Choose the best credit card in 5 simple steps

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Finding the right credit card can feel overwhelming, especially with so many different types to choose from.

It's important to think about your financial goals, spending habits, credit score, and the specific features you're looking for in a card.

The card you want will depend largely on your credit profile and the reason you want a card in the first place. Following these five steps can help you narrow down your options.

1. Check your credit score

The first step to finding the best credit card is to check your credit score. Knowing your score beforehand helps you understand your creditworthiness. This helps you determine the type of cards you are eligible for and the interest rates you may qualify for.

There are a few ways to check your score.

• You can get a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) via AnnualCreditReport.com.
• Some card issuers offer free access to your credit score in your online account or monthly statements.
• There are also online platforms, like Credit Karma or Experian, provide free credit monitoring services.

Once you know your score, you can figure out where you stand. Your score is calculated based on information in your credit report. This includes your payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries.

FICO credit scores are the most common type of credit score used by lenders. Scores range from 300 to 850. Higher scores generally signal better creditworthiness and lower risk to lenders.

• Excellent: 800+
• Very good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 579 and below

If your credit score is very good or excellent, you'll have a good shot at getting approved for the best credit cards out there. These cards often allow you to accumulate rewards faster and come with added perks like airport lounge access. A lower score may result in limited card options, higher interest rates, or even denial. Depending on your score, you may have to start with cards designed for those with poor credit.

2. Decide what type of card you want

Next up, you need to figure out why you want a credit card in the first place. Are you hoping to earn rewards for your spending? Do you want to consolidate debt from other credit cards? Do you need help building credit?

These questions will help you align your needs with different cards' specific features and benefits. Here are some common types of credit cards to consider.

Rewards credit cards

With these cards, you earn points for every dollar you spend. You can redeem these points for various rewards, such as travel, merchandise, gift cards, or cash back.

Rewards cards may provide more points for specific categories (like dining, groceries, or travel). For example, the popular Chase Sapphire Preferred® Card offers 5X points on travel booked through Chase Ultimate Rewards, 3X points on dining, select streaming services, and online grocery purchases, and 2X points on all other travel purchases.

Travel credit cards are a type of rewards card designed for frequent travelers. You can use points for flights, hotel stays, car rentals, or other travel-related expenses.

Some travel cards have partnerships with specific airlines or hotel chains. You can earn bonus points or enjoy exclusive benefits when using those partners.

Cash back credit cards

With this credit card, you earn a certain percentage of cash back, ranging from 1%-5% of the total purchase amount.

Some cash back cards offer higher rewards for certain spending categories, such as groceries, gas, or dining. Depending on the card issuer, you can redeem your rewards as a statement credit, deposit into your bank account, or for other purposes.

Cash back cards are a good option for those who prefer straightforward rewards and want to earn money back on their everyday spending.

Unlike other rewards cards that may restrict how you can redeem points, you can use cash back rewards however you want, whether to offset your credit card bill, save for future purchases, or treat yourself to something special.

Secured credit cards

If you have poor credit or haven’t established a credit history, you may want to consider a secured credit card.

These cards require a security deposit that serves as collateral. The deposit amount often determines the credit limit on the card.

Secured credit cards work like traditional credit cards. You can make purchases using the card, and you’re required to make regular monthly payments. These payments help establish a positive payment history which can improve your credit score over time.

Most secured credit cards don’t offer rewards, but some do. For example, the Capital One Quicksilver Secured Cash Rewards Credit Card offers 1.5% cash back on general purchases and 5% cash back on hotels and rental cars booked through Capital One Travel. You’ll need a cash deposit to open this card.

Secured cards are best for those trying to build or rebuild their credit. Responsibly managing a secured card shows creditworthiness to lenders, increasing the chance of getting an unsecured card in the future.

Balance transfer credit card

With a balance transfer credit card, you can transfer the outstanding balance from one (or multiple) credit card onto the new card. The purpose of these cards is to consolidate debt and save money on interest payments.

Most balance transfer cards have an introductory period with a low or 0% interest rate, ranging from 6 to 24 months. During this period, you can focus on paying off the balance without accruing high interest charges.

Balance transfer cards often charge a balance transfer fee, a percentage of the total transferred amount. But the fee may be worth it if you can save enough on interest.

It's essential to have a repayment plan when using a balance card. After the introductory period, any remaining balance will accrue interest at the regular rate, which varies by the card issuer.

3. Find the card that offers you the most value

Once you figure out the type of credit card you want, you can narrow your list of options to cards that give you the most bang for your buck.

Here’s how to get the most value from your card, depending on the type.

How to make the most of a rewards credit card

• Understand the rewards structure: Familiarize yourself with how you earn points or miles. Focus your spending on categories that offer higher rewards.
• Take advantage of bonuses: Many rewards cards offer a bonus if you spend a certain amount within the first couple months of having the card. Aim to apply for cards with attractive introductory offers.
• Maximize redemption: Look into the best ways to redeem your rewards, whether for flights, hotel stays, or cash back.
• Keep an eye on expiration dates: Some rewards have expiration dates, so make sure you use them before expiration.

How to make the most of a cash back credit card

• Maximize bonus categories: Find a card offering higher rewards for the categories you spend in, like groceries or gas. Concentrate your spending in those areas to earn more cash rewards.
• Track rotating categories: Some cash back cards have bonus categories that change every quarter. You can adjust your spending to earn higher rewards.
• Redeem strategically: Determine the best way to redeem your cash rewards, whether via statement credits, direct deposits, or gift cards.

How to make the most of a secured credit card

• Use responsibly: Make timely payments and keep your credit utilization low to build a positive credit history.
• Slowly increase your credit limit: Some secured cards can increase your credit limit, based on responsible card usage.
• Review credit score: Check your credit score and credit reports to track your progress and identify areas for improvement. With a positive credit history, you may be eligible for unsecured credit cards with better terms and benefits.

How to make the most of a balance transfer credit card

• Look for a solid introductory APR: Choose a card that offers a lengthy introductory period with a low or 0% interest rate on balance transfers.
• Calculate the fee: Review the balance transfer fee and assess if the potential interest savings outweigh the fee.
• Create a repayment plan: Take advantage of the introductory period and avoid accumulating interest.

4. Consider bonus perks & features

Besides rewards and functionality, you'll also want to consider which perks your credit card offers.

For example, bonuses, such as sign-up bonuses or introductory offers, can boost your rewards or savings right from the start. Perks like airport lounge access and concierge services can make your travel experience more enjoyable. Added features, like mobile apps, budgeting tools, or personalized alerts, can help you manage your finances more effectively.

It’s worth noting that cards with the most perks tend to charge higher annual fees. The key perks and features you should look for include:

• Sign-up bonuses
• Introductory 0% APR
• Enhanced bonus categories
• Anniversary bonuses
• Purchase protection
• Extended warranties
• Cell phone protection
• Travel insurance
• Concierge services
• Elite status with hotels
• Hotel upgrades
• No foreign transaction fees
• Airport lounge access
• Annual travel credits
• Priority boarding
• Complimentary checked bags
• Fee credits for Global Entry or TSA PreCheck membership
• Exclusive events

The cards in your final list should offer some of the perks you want and ones you can actually use. If a card charges an annual fee, it’s important to make sure the benefits are worth more to you than the fee.

5. Review offers & apply

At this point, you’ve selected a card that’s right for you. Before you apply, make sure to read the fine print, including the terms and conditions of the card. Pay attention to penalties, interest rates, and any restrictions or limