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How to choose the right credit card for you

The Points Guy logo The Points Guy 11/28/2021 Madison Blancaflor
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MSN has partnered with The Points Guy for our coverage of credit card products. MSN and The Points Guy may receive a commission from card issuers.

Editor’s note: This is a recurring post, regularly updated with new information. This page includes information about the Discover it Student Cash Back that is not currently available on The Points Guy and may be out of date. 

Whether you’re hoping to save money on your monthly grocery bill, rack up rewards for (mostly) free travel, want a card to help earn rewards on business expenses or have some other earnings goal, there is a credit card out there for you.

These days, there are even more options than ever before. Popular credit cards that have been around for years have gotten refreshes (such as the Chase Sapphire Preferred Card), and new cards have hit the market for customers to enjoy (including the Capital One Venture X Rewards Credit Card).

With more options, however, comes more potential confusion over which card is the best for you. Since many of the best credit cards include annual fees, it’s important that you choose the right credit card for your goals and spending habits so you can ensure any and all cards in your wallet are worth the expense. Today, we’re walking through how to choose the best credit card for you.

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What to look for in a credit card

When choosing the right card for you, the first thing is to consider your goals.

Are you hoping your credit card will help make your travels more affordable? Are you more interested in covering everyday expenses or padding your savings? Are you a small business owner? Are airline or hotel benefits and potential shortcuts to elite status more your speed? Are you new to building credit or looking to repair your credit score?

These questions can help you decide what kind of card you need. Here’s a quick overview of which type of card you should look for based on your goal (s). We’ll dig deeper into some of these categories later on.

  • Travel rewards card: If you want to earn rewards points that can be used to offset the cost of your travel, check out a travel rewards credit card that earns transferable currencies (such as Chase Ultimate Rewards or American Express Membership Rewards) with a number of partners, giving you the highest value-per-point due to its flexible redemption options.
  • Cobranded travel card: For those who are loyal to a specific airline or hotel brand, grabbing a cobranded credit card can expedite your earning in that individual program while giving you brand-specific benefits (such as free checked bags for some airline cards) or potentially helping you earn elite status faster.
  • Cash-back card: Cash back is a great option if your primary goal is covering day-to-day expenses or padding your savings. Cash back is also a decent way to cover travel expenses other than hotels and flights (think: campground fees, Disney World tickets, dinner reservations and more).
  • Business credit card: Small business owners can apply for credit cards that earn rewards on the kinds of purchases they make each month, such as shipping, online advertising, office supplies and more. You don’t have to run a Fortune 500 company to apply, either — even small side hustles often qualify for business credit cards.
  • Student credit card: College students or college-aged individuals who are just getting started building up credit can look into student credit cards. The credit requirements to be approved are usually lower than with other cards, and many still offer decent rewards rates while you’re establishing that credit history needed for top-tier cards down the line.
  • Secured credit card: These are best for those who are rebuilding their credit scores. You usually won’t earn rewards and you’ll have to put down a deposit that acts as your credit limit, but a secured credit card can help you improve your score so that you can apply for travel rewards and cash back cards later on.

From there, you can narrow down what card is the best fit for you by looking at these factors:

  • Rewards structure: One of the most important features of a rewards credit card — whether cash back or travel rewards — is the bonus categories a card offers. In order to maximize a credit card strategy, you want to earn more than 1% or 1x on as many purchases as possible. So, for example, if you spend the majority of your budget on groceries and dining, you should look for a card that earns bonus rewards in those categories. Alternatively, if you don’t have any spending categories that outshine the others, a flat-rate card that earns across spending categories might be a better option.
  • Annual fee: Many of the best credit cards charge annual fees. Don’t let this deter you from applying, because in many cases a card’s fee will be worth it if you can maximize the rewards structure and other benefits offered by the card. However, it is something to keep in mind when trying to narrow down your card choices.  If you don’t think you’ll get enough value from a particular card to offset the cost of an annual fee, you’ll want to look at other options.
  • Sign-up bonus: Many cards offer a sign-up bonus after you meet certain spending requirements within the first three to six months. While you shouldn’t base your entire decision on what a card offers upfront, it can help you choose between two cards that may both fit your long-term needs. Sign-up bonuses are a great way to bolster your rewards balance (especially if you’re hoping to hit a specific target) and help you justify the first year of an annual fee.
  • Other benefits: Most rewards cards come with more benefits than just their rewards structure. Premium cards may offer lounge access or annual credits, some cards may have partnerships with brands that give you additional perks and others may even help you hit elite status with your favorite airline or hotel brands. Make sure you’re considering what benefits are important to you when looking at credit card options.

Not sure where to start? Here are a few examples of cards you should look at based on some common financial goals.

Want to save money on travel? Try travel cards with transferable currencies

When it comes to travel rewards, transferable currencies are generally the most valuable. That’s because these types of points usually allow you to book travel either through an issuer portal or by transferring points to other loyalty programs for airlines and hotels.

You can often get outsized value from these types of points if your primary goal is to book award flights and hotel stays for (almost) free. Many of these cards also come with additional benefits such as travel insurance protections, annual statement credits, lounge access and more.

(Photo by John Gribben for The Points Guy) © The Points Guy (Photo by John Gribben for The Points Guy)

If you’re a beginner (or just don’t travel enough to warrant a high annual fee), cards such as the Chase Sapphire Preferred Card, Citi Premier® Card and Capital One Venture Rewards Credit Card are excellent choices — and all three have annual fees that are under $100.

If you travel frequently, you might consider a premium card such as the Chase Sapphire Reserve, with a $550 annual fee, or The Platinum Card® from American Express with a $695 annual fee (see rates and fees). Both come with higher earning rates on travel purchases and a ton of additional benefits. 

Of course, there is also an increasing number of higher-tier cards that have annual fees in the $200-400 range, including the American Express® Gold Card (see rates and fees) and the new Capital One Venture X Rewards Credit Card. Both offer strong benefits and great rewards at a price point that’s easier to chew than the $500-plus annual fees of top-tier premium cards such as the ones mentioned above.

Related: Best travel rewards cards

Want help earning elite status? Apply for a premium cobranded card


Video: How people with 10+ credit cards make it work (CNBC)

UP NEXT
UP NEXT

Some of the top cobranded travel credit cards offer ways to jump-start your elite-status journey, allow you to earn certain tiers through spending or occasionally even receive complimentary status just by being a cardholder. If your biggest travel goal is to hit elite status, then there are plenty of options out there.

For example, the Delta SkyMiles® Reserve American Express Card, with its $550 annual fee (see rates and fees), gives you four different opportunities to earn 15,000 Medallion® Qualification Miles (MQMs) at $30,000, $60,000, $90,000 and $120,000 spent on purchases in a calendar year, for a total potential of 60,000 MQMs. Combined with the ability to earn a Medallion Qualification Dollar (MQD) waiver after spending $25,000, you could be well on your way to earning Delta elite status before you ever step on a plane.

The right credit card can fast-track your way to elite status, which can help you upgrade your stays. (Photo courtesy of Hilton) © The Points Guy The right credit card can fast-track your way to elite status, which can help you upgrade your stays. (Photo courtesy of Hilton)

A number of hotel credit cards offer complimentary elite status just for being a cardholder, including the Hilton Honors Aspire Card from American Express, with an annual fee of $450. This card confers automatic Hilton Honors Diamond status, which TPG values at $3,025. The World of Hyatt Credit Card offers automatic Discoverist status (Hyatt’s lowest tier of elite status), and the Marriott Bonvoy Boundless Credit Card (which won Best Cobranded Hotel Card at the 2021 TPG Awards) offers automatic Silver Elite status and 15 elite-night credits to help you hit an even higher tier.

The information for the Hilton Aspire Amex card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Related: Best credit cards for jumpstarting elite status

Want to save money on everyday expenses? Apply for a cash-back card

If your primary goal is just to save money beyond travel expenses, consider a cash-back card. Rather than earning travel rewards that are most valuable when redeemed for (you guessed it) travel, cash back is worth a fixed value. You can use rewards to save on your monthly credit card bill, or if you have a card that allows you to deposit your rewards into a bank account, you can always start using rewards as a nice nest egg for an upcoming purchase or a rainy day.

There are a ton of cash-back rewards cards to choose from based on which spending categories will give you the most value.

You can find cards with high earning on dining, such as the Capital One Savor Cash Rewards Credit Card, or, if you spend more on groceries, there’s the Blue Cash Preferred® Card from American Express® that earns 6% back on the first $6,000 spent per year at U.S. supermarkets (then 1%). Cash back is received in the form of Reward Dollars that can be redeemed for statement credits.

diagram: (Photo by John Gribben for The Points Guy) © The Points Guy (Photo by John Gribben for The Points Guy)

The Chase Freedom Unlimited (the third-annual Best No-Annual-Fee Card winner at the TPG Awards) is also a popular choice. It’s a cash-back card that earns a flat 1.5x points (which can be redeemed for 1 cent each just like cash back or combined with points from a higher-tier Chase card so that you can transfer points to the Ultimate Rewards program’s partners) on all non-bonus purchases, making it a great option for everyday expenses that may not fall into other common bonus categories.

