Money Blog – By Kenneth Keith

Discover the Best Credit Cards for Your Lifestyle

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Kenneth Keith

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A recent report by Experian found that the average American holds 3.96 credit cards. With so many options, finding the right credit card can seem tough. But, there are many great credit cards out there. They offer rewards, sign-up bonuses, and benefits for different lifestyles.

Key Takeaways

  • Credit cards offer a range of rewards and benefits to match various spending habits and lifestyles.
  • The Chase Sapphire Preferred® Card, Capital One Venture X Rewards Credit Card, and The Platinum Card® from American Express are among the best overall credit card options.
  • Cash back credit cards like the Citi Custom Cash® Card, Blue Cash Preferred® Card from American Express, and Discover it® Cash Back provide strong earnings in popular spending categories.
  • Analyzing your specific spending patterns and lifestyle needs is key to identifying the credit card that will maximize your rewards.
  • Discover offers a variety of no-annual-fee credit cards with unique rewards structures and valuable benefits.

Types of Credit Card Rewards

Cash Back Rewards

Cash back rewards credit cards make it easy to earn money back on every buy. They usually give 1-2% cash back on all spending, with some offering more in certain areas. For example, you might get 3-5% cash back on groceries, gas, or dining. Cards like the Citi Custom Cash® Card and the Blue Cash Preferred® Card from American Express are popular choices.

The Citi Custom Cash® Card gives 5% cash back in the top spending area each cycle. The Blue Cash Preferred® Card offers 6% back at U.S. supermarkets up to $6,000 a year and 3% at gas stations and transit.

Travel Rewards

Travel rewards credit cards let you earn points or miles for travel costs. You can use these for things like flights, hotels, or rental cars. Cards like the Chase Sapphire Preferred® Card and the Capital One Venture X Rewards Credit Card give extra points or miles on travel spending.

Some cards also offer perks like lounge access, credits for Global Entry/TSA PreCheck, and elite status with partners.

CardRewards RateBonus CategoriesKey Benefits
Citi Custom Cash® Card5% cash backOn the top eligible spending category each billing cycleNo annual fee
Blue Cash Preferred® Card from American Express6% back at U.S. supermarkets (on up to $6,000 per year in purchases), 3% back at U.S. gas stations and on eligible transitGroceries, gas, and transit$0 introductory annual fee for the first year, then $95
Chase Sapphire Preferred® Card2X points on travel and diningTravel and dining$50 annual hotel credit, 25% more value when redeeming points for travel through Chase Ultimate Rewards®
Capital One Venture X Rewards Credit Card5X miles on flights and 10X miles on hotels and rental cars booked through Capital One TravelTravel$300 annual travel credit, Priority Pass airport lounge access, Global Entry/TSA PreCheck application fee credit

“With the right cash back or travel rewards credit card, you can earn significant value on your everyday purchases.”

Analyze Your Spending Habits

When picking the best credit card, look at how you spend money. Check out what you spend on groceries, gas, dining, travel, and online shopping. This helps you find cards that give the most rewards in your spending areas. For example, if you buy a lot of groceries, the Blue Cash Preferred® Card from American Express is a good choice. If you travel a lot, the Chase Sapphire Preferred® Card or Capital One Venture X Rewards Credit Card might be better.

Using digital tools and mobile banking can make this easier. Many banks have online platforms and apps that track your spending. They show you where your money goes, helping you save or earn more rewards.

The Spending & Budgeting Tool from Wells Fargo gives you charts to see your spending. Mobile apps from Capital One and Chase help you manage your money, build credit, and save on fees.

Understanding your spending helps you pick the right credit cards for you. This way, you can earn more rewards and spend less, reaching your financial goals faster.

Spending CategoryMonthly AverageBest Credit Card for Rewards
Groceries$500Blue Cash Preferred® Card from American Express (6% back at U.S. supermarkets)
Gas$200Chase Freedom Unlimited® (1.5% back on all purchases)
Dining$300Chase Sapphire Preferred® Card (2X points on dining)
Travel$800Capital One Venture X Rewards Credit Card (2X miles on all purchases)
Online Shopping$400Amazon Prime Rewards Visa Signature Card (5% back at Amazon and Whole Foods)

By looking at your spending and matching it with the right credit cards, you can get the most rewards. This makes your financial plan better and helps you save money over time.

