There is a wide variety of credit cards available, making it challenging to choose the right one. Different cards cater to various individuals, such as food enthusiasts, frequent travelers, students, and those aiming to improve their credit. Conducting research is crucial in finding a card tailored to your lifestyle.
The credit cards we recommend offer numerous additional benefits beyond rewards. These include annual statement credits, sign-up bonuses, discounts at select retailers, insurance coverage, and more. Taking advantage of these perks can lead to significant savings, particularly given the average American spending budget of approximately $22,126 per year, as reported by Esri’s spending data.
Chase Freedom Flex℠
The Chase Freedom Flex℠ is a credit card that provides value to reward-seeking cardholders. It allows them to maximize rewards through capped rotating quarterly categories. Additionally, the card offers flexibility, an introductory APR offer, and a generous welcome bonus.
Cardholders of the Chase Freedom Flex℠ enjoy a $0 annual fee. They can earn 5% cash back on up to $1,500 in quarterly rotating categories, which requires activation. Furthermore, they receive 5% cash back on travel purchases made through Chase Ultimate Rewards®, 3% cash back on dining and drugstores, and 1% cash back on all other purchases.
As a welcome bonus, new cardholders can earn a $200 bonus after spending $500 on purchases within the first three months of opening an account. However, it is important to note that foreign transactions conducted using this card will incur a 3% fee in U.S. dollars.
Apart from the rewards and fees, the Chase Freedom Flex℠ card offers various benefits and drawbacks. Cardholders can enjoy cash-back rewards that never expire and require no minimum redemption. There are also multiple redemption options available.
In terms of protection, the card provides zero liability protection, purchase protection, extended warranty protection, trip cancellation/interruption insurance, cell phone protection, and auto rental collision damage waiver.
Furthermore, cardholders can benefit from additional perks such as a three-month complimentary DashPass membership with 50% off for the following nine months. They also receive three months of no-extra-charge Instacart+ and up to $10 in statement credit each quarter through 07/31/2024 for eligible Instacart purchases.
Other benefits include a $5 Lyft credit when taking three rides in a calendar month, a $5 Fandango reward for spending $20 at Fandango or on Fandango’s streaming service, and one year of complimentary ShopRunner membership.
Capital One Venture X Rewards Credit Card
The Capital One Venture X Rewards Credit Card has an annual fee of $395. However, its annual travel credit and mile bonus can fully offset this fee if utilized completely. This makes it a great option for those seeking a premium travel credit card. The card offers convenient features, comprehensive purchase and travel protections, access to airport lounges, and the ability to transfer miles to travel and hotel partners. These advantages set it apart from other premium card options.
In terms of rewards, cardholders earn 2 miles per $1 on purchases, 5 miles per $1 on flights booked through Capital One Travel, and 10 miles per $1 on hotels and rental cars booked via Capital One Travel. As a welcome bonus, users can earn 75,000 miles after spending $4,000 on purchases within the first three months of opening an account. Notably, there are no foreign transaction fees associated with this card.
Apart from these benefits, the Capital One Venture X offers additional value. Cardholders can enjoy a $300 annual statement credit reimbursement for travel bookings made through Capital One Travel. Furthermore, they receive a 10,000-mile bonus on their card anniversary. The card also grants access to airport lounges, provides primary rental car coverage, offers a cell phone protection benefit, and allows for miles transfer to travel and hotel partners. Moreover, the card’s miles do not expire, and bookings made with Capital One are not subject to blackout dates. Lastly, owning the card comes with Hertz President’s Circle status.
Chase Sapphire Preferred® Card
The Chase Sapphire Preferred® Card is ranked among the best credit cards because it balances rewards, benefits, and features with a reasonable annual fee. New cardholders are drawn to the attractive welcome bonus offered by Chase Ultimate Rewards, a powerful rewards program.
The card has an annual fee of $95. It offers 5 points per $1 on travel purchases through Chase Ultimate Rewards®, 3 points per $1 on dining, select streaming services, and online grocery purchases (excluding Walmart, Target, and wholesale clubs), 2 points per $1 on other travel purchases, and 1 point per $1 on all other purchases.
To entice new users, the card provides a welcome bonus of 60,000 points after spending $4,000 on purchases within the first three months of opening the account. There are no foreign transaction fees.
Apart from its rewards and benefits, the Chase Sapphire Preferred offers additional advantages over the premium Chase Sapphire Reserve® card, which has an annual fee of $550. The Sapphire Preferred provides travel coverages, purchase protections, and the value of points increases by 25% when booking travel through Chase Ultimate Rewards. It also grants bonus points equal to 10% of the total purchases made in the previous year. Additionally, cardholders can transfer points to various airline and hotel loyalty programs. All these benefits come at a relatively affordable annual fee.
The Blue Business® Plus Credit Card from American Express
The Blue Business® Plus Credit Card from American Express (terms apply) provides excellent value to business owners. It is an effective way to earn simple rewards and receive assistance in managing finances. The card has no annual fee and offers purchase protections and other convenient features.
With an annual fee of $0, the Blue Business Plus Card is a cost-effective choice. It rewards cardholders with 2 Membership Rewards points per $1 on everyday business purchases, up to the first $50,000 spent per year. After that, it provides 1 point per $1 on all other purchases.
There is no welcome bonus associated with this card, and it does charge a foreign transaction fee of 2.7% for each transaction converted to US dollars. However, the benefits of the card include extended warranty protection, purchase protection, Amex Offers, Global Assist Hotline, car rental loss and damage insurance, no-extra-charge employee cards, and the ability to connect your account to QuickBooks.
Additionally, the card offers Vendor Pay by Bill.com and digital features such as the American Express App and online statements. Select benefits require enrollment. While it may not provide the major credits associated with luxury Amex cards, it remains advantageous due to its lack of an annual fee.
Wells Fargo Active Cash® Card
The Wells Fargo Active Cash® Card is a leader in the flat-rate cash-back card market. It has no annual fee and offers a generous welcome bonus. The card also provides a low introductory APR and additional features, making it appealing to those seeking straightforward rewards.
You won’t have to pay an annual fee for the Wells Fargo Active Cash® Card. It offers unlimited 2% cash rewards on purchases, allowing you to earn rewards without any limits. Additionally, there is a $200 cash rewards bonus available if you spend $500 on purchases within the first three months of opening your account.
When using the Wells Fargo Active Cash® Card for foreign transactions, there is a 3% fee. However, it compensates for this drawback by offering various benefits. These include cell phone protection, zero liability protection, and security features. While it offers a moderate number of perks, the main highlight is its excellent flat-rate rewards rate.
Wells Fargo Reflect® Card
The Wells Fargo Reflect® Card is known for its exceptional balance transfer feature with a long introductory APR period. It stands out with no annual fee, making it an appealing choice to transfer existing debt from high-interest cards. However, once the introductory period ends, the card doesn’t offer many additional benefits.
The card has no annual fee and does not provide any rewards or welcome bonus. When it comes to foreign transactions, there is a 3% fee. The Wells Fargo Reflect Card does offer some benefits, such as cell phone protection. This coverage extends up to $600 for damage or theft if you pay your monthly phone bill using the card. However, there is a $25 deductible and a limit of two claims per 12-month period. Apart from this, the card mainly offers convenience benefits.
These convenience benefits include My Wells Fargo Deals, where you can access special offers and discounts from select merchants. Additionally, the card provides Roadside Dispatch, which assists with emergencies such as flat tires, dead batteries, or other roadside assistance. Lastly, there is Credit Close-up, a complimentary credit score monitoring service.
Petal® 1 “No Annual Fee” Visa® Credit Card
The Petal® 1 “No Annual Fee” Visa® Credit Card, issued by WebBank, is ideal for first-time credit card users who want to build their credit. It offers an unsecured option with no annual fee, making it a convenient choice. However, the reward program lacks consistency, and the standard APR is relatively high.
With the Petal® 1 card, you won’t have to worry about paying an annual fee. It’s a great advantage for those who want to avoid extra costs.
