rates on your purchases.
Remember: Interest will only be applied to any balance that you carry past your payment due date in the event that your credit card does not offer a 0% introductory APR on purchases, or if your 0% introductory APR period is already over.
Minimum payment is also called minimum amount due and it's the minimum amount of your balance that you need to pay back each billing cycle in order to ensure your account remains in good standing. However, any balance you carry will incur interest that can quickly snowball and get you mired in credit card debt, so you should always aim to pay off your balance in full.
Your minimum amount due will be listed on your monthly credit card statement. In general, most credit card issuers in the United States calculate your minimum payment as the larger amount of $25 (or your entire balance if it is less than $25); or 1% of your new balance plus new interest incurred and late payment fees. Your credit card company can also add any past due amount to your minimum payment.
When you do not pay the minimum payment when it is due, you will be penalized with late fees and possibly a penalty APR which will send your APR skyrocketing. Your introductory APR may also be ended and your credit score may take a hit. Any unpaid balance will naturally incur interest that you are required to pay back, too.
Your credit card account could also end up in default if you do not pay the minimum payment when it's due. Your credit card issuer has the right to close your account without notice and demand you to repay all your unpaid balance immediately if your account ends up in default. Your credit card company can also start collection activities. In some cases, you may even be required to pay for their collection costs, court costs, attorneys' fees, etc.
Late payments can negatively affect your credit score, lead to late payment fees in addition to increasing your APR (i.e. interest rate). Making a late payment means you are also liable to repay all the interest incurred on any unpaid balance, along with the balance owed.
Your credit card's credit limit is decided by your credit card issuer. Your credit card's credit limit greatly depends on how well-qualified you are as a credit card applicant - taking into consideration things like your income, credit history, credit score, etc. It is essentially the amount you are eligible to borrow.
A balance transfer gives you extra time to pay off your existing debt. It requires you to transfer your existing balance from one credit card to another with a preferably lower interest rate or even better, one that offers a 0% introductory APR on balance transfers for a period of time.
A balance transfer can help you get rid of existing debt faster while keeping your interest to a minimum. That said, there is typically a balance transfer fee you will have to pay, though it is pretty much negligible compared to the amount of interest you potentially get to avoid.
Some cards offer an $0 intro balance transfer fee and others offer a 0% intro balance transfer APR for a certain period of time. Some cards offer both! When choosing a balance transfer card try to find one that has a long enough intro APR period so that you will have enough time to pay off your balance without incurring interest.
Yes, you can but the credit cards you qualify for are limited and not as rewarding as those for people who have an excellent or good credit score. The perks that you get to enjoy are basic and pale in comparison to the other more rewarding credit cards on the market.
That said, it is always a good idea to build up your credit rating or credit score as a decent credit rating or score will definitely come in handy in the future. You can do just that with responsible credit card use regardless if you are opting for a credit building credit card (i.e. secured credit card) or a student credit card (if you are still in college).
Some of the best credit cards in the market boast about having no annual fee, and while that is a great money-saving benefit, you still need to look out for other fees that the card might charge.
Typical credit card fees include balance transfer fees (if you use the card to make balance transfers), cash advance fees (if you take cash out of the ATM), an annual membership fee (some are waived perpetually while some offer a year or two of fee waivers), foreign transaction fees (if you use the card to shop online in a foreign currency or use the card abroad), late payment fees (if you pay your balance late), returned payment fees and overlimit fees. Keep in mind that each card is different and some cards may not charge these fees, so it pays to read the fine print to really find out which card is best for you in the long run.
If you have a rewards card then it pays off to use it each chance you get so that you can earn rewards on your spending. You can use your credit card to make purchases most of the time regardless of whether you are shopping in store or online, at the theater, buying groceries, dining at your favorite restaurant or booking travel online. Just be sure to pay your credit card bill in full before the due date to avoid incurring any interest charges and fees.
While you can also use your credit card to withdraw cash from the ATM, we strongly discourage it since cards usually come with high cash advance APRs and fees. You are much better off using your debit card when it comes to getting cash out of the ATM.
If you really cannot be bothered about using credit cards responsibly, maximizing credit card rewards and enjoying all the additional perks and security that credit cards afford, your next best option would be to use a debit card. A debit card lets you make purchases only up to the amount of savings you have in your linked account; once your savings are depleted, you can no longer make purchases or spend. A debit card does offer you the convenience of not having to lug cash around, though.
Cash is perfect for when you need to make payments at merchants that do not accept credit cards and debit cards (although it's rare that merchants don't accept credit cards these days) as well as when you are overseas without a credit card that offers $0 foreign transaction fees. Cash is also great when you have an emergency because it is accepted everywhere. Also, using cash is a great way for you to limit your spending.
In general, using cash and/or a debit card minimizes your risk of getting into debt. But these two methods of payment will not help you build your credit score or earn any rewards on your purchases. That said, it is absolutely ok if you choose to use a combination of credit cards, a debit card and cash for your day-to-day expenses.
Credit cards are safer than cash because credit card fraud protection policies and federal laws work to limit your liability for fraudulent charges made on a stolen or lost credit card. The onus is on you - the cardholder - to make a lost or stolen credit card report as soon as you realize your card has been lost or stolen. Most credit cards in the United States offer $0 liability protection in the event of unauthorized charges made with your lost or stolen credit card.
In addition, credit cards with an EMV chip work to protect consumers against fraudulent transactions from taking place at chip-enabled payment terminals. Chip credit cards are much harder to clone compared to old-school magnetic-stripe credit cards. Basically, credit cards with an EMV chip offer consumers a more secure way to pay.
Yes, you can use your credit card to get cash out of the ATM but it is not advisable. Not only will you be charged a cash advance fee for using your credit card to get cash from the ATM, the APR for cash advances is usually pretty hefty, too. Credit card issuers start charging interest on cash advances on the transaction date so you would be better off using your debit card to get cash out.
Travel credit cards may offer many different types of benefits such as complimentary travel insurance protection, car rental loss and damage insurance, baggage insurance plan, car rental privileges, $0 foreign transaction fees, premium roadside assistance, travel accident insurance, complimentary airport lounge access, airline fee credit, free checked bags, fee credit for Global Entry or TSA PreCheck and more.
They may also offer accelerated points-earning when you spend on travel, the ability to transfer your rewards points to leading airline and hotel loyalty programs and allow you to redeem your rewards for airfare, hotel stays, car rentals, cruises, travel and more.
The specific collection of travel benefits you get to enjoy greatly depends on the credit card you are holding. Top-tier travel credit cards offer cardholders lots of perks and benefits, but they usually come with hefty annual fees. Although if you travel a lot, the perks and benefits you get to enjoy can easily outweigh the amount you have to fork out to use the credit card.
The best credit cards to use overseas are those that come with travel benefits (such as complimentary airport lounge access and travel insurance protection), those that let you earn rewards, and those that offer $0 foreign transaction fees. There are travel credit cards that boast all of the above-mentioned features.
If you travel abroad frequently, getting a travel rewards credit card that offers $0 foreign transaction fees is your best bet. These cards are usually reserved for people with excellent or good credit. Another thing to keep in mind is that many countries prefer Visa and Mastercard to Amex and Discover, and many merchants in foreign countries may only accept Visa and Mastercard credit cards.
You can easily compare credit cards and apply for a credit card on GET.com. With just a few clicks, you can see at a glance which cards may be more suitable for you. We've reviewed hundreds of credit cards and divided them into categories so that you can find the one that suits you best.
At GET.com we rate credit cards based on their merits, rewards, benefits, bonus offers, introductory low APR periods, and flexibility (how and where the card can be used, how rewards can be redeemed, etc). We also look at the annual fee, ongoing APR, as well as other card fees. Our ratings are based on the value that we feel a card gives you compared to the potential cost of using the card.
To apply for a credit card click on the ‘Apply Now' button to enter the issuer's secure website. Once there, you will need to fill out your personal information. Normally, you will need to enter your full name, date of birth, phone number, social security number, contact information and financial information.