The information for the Capital One Savor card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Related: My mom got her first rewards card after using cash for 50 years

Want to build credit during college? Apply for a student credit card

Most of the cards mentioned above require you to have a good credit score, which means a proven history of paying bills on time and being a responsible borrower. While you’re in college, getting one of the cards that help you build credit so that you can eventually add more of our best credit cards to your wallet is a great step to take. Plus, building credit also helps when it comes time to finance a car, apply for a mortgage and more. Many student credit cards are available to college students who are just starting out with little to no credit, and many also still earn rewards.

The Discover It Student Credit Card is an option. You’ll earn 5% back on rotating categories (up to the quarterly maximum), such as gas stations, grocery stores and more. There’s no annual fee. It’s a popular starter card for college students looking to jump into earning rewards but who don’t quite have the score needed for some of those higher-tier rewards cards mentioned earlier.

The information for the Discover it Student Credit Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Related: Best cards for students 

Want to earn rewards on side hustle expenses? Apply for a small business card

You don’t have to have a Fortune 500 company or even a physical office location in order to qualify for a small business credit card. If you have a side hustle selling on Etsy or a freelance gig, you can still apply. Small business credit cards often offer bonus categories that personal cards do not often come with, such as office supplies or internet services. Plus, a small business card is a great way to keep your personal and business expenses separate when it comes time to do your taxes.

(Photo by @criene/Twenty20) © The Points Guy (Photo by @criene/Twenty20)

There is a business card out there for pretty much anyone and everyone, no matter what type of business you have. One great all-around business card is the Ink Business Preferred Credit Card, which offers 3x Ultimate Rewards points on the first $150,000 spent in assorted business categories each month while only charging a $95 annual fee each year. You can also find flat-rate business credit cards that earn rewards across all expenses, such as The Blue Business® Plus Credit Card from American Express, which earns 2x on the first $50,000 spent each year (1x thereafter). It also comes with no annual fee (see rates and fees).

This year’s TPG Award winner for Best Business Card is the American Express® Business Gold Card, which offers an impressive 4x on the two business categories you spend the most on each billing cycle and a solid range of other benefits, all for a reasonable $295 annual fee (see rates and fees).

Related: Best small business credit cards 

Want to finance purchases over time or pay off debt? Apply for a 0% APR card

While TPG always encourages that you pay off your balance in full each month, we also recognize that it isn’t always possible — especially during uncertain times like the ones in which we’re currently living. If you are trying to consolidate debt or just know you’ll need help financing purchases over the next couple of months (for the holiday shopping season, for example), a card with a 0% APR intro offer could be a good fit for you.

These cards offer a time frame (generally anywhere between 12 to 18 months) in which you can pay 0% interest on either new purchases, balance transfers or both. So long as you can confidently pay off your balance by the time that introductory period ends (and the regular APR kicks in), you can save hundreds or even thousands of dollars on interest payments while reducing the financial burden of paying off your purchases all at once.

The Chase Freedom Flex and Blue Cash Everyday® Card from American Express are both solid options, offering 0% intro APR on purchases for the first 15 months from account opening. Once the introductory period ends, a regular variable APR of 13.99%-23.99% applies for the Blue Cash Everyday (see rates and fees); 14.99%-24.74% for the Chase Freedom Flex.

Related: Best 0% APR credit cards 

Bottom line

There is no such thing as a one-size-fits-all credit card. Every person’s goals, spending habits and needs are unique. It’s not about finding the best credit card, it’s about finding the right credit card for you.

Figuring out where to get started can be overwhelming, but hopefully this guide has given you a solid starting point for where to start looking. There are a ton of options out there. No matter what your goals are for 2022 and beyond, I promise there is a card out there that will help you hit them.

Featured photo by Isabelle Raphael/The Points Guy. 

For rates and fees of the Hilton Aspire card, click here.

For rates and fees of the Blue Cash Preferred card, click here.

For rates and fees of the Blue Cash Everyday, click here.

For rates and fees of the Amex Platinum card, click here.

For rates and fees of the Delta SkyMiles Reserve, click here.

For rates and fees of the American Express Gold Card, click here.

For rates and fees of the American Express Business Gold Card, click here.

For rates and fees of the Amex Blue Business Plus, click here.

SPONSORED: With states reopening, enjoying a meal from a restaurant no longer just means curbside pickup.

And when you do spend on dining, you should use a credit card that will maximize your rewards and potentially even score special discounts. Thanks to temporary card bonuses and changes due to coronavirus, you may even be able to score a meal at your favorite restaurant for free. 

These are the best credit cards for dining out, taking out, and ordering in to maximize every meal purchase.

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Editorial Disclaimer: Opinions expressed here are the 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.

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