Best Credit Cards for Cash Back

Cash back credit cards can really boost your spending power. Top picks include the Citi Custom Cash® Card, which gives 5% back in your top spending category each cycle (up to $500). The Discover it® Cash Back offers 5% back in certain categories and matches all your cash back in the first year. The Wells Fargo Active Cash® Card gives 2% cash back on all buys. These cards are great for earning cash back on daily spending without an annual fee.

Other great options are the Citi Double Cash® Card with 2% cash back on all buys, and the Apple Card with 2% back on Apple Pay and 3% at Apple and select stores. The PayPal Cashback Mastercard® offers 3% back on PayPal purchases and 1.5% on other buys.

CardCash Back RatesIntro OfferAnnual Fee
Wells Fargo Active Cash® CardUnlimited 2% cash back on all purchasesNone$0
Citi Double Cash® Card2% cash back on every purchase (1% when purchasing, 1% when paying off)None$0
Apple Card2% cash back on Apple Pay purchases, 3% on purchases at Apple and select merchantsNone$0
PayPal Cashback Mastercard®3% cash back on purchases made through PayPal, 1.5% on all other purchasesNone$0

When picking a cash back credit card, think about your spending and what you buy most. The right card can help you get the most rewards and cash back on your daily expenses.

Top Travel Rewards Credit Cards

Looking to boost your travel rewards? Two types of credit cards are key: general travel rewards cards and co-branded airline and hotel cards. Each has its own perks to make your travels better and help you collect valuable points or miles.

General Travel Rewards

General travel rewards cards, like the Chase Sapphire Preferred® Card and Capital One Venture X Rewards Credit Card, give you flexible points or miles. You can use these for many travel costs. They earn 2-5 points/miles per dollar on travel buys. Plus, you can move points to airline and hotel loyalty programs for more value.

These cards also offer perks. You might get annual travel credits, airport lounge access, and hotel elite status.

Airline and Hotel Co-Branded Cards

Co-branded cards, such as the United Quest℠ Card, IHG One Rewards Premier Credit Card, and The World of Hyatt Credit Card, are made for specific travel brands. They give you rewards and benefits for those brands. You earn more points or miles on buys with the airline or hotel.

They might also give you perks like free checked bags, priority boarding, and elite status. These cards are great for those who travel a lot with one airline or hotel.

“According to a NerdWallet study, 68% of American adults have a credit card that earns travel rewards.”

Choosing the right travel rewards credit card is key. Think about your spending, travel style, and the card’s benefits. Knowing the differences between general and co-branded cards helps you pick the best one for your needs.

Maximizing Rewards Categories

To get the most from your credit card rewards, know the bonus categories each card offers. For example, the Discover it® Cash Back card gives 5% cash back in certain quarterly categories. The Citi Custom Cash® Card earns 5% back in your top spending area each cycle. Use the right card for your buys to boost your rewards across various spending areas.

Many cards have great sign-up bonuses to increase your rewards. The Chase Freedom Flex® offers a $200 cash back bonus after spending $500 in the first three months. The Citi Custom Cash® Card gives a $200 cash back bonus after spending $1,500 in the first six months. The Capital One Quicksilver Cash Rewards Credit Card also offers a $200 cash bonus after spending $500 in the first three months.

Some cards are great for specific spending areas. The Blue Cash Preferred® Card from American Express gives 6% cash back at U.S. supermarkets up to $6,000 a year. The Citi Custom Cash card offers 5% cash back on your top spending area up to $500 a cycle and 1% on all else.

The Chase Freedom Flex card offers 5% cash back in activated bonus categories up to $1,500, then 1% after. The Citi Double Cash® Card gives 2% cash back on all buys — 1% when you buy and 1% when you pay it off.

To boost your rewards, use tools like Shop Through Chase for extra cash back on purchases. This adds to the bonuses you get from each card.

“Rewards credit cards offer a variety of rewards structures such as points, miles, or cash back, and the best credit cards provide high earning potential, competitive rates, and fewer common card fees.”

Annual Fees vs No Annual Fee Cards

When picking a credit card, think about the rewards and benefits versus the annual fees. Cards like the Chase Sapphire Reserve® and The Platinum Card® from American Express have high annual fees ($550) but offer great rewards and perks. These might be worth it for those who travel a lot or spend a lot.

On the other hand, cards like the Discover it® Cash Back and Wells Fargo Active Cash® Card don’t have an annual fee. They still offer good cash back or travel rewards. This makes them a good choice for those who don’t want to pay extra fees.