When it comes to rewards, the Petal® 1 card allows you to earn cash back ranging from 2% to 10% at select merchants. This can be a valuable perk for regular shoppers.
Unfortunately, there is no welcome bonus offered with the Petal® 1 card. While it may not be a deal-breaker, it’s something to consider if you value introductory rewards.
One of the advantages of the Petal® 1 card is that it doesn’t charge any foreign transaction fees. This makes it a suitable option for travelers or those who frequently make purchases in foreign currencies.
The Petal® 1: Leap program provides several benefits to cardholders. You can track your credit score, receive push notifications for account activity, set up autopay, and use digital wallet technologies. These features enhance the convenience and security of managing your card.
Additionally, the Petal® 1: Leap program reports to all three major credit bureaus. This means that by using the card responsibly, you can establish and improve your credit history.
Unlike many traditional credit cards, Petal evaluates creditworthiness using a “cash score” instead of conducting a credit check. This can be beneficial for individuals who have limited credit history or want to avoid a credit check.
To apply for the Petal® 1 card, you may be required to provide banking and other financial information. This helps Petal assess your financial situation accurately.
BankAmericard® credit card
The BankAmericard® credit card is known for its introductory APR, making it a top choice for financing large purchases or balance transfers. It does not offer rewards or many additional benefits.
There is no annual fee associated with the BankAmericard credit card. Furthermore, there are no rewards or welcome bonuses provided. However, foreign transactions will incur a 3% fee.
One of the key features of the BankAmericard is its introductory APR, which applies to both purchases and balance transfers for 21 billing cycles. It is important for users to make minimum payments and pay off the balance in full before the end of the introductory period.
When transferring a balance to the BankAmericard, be aware of the 3% transaction fee on the transferred amount. On the positive side, there is no penalty APR for late payments or other penalties.
Bank of America offers credit education opportunities to cardholders, providing valuable resources for understanding and managing credit accounts. Additionally, users can access their FICO Score for free, with monthly updates.
How do credit cards work?
Credit cards provide a line of credit, acting as a loan. When you use a credit card, you borrow money from the company to make a purchase. This borrowed amount needs to be paid back, along with interest if the balance is not fully settled by the billing cycle’s end.
Interest rates are usually expressed as an annual percentage rate (APR). The credit card agreement’s APR reflects the interest applied to a balance throughout a year, although interest is typically charged on the average daily balance.
Grace periods are commonly included in credit card features. During this time, transactions made do not accumulate interest. If you pay off your balance before the grace period ends, which is the billing statement due date, you can avoid paying interest on your purchases. However, if the balance is not cleared by the due date, the grace period is lost. This means that both the carried balance and subsequent purchases will accrue interest.
Your credit limit determines the maximum amount you can borrow. To maintain good credit, it is advised not to “max out” your credit card. Instead, aim to spend no more than 30% of your credit limit before paying down the balance. This keeps your credit utilization rate, the amount of credit used, under 30%.
Responsibility lies with you to pay the full balance, including any interest charges, when you make a purchase using your credit card. Paying off the balance entirely before the monthly due date is the only way to avoid paying interest. Failing to make minimum payments will negatively impact your credit score.
Different types of credit cards
There are various types of credit cards available, including cash-back cards, rewards cards, balance transfer cards, low-interest cards, and credit building cards.
Cash-back credit cards provide rewards in the form of a percentage of your spending. Rewards cards, on the other hand, earn points or miles that can be redeemed for travel, merchandise, or gift cards.
Balance transfer cards allow you to move existing debt from one card to another, often with fees involved. They may also offer an introductory APR to help finance the transferred debt over a period of time.
Low-interest cards have a lower APR compared to other cards. They can be useful for financing medium to large purchases over an introductory period, with lower or no interest rates. However, it’s important to have a repayment plan in place as high interest rates may apply after the introductory period ends.
Credit-building cards are specifically designed to assist individuals new to credit or those looking to rebuild their credit standing. These cards can be secured, requiring a deposit equal to the offered credit, or unsecured for those with weaker credit profiles.
