The best credit cards can save you money on interest, earn you rewards and prove a money-juggling savior when life gets tough. In the midst of the recent coronavirus outbreak, however, credit cards are set to take on an even more important role in helping households ride out their personal financial storms.
The key to choosing the best credit card is to know what you intend to use it for. This may be to pay off existing credit card debt, fund a big-ticket purchase, improve your credit rating, or earn rewards, such as airline miles. As there will be no single best credit card for everyone, it’s essential to focus on the features that will affect you the most.
These will include fees, which are the costs of owning a credit card, and interest rates - also known as the annual percentage rate or APR for short - which is the price you will pay for borrowing with a credit card. If you are looking to use a balance transfer credit card to manage an existing card debt or make a large purchase, the length of the interest-free period - during which you will not be charged interest, as long as you make a minimum payment each month - will be important. Alternatively, if you are looking to spend regularly on a credit card, the best rewards credit cards will offer cash back or loyalty points based on your spending, while the best credit card for airline miles will enable you to earn frequent flyer miles simply by making everyday purchases.
While identifying the primary reason for taking out a credit card will help you decide which type of credit card it is you need, it is still important not to lose sight of the other features - and in particular, the fees and APR - in your final reckoning. Fortunately, we have done the hard work for you, with our rundown of the best credit cards across the most popular categories available.
Balance transfer credit cards
If you already have credit card debt, a balance transfer credit card could buy you some time to pay the debt off more cheaply. This is because the best balance transfer credit cards come with lengthy interest free periods, allowing you to concentrate on paying off the balance without incurring any more interest.
It is possible to transfer the balance from one or several credit cards on to your new balance transfer credit card, usually for a small fee. This makes a balance transfer credit card an extremely effective way of consolidating a number of debts into one place, and is a much easier option than approaching the best debt consolidation companies.
The priority should then be to try and pay off this debt before the interest free period ends. This is because balance transfer cards typically carry a higher-than-average APR that will kick in once the grace period expires. The APR will also likely begin to apply if you fail to meet the minimum monthly repayment set out by the credit card lender. Importantly, however, if you are committed to clearing your debt before the interest free ends, it is almost certain that you will have to pay off much more than the minimum repayment each month to meet your goal.
Find out more about how a balance transfer card can help you manage your debt.
Citi Simplicity Card: The best balance transfer card
0% APR for 21 months
No late fees for missing payments
5% or $5 balance transfer fee
Check out the Citi Simplicity Card
An interest free balance transfer period of almost two years alongside some welcome leeway for missing monthly payments makes the Citi Simplicity Card – No Late Fees Ever our current choice for best balance transfer credit card. The balance transfer fee of the greater of $5 or 5% of the amount of each transfer might be more than the typical balance transfer credit charge will charge, but then this is not a typical credit card. Not only do you enjoy 0% APR for 21 months, but you will also not have to pay a late fee or penalty APR if you miss a payment. Given the uncertainty that abounds in the face of the coronavirus, both features could prove invaluable in the fullness of time. Despite the flexibility, the importance of paying off your debt before the end of the interest free period remains, so as to avoid the go-to variable APR of 14.74%-24.74%, based on your creditworthiness.
- Also consider: HSBC Gold Mastercard credit card for 18 months of interest free purchases and balance transfers, with no annual fee.
Rewards credit cards
If you’re someone who regularly uses their credit card but will always pay off the balance each month, it’s likely to be worth your time investigating the best rewards credit cards. These credit cards let you earn points when you spend that can be used for things like shopping vouchers, hotel discounts, free flights and more. Some of the best rewards credit cards offer lucrative sign-up bonuses, although you should only go for those that you believe are attainable through the course of your regular spending.
As even the best rewards credit cards are likely to have much higher APRs than their non-reward card counterparts, this needs to be taken into account when working out whether this is the type of card for you. Any annual fees will need to be factored into the equation too. That is why getting a rewards credit card really only makes sense if you can avoid paying interest by settling your outstanding debt in full every month, and if you're gaining enough from the rewards in order to justify the cost.
It is also worth noting that many rewards cards will require a good credit score at minimum to get approved, although this can vary between issuers. Check out the best credit report services to see where you stand, and consider using the best credit repair services if there is room for improvement.
Wells Fargo Propel American Express card: Best rewards credit card
No Annual fee
20,000 points sign-up bonus
12 months of 0% interest
Check out the Wells Fargo Propel Amex Card
The absence of an annual fee combined with an excellent range of potential rewards sees the Wells Fargo Propel American Express card stand out among the best rewards credit card contenders. It is possible to earn 3x points on eating out and ordering in, travel spending including flights, hotels, homestays, and car rentals, at gas stations and on transit, and on popular TV streaming services, with 1x points available on all other purchases. There is an introductory offer through which 20,000 bonus points – the equivalent of a $200 cash redemption value - can be earned too, provided you spend $1,000 in the first three months. The card also offers 12 months 0% interest on purchases and qualifying balance transfers, with a variable APR of 13.99%-25.99% to follow.
- Also consider: Citi Rewards+ Card that earns 2x points at supermarkets and gas stations for the first $6,000 per year.
Cashback credit cards
A slight variation on rewards credit cards, and one which will give you cash every time you spend on them, are cash back credit cards. The best cash back credit cards are very similar to reward credit cards in how they work, but will often have no annual fee. This is because the credit card issuer is making money from the businesses you make purchases at. Therefore, as long as you pay off your balance each month in full, you can make a cash back card worth it.