It’s important to think about how you spend money and travel to decide between these cards. Premium cards with high fees offer things like airport lounge access and travel insurance. But, they might not be a good deal for people who don’t travel often or don’t use all the card’s benefits.

CardAnnual FeeKey Benefits
Chase Sapphire Reserve®$550– 3X points on travel and dining
– $300 annual travel credit
– Priority Pass™ Select lounge access
– Global Entry/TSA PreCheck fee credit
The Platinum Card® from American Express$695– 5X points on flights and prepaid hotels
– $200 airline fee credit
– Lounge access (including Centurion Lounges)
– Global Entry/TSA PreCheck fee credit
Discover it® Cash Back$0– 5% cash back in rotating quarterly categories
– Dollar-for-dollar match of all cash back earned in the first year
– No annual fee
Wells Fargo Active Cash® Card$0– 2% cash back on all purchases
– $200 cash rewards bonus after spending $1,000 in the first 3 months
– No annual fee

Choosing between a card with an annual fee and one without should depend on your spending, travel, and what benefits you value. By looking at the pros and cons, you can pick a card that fits your lifestyle and financial goals.

credit card annual fees

Credit Score Requirements

The credit score needed for a credit card varies a lot. It depends on the card’s features and the issuer’s rules. Top rewards cards like the Chase Sapphire Reserve® and The Platinum Card® from American Express need excellent credit (scores of 750 or higher). But, cards for building or fixing credit, such as the Discover it® Secured Credit Card, have easier requirements.

Make sure to check the credit score range for any card you want to apply for. This ensures you have a good shot at getting approved. Knowing about the different credit score models and their ranges helps you see which cards you might get.

Credit Score Ranges

The main credit scoring models, FICO and VantageScore, have slightly different scales:

  • FICO Score: 300-850
    • Exceptional: 800-850
    • Very Good: 740-799
    • Good: 670-739
    • Fair: 580-669
    • Poor: 500-579
  • VantageScore: 300-850
    • Excellent: 781-850
    • Good: 661-780
    • Fair: 601-660
    • Poor: 500-600
    • Very Poor: 300-499

A credit score of 700 or higher is usually seen as good. It might get you most credit cards, including those with cash back and low APRs. But, the exact score needed can change a lot between different credit card companies and products.

Remember, credit scores are just one thing issuers look at when reviewing credit card applications. Your income, debt, and credit history also play a big role in your approval chances.

Credit Cards for Building Credit

Secured credit cards are great for those with not much or no credit. They need a refundable deposit, which sets the card’s limit. Using the card wisely, like paying on time and keeping balances low, can boost your credit score.

The Discover it® Secured Credit Card and the First Progress Platinum Prestige Mastercard® Secured Credit Card are top choices. The Discover it® Secured Credit Card has no yearly fee. It gives 2% cash back at gas stations and restaurants, up to $1,000 each quarter. Plus, it matches all cash back earned at the end of the first year.

When your credit gets better, you might move to an unsecured rewards card. It’s important to use your secured card well. Show you can make payments on time and keep your credit use low. This builds a good credit history for an unsecured card later.

Other ways to build credit with no history include using Experian Go™, Experian Boost™, and being an authorized user. A study by Experian® showed that Credit Builder card users saw an average FICO® Score increase of 30 points after about 8 months. This was from June 2022 to October 2022.

Using the right tools and strategies, people with limited or poor credit can improve their credit. This opens doors to better financial opportunities in the future.

Credit Cards with Special Benefits

Some credit cards offer more than just rewards. They come with perks like statement credits for travel or streaming, cell phone protection, and extended warranties. It’s important to check these benefits to see if they’re worth the annual fee.

The Chase Sapphire Reserve® gives you a $300 travel credit, access to Priority Pass lounges, and a credit for Global Entry/TSA PreCheck. The Amex Platinum Card® offers Uber credits, Saks Fifth Avenue credits, and more for your lifestyle.

CardSpecial Benefits
Chase Sapphire Reserve®
  • $300 annual travel credit
  • Priority Pass lounge access
  • Global Entry/TSA PreCheck credit
Amex Platinum Card®
  • Uber credits
  • Saks Fifth Avenue credits
  • Other lifestyle service credits

These perks can add a lot of value to your credit card. By looking at each card’s benefits, you can pick the ones that match your lifestyle and spending.

Redeeming Rewards Wisely

When you’re looking to use credit card rewards, make sure you’re getting the most from your points or miles. You can use them for travel, cash back, gift cards, or merchandise. But, the value of each option can change a lot. Knowing the best way to use your card’s rewards can help you make the most of them.