Secured cards that report payment activity to major credit bureaus help users establish a stronger credit history. Some secured cards even allow users to upgrade to unsecured cards after demonstrating creditworthiness through consistent on-time payments and responsible card usage.
How to choose the best credit card for you
There are numerous excellent credit cards available in the market. American Express, Discover, and Bank of America consistently rank highly in the J.D. Power Credit Card Satisfaction Study. These options should be considered when making your choice, according to John Ulzheimer, a credit industry veteran.
Before selecting a credit card, it’s crucial to evaluate your spending habits and financial objectives. Determine your affordability for annual fees and decide on the type of rewards and APR that suit you best.
Carrying a balance on a credit card is not recommended. Other financial products, such as personal loans, generally offer lower interest rates. If you require a longer-term loan, consider exploring alternatives beyond a credit card.
When considering a credit card offer, carefully review the fine print to comprehend any additional fees and restrictions. Additionally, research the customer service and fraud protection policies of the card issuer, especially if you are new to credit cards. Ensure that your queries will be addressed promptly.
In conclusion, take your time to assess different credit card options based on your financial circumstances. Make informed decisions by considering your spending patterns, repayment capabilities, and understanding the terms and conditions associated with each card.
How to get a credit card
Applying for a credit card is a straightforward process. However, there are a few considerations before proceeding. A good credit score increases the chances of approval for better, more rewarding cards. If your credit score is limited, start by applying for a student or secured card to build credit before seeking high-end rewards cards.
You can obtain copies of your credit reports from the three major credit bureaus: Experian, Equifax, and Transunion. These bureaus maintain consumer files that assist lenders in assessing creditworthiness. Credit card issuers will check your credit when you apply. It’s essential to ensure your credit report is error-free to enhance your application’s success.
Comparing different cards is crucial to find the one that suits your budget and lifestyle. Once you have chosen a card, you can apply through various methods like online, phone, or mail. During the application process, you’ll be required to provide personal information such as your name, address, and Social Security Number. This information allows the issuer to access your credit report and evaluate the risk associated with extending you credit.
In addition to personal details, many issuers may request your salary or other financial information, like monthly rent or mortgage expenses. This information might influence the credit limit they are comfortable granting you.
What are credit card rewards and how do they work?
Credit card rewards are provided by credit card companies to incentivize increased card usage. These rewards can include cash back, points, or miles that can be redeemed for various benefits like travel, merchandise, and gift cards. The structure of rewards varies, ranging from flat-rate cash back to bonus rates on specific spending categories that change every quarter, requiring activation.
If a credit card offers a welcome bonus, you may be required to spend a certain amount within a specific timeframe to receive that lump-sum reward. Some credit cards have annual fees that need to be paid in order to access rewards. Therefore, it is essential to calculate the value of the rewards and benefits offered by a card and weigh it against the cost of owning the card.
How many credit cards should I have?
The number of credit cards you carry depends on your financial goals and spending habits. It is up to you whether you want many cards or none at all. Applying for multiple cards simultaneously can temporarily lower your credit score due to inquiries on your credit report.
If your goal is to improve your credit, having one card with a low limit might suffice. However, if you want to maximize rewards, consider having two or three cards with different rewards programs. Keep in mind that managing multiple accounts means handling multiple statements, due dates, and balances.
Carefully consider the number of cards you can manage to avoid overwhelming your wallet.
Important credit card terms
Understanding key terms related to credit cards can greatly benefit you. The annual percentage rate (APR) represents the interest rate applied to balances carried on your card. To avoid interest charges, pay your balance in full within the grace period. Maintaining a good standing requires making the minimum payment each month. When you transfer a balance from one card to another, a balance transfer fee is usually applied.
How does credit card interest work?
Credit card interest is only applied when you have an unpaid balance on your card. The interest rate varies between 10% and 30% for different cards. It is calculated monthly based on the outstanding balance and compounded daily. If you clear your balance every month, you won’t face any interest charges. However, failing to pay off the balance means you’ll be charged interest on new purchases until you’ve fully paid off the balance for at least two months.