Finding The Best Credit Card Application For You
Finding the best credit card offer depends entirely on how you use your credit cards. Without question, some credit cards are significantly better than others. But the best credit card for cash back rewards might not be the best credit card for you if you carry a balance from month to month. Similarly, the best airline rewards credit card might be great for some people, but if you don't spend enough to offset the annual fee and higher interest rate it may carry, it could turn out to be the worst credit card for you.
Choosing from a generalized list of the best credit cards is not a great way to find the right credit card. Instead, take a moment to think about how you actually use your credit cards (not how you wish you did). Then, check out the following suggestions about the best type of credit card for your particular usage habits.
Balance Carriers: If you currently owe money on your credit cards, then you should search for a balance transfer credit card. These card provide you a 0% rate for around a year. During that period, you can use the money you would have spent on interest to reduce your debt. (You can also estimate how much you can save with our balance transfer calculator.)
Debt Free, but Not For Long: Okay, you don't currently have much credit card debt, but you're planning on making a large purchase or know you won't be able to pay your upcoming charges in full in the near future. If this describes you, you'll likely benefit most from a credit card that offers a 0% APR on purchases. Like 0% balance transfer offers, these cards charge no interest for up to 12 months. This can help interest charges from mounting up on new purchases and give you time to repay your debt. (Many credit cards offer a 0% APR on purchases and balance transfers, but this is less common than it was a few years ago. Be sure to inspect the credit card application to make sure your 0% rate applies to purchases.)
Small Spender Interested in Rewards: Okay, you want to take advantage of a rewards program, but don't use your credit card very much. Say, for example, you spend $1,000 a month on your credit card. If you were to get an airline miles credit card, it would take about four years to earn enough miles to get a free ticket. However, if you applied for a cash back credit card, you'd pocket more than $100 a year in rewards. It's a no-brainer. Go with the cash back credit card. (And consider using your credit card as much as possible to rack up rewards. Just be sure to pay it off every month.)
Rewards Pro: Okay, you know the drill. Charge everything you possibly can to rack up points, cash back or miles. But maybe you're unsure about what the best credit card to carry is. Or whether or not a high annual fee is worth paying. From a purely reward related perspective which doesn't take into effect high end perks, going with a no or low annual fee rewards card that offers cash back or miles that can be used on any airline is likely the best bet. If you choose a card with a high annual fee, that cost will eat into your total rewards bounty. For example, if your annual fee is $30, you'll need to spend $3,000 to break even. If that annual fee is $400, you'll need to spend $40,000 just to break even. Now, a card with a $400 annual fee may offer a lot of additional perks that make membership worthwhile, but if you want to really maximize your total rewards, look for a no annual fee cash back credit card. Miles and points are great, but cash is king.
Final Notes: Even though I said that there is no "best credit card," I do believe some credit cards are significantly better than others. Much of this has to do with the credit card company. Before the CARD Act took effect in early 2010, credit card companies wreaked havoc on people by raising rates without any cause, slashing credit limits, and adding annual fees. The best credit card companies did not do this and, even though the CARD Act restricts certain unsavory tactics, I believe the credit card companies that treated their customers well before the CARD Act will continue to offer better service and less hassles to their customers. So, if you backed me in a corner and asked me what the best credit card was, I would say any card from Discover.