Getting the Most Value from Your Points

Using your points for travel like flights or hotels usually gives you the best value. Cards like the Chase Sapphire Preferred® and Chase Sapphire Reserve® offer a 25-50% bonus when you use their travel portal.

But, using points for cash back or gift cards might not be as valuable. Always compare the redemption rates to make sure you’re getting a good deal.

Redemption OptionAverage Value per Point
Travel (e.g., flights, hotels)1-2 cents
Cash Back0.5-1 cent
Gift Cards0.5-1 cent
Merchandise0.5-1 cent

For the best value, try to use your points for travel whenever you can. If you don’t have travel plans, save your points for later. This way, you’ll get a better deal.

The value of your rewards can change based on your card and how you use them. It’s key to know your card’s program details. With some research and careful planning, you can make sure you’re getting the most from your credit card rewards.

Managing Multiple Credit Cards

Using many credit cards can help you earn more rewards across different spending areas. But, it’s key to handle them well to avoid problems like missing payments or high credit use. Setting up automatic payments, tracking your spending, and checking your credit reports often can keep your credit in good shape. Also, picking cards with no annual fees or waived fees in the first year can save you money.

Keeping your credit cards organized is crucial. You can use personal finance apps, spreadsheets, or lists to keep track of balances, due dates, rewards, and fees. Assigning each card to a specific spending area can help you earn more rewards and make budgeting easier. It’s wise to only carry the cards you use often to lower the chance of losing or having them stolen.

Checking your credit card statements regularly and setting up alerts for transactions can help prevent fraud. Staying on top of your payments is key, and autopay can help you pay on time. This keeps your credit score healthy and lets you use more credit without hurting your credit use ratio.

TipBenefit
Organize your credit card accountsTrack balances, due dates, rewards, and fees
Assign spending categories to each cardMaximize rewards and simplify budgeting
Carry only frequently used cardsReduce risk of loss or theft
Set up autopayEnsure timely payments and maintain a healthy credit score

By using these tips, you can handle multiple credit cards well and enjoy their perks. This includes earning rewards in various spending areas and building a strong credit profile. Remember, using credit cards wisely is crucial to getting the most out of having several cards.

Bankrate: Stay Organized with MultipleCreditNerdWallet: How to Stay Organizedwith Multiple CreditCNBC Select: How to ManageMultiple Credit

The Impact of Credit Card Interest

Earning credit card rewards is great, but remember, interest can erase those rewards quickly. With an average interest rate of about 16%, carrying a balance can be expensive. To get the most from your rewards card, pay off your balance every month. This way, you won’t pay interest and won’t get into debt.

In 2022, credit card companies charged over $105 billion in interest. This shows how costly credit cards can be. The average APR almost doubled from 12.9 percent in 2013 to 22.8 percent in 2023. This is the highest level since 1994.

About half of the APR increase came from issuers raising their profit margins. This now stands at 14.3 percent for revolving accounts. The impact of credit card interest is huge. In 2023, the average cardholder might have paid over $250 in extra interest fees.

YearAverage APRAPR MarginAdditional Interest Fees
201312.9%10.0%–
202322.8%14.3%$25 billion

To avoid the high cost of credit card interest, pay off your balance every month. This way, you keep the value of your rewards and stay financially healthy. Remember, managing your credit card well means avoiding debt.

Avoiding Credit Card Debt

To avoid credit card debt, it’s key to have good financial habits. Start by making a budget and tracking your spending. Only charge what you can pay back each month. This way, you can enjoy rewards without high-interest debt.

Limiting the number of credit cards you use is also smart. Too many cards can lead to overspending. Try to keep your credit use below 30% of your total credit to keep your credit score healthy.

If you’re carrying a balance, look into a balance transfer card with a 0% APR. This can help you pay off debt faster and avoid high interest. Credit card APRs can be between 15% to 20% or more, making it hard to pay off debt quickly.

It’s also important to save for emergencies. Aim to save three to six months of income for unexpected costs. This can prevent you from using high-interest credit cards when you need money fast.

Staying disciplined with your finances is the best way to avoid credit card debt. With a budget, spending tracking, and fewer credit cards, you can enjoy rewards while keeping your debt low.

Strategies to Avoid Credit Card DebtBenefits
Create a detailed budget and track spendingHelps you stay within your means and identify areas where you can cut back
Limit the number of credit cards you have openReduces the risk of overspending and makes it easier to manage payments
Consider a balance transfer card with a 0% introductory APRAllows you to pay down existing debt more efficiently and avoid high-interest charges
Build an emergency fund with 3-6 months of net incomeHelps you cover unexpected expenses without relying on credit cards
Maintain a credit utilization ratio below 30%Keeps your credit score healthy and demonstrates responsible credit usage

By using these strategies and good financial habits, you can enjoy credit card rewards without high-interest debt. Remember, success comes from discipline and a long-term financial plan.

“The top reasons people get into credit card debt are predictable due to three common mistakes: overspending, not tracking expenses, and failing to pay their balances in full each month.”
– Beverly Anderson, President of Global Consumer Solutions at Equifax

Conclusion

Choosing the best credit card means looking at how you spend, your credit score, and your financial goals. You might want to earn cash back, get travel rewards, or improve your credit. There are many credit cards out there that can help you achieve these goals.

It’s important to use your credit card wisely. Pay off your balance every month to avoid extra charges and keep your credit score healthy. With smart credit card use, you can earn rewards and stay financially responsible.

Think about how you spend and what you want to achieve with your credit card. Whether it’s cash back, travel perks, or building credit, there are many options. By picking the right card and using it wisely, you can make the most of your credit cards and improve your financial future.

FAQ

What are some of the best overall credit card options?

Forbes Advisor recommends the Chase Sapphire Preferred® Card, Capital One Venture X Rewards Credit Card, and The Platinum Card® from American Express. These cards offer great rewards on travel, dining, and everyday purchases.

What are the different types of credit card rewards?

Credit cards have two main types of rewards: cash back and travel rewards. Cash back rewards give you money back on purchases, earning 1-2% on all spending. Some cards offer more, like 3-5% cash back in certain categories.

Travel rewards let you earn points or miles for travel expenses like flights, hotels, and car rentals.

How can I determine the best credit card for my spending habits?

Look at where you spend the most, like on groceries, gas, dining, travel, and online shopping. This helps you find cards with the highest rewards in those areas.

What are some of the top cash back credit cards?

Top cash back cards include the Citi Custom Cash® Card, which gives 5% back in your top spending category each billing cycle. The Discover it® Cash Back offers 5% back in rotating categories. The Wells Fargo Active Cash® Card gives 2% cash back on all purchases.

What are the top travel rewards credit cards?

The Chase Sapphire Preferred® Card and Capital One Venture X Rewards Credit Card are great for travel rewards. They offer points or miles for various travel costs. Co-branded cards like the United Quest℠ Card and IHG One Rewards Premier Credit Card give rewards for specific travel brands.

How can I maximize my credit card rewards?

To get the most from your rewards, know the bonus categories each card offers. Use the right card for your spending to earn more rewards across different areas.

Should I choose a credit card with an annual fee?

Consider the rewards and benefits against the annual fee. Premium cards with high fees can offer great rewards and perks for frequent travelers or big spenders. No-annual-fee cards also provide good rewards without the extra cost.

What credit score is required for the best credit cards?

Credit scores needed vary by card and issuer. Premium cards often require excellent credit (750 or higher). Cards for building credit may have lower score requirements.

What are some credit cards for building credit?

Secured credit cards are great for building credit. They require a deposit that becomes your credit limit. Using them responsibly can improve your credit score over time.

What special benefits do some credit cards offer?

Some cards offer extra benefits like statement credits for travel or streaming, cell phone protection, and extended warranties. Reviewing a card’s benefits can help decide if the perks are worth the annual fee.

How can I get the most value when redeeming my credit card rewards?

To get the most from your rewards, redeem for travel expenses like flights or hotels. Cards like the Chase Sapphire Preferred® and Chase Sapphire Reserve® offer a 25-50% bonus when using the travel portal.

How can I effectively manage multiple credit cards?

Use multiple cards to earn rewards across different spending areas. Manage them with automatic bill payments, spending tracking, and credit report reviews. Choose cards with no annual fees or waived fees to keep them open without extra costs.

How does credit card interest impact the value of rewards?

Remember, interest on unpaid balances can erase any rewards you earn. Pay your balance in full each cycle to avoid interest. Responsible use ensures you enjoy your rewards without debt.

What strategies can help me avoid credit card debt?

Avoid debt by budgeting, tracking spending, and only charging what you can pay off. Consider a balance transfer card with a 0% APR to pay down debt faster. Limiting your open cards can also prevent overspending.

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