As you might expect, many cash back credit cards offer bonuses when you sign up, but you need to make sure you will be able to comfortably meet the requirements to earn those bonuses. For example, a card may offer you a sign-up bonus of a couple hundred dollars, but you have to spend twice as much in a three-month period with your credit card. So, be sure to budget for those purchases to earn the most money back as possible.
You may also be tempted by cash rewards credit cards that offer higher percentages of cash back, but these may come with a higher annual fee, that therefore needs to be taken into account when working out if you will use the card enough to recoup the extra outlay. It should also be noted that some cash back credit cards limit the amount of spending that it is possible to earn cash back on. If a card offers 6% cash back but limits your purchases to $6,000, the most money you can earn back is $360; if you have an annual fee to pay, you'll have to subtract it from that total.
Blue Cash Preferred Card from American Express: Best cashback credit card
6% cashback on supermarket purchases
$250 credit sign-up incentive
12 months at 0% interest
Check out the Blue Cash Preferred Amex card
Standing out among the best cash back credit cards is the Blue Cash Preferred Card from American Express. An eye-catching 6% cash back is available on purchases at US supermarkets on up to $6,000 of spending per year (1% thereafter), and on select streaming subscriptions too, while 3% is payable on spending at gas stations, and on transit, including taxis, parking, trains and buses; all other purchases using the card offer cash back at 1%. As an added incentive, there is a $250 statement credit available if you spend $1,000 in purchases on your new card within the first three months. The $95 annual fee may be high compared with other rewards cards on the market, but if you spend at least $135 a month on groceries, the card will already have paid for itself. The card also offers 12 months interest free on purchases and balance transfers from opening, before reverting to a variable APR of 12.99%-23.99%, depending on your creditworthiness.
- Also consider: the Chase Freedom Unlimited card that offers an unlimited reward rate of 1.5% cash back on all purchases, without an annual fee.
Airline miles credit cards
The coronavirus may have put travel plans on ice for now, but there’s no harm in using the best credit card for airline miles to help you save money on flights when normality resumes. For each dollar you spend, most airline miles credit cards give you one mile or one point, though the best airline miles credit cards give you the opportunity to earn double miles when you make certain purchases, such as buying a flight from the participating airline.
In addition to providing you with airline miles, the best airline miles credit cards often include additional perks, such as in-flight discounts, priority boarding and access to VIP lounges. Some will provide assistance in the event of an emergency, including lost luggage reimbursement, travel accident insurance, 24/7 roadside assistance and rental car insurance.
Like any other credit card, an important consideration when you're selecting an air miles card is the APR and fees that it carries. Making sure these are at least on a par with those charged by other credit cards is a must so as not to nullify the benefits you are gaining by choosing an airline miles card.
Chase Sapphire Preferred Card: Best airline miles credit card
60,000 points sign-up bonus
2x points on travel and restaurants
High APR and Annual fee
Check out the Chase Sapphire Preferred Card
The Chase Sapphire Preferred Card is an excellent all round option among the best credit cards for airline miles. For starters, the sign-up bonus offer includes 60,000 points after you spend $4,000 in the first three months (terms apply). Combine this with the 25% more value available on points when redeeming for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards, and that equates to $750 in travel rewards - more than offsetting what is a slightly inflated annual fee of $95. Great value can also be achieved by transferring points to one of 10 airline transfer partners on a 1:1 basis in order to make high-value redemptions, while other perks include earning 2x points on travel and dining at restaurants (1 point per $1 on all other purchases). The potential benefits are not in doubt, although an above average variable APR of 15.99%-22.99%, depending on your creditworthiness, means you must be sure that you will make the most of them.
- Also consider: the Delta SkyMiles Gold American Express Card that offers 35,000 bonus miles after spending $1,000 in purchases in your first three months of membership.
Student credit cards
The best student credit cards will not only offer low fees, 0% introductory rates and rewards, but are important in helping younger borrowers to begin building their credit history too.
To apply, you need to be over 18 years of age and can prove that you’re enrolled at college or university. Applicants under the age of 21 can expect to be asked to either prove their income – which could be earnings from a part-time job or a regular allowance - or have a co-signer on their application, typically a parent.
Conscious that students will likely only have an average credit score at best, card issuers typically counter the risk that students pose to them as a relative unknown by charging a higher-than-usual APR, and also limiting the amount that is allowed to be borrowed. Paying off your bill in full each month should therefore be the aim to avoid racking up interest, and to demonstrate your ability to manage your finances effectively.
An interest free introductory period can provide some welcome flexibility, particularly if you have a big-ticket purchase to make, while the best student credit cards will likely have no annual fee to pay either. Rewards typically take the form of points or cash back, while good grade programs offering statement credits can be a handy incentive to work that little bit harder too.
Discover it Student Chrome: Best student credit card
2% cashback at gas stations and restaurants
No late fee for first missed payment
$20 credit for each year GPA 3.0 or higher
Check out the Discover it Student Chrome card
With no annual fee, a six-month 0% introductory rate on purchases, and cash back and good grade rewards, Discover it Student chrome makes a great case for being the best student credit card around. The card offers 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, as well as 1% on any other purchases, while your total first year earnings will be doubled as part of its introductory offer. A $20 statement credit is also available each school year that your GPA is 3.0 or above. The card also forgives any initial repayment lapses, with a late fee not being applied on the first late payment. Paying late will also not result in a change in the APR, which is typically 14.49%-23.49% variable.
- Also consider: the Deserve EDU Mastercard for Students that offers 1% cash back on all purchases with no annual fee.
Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
All APR and interest rate figures are correct at the time of writing, as are all offers and bonus features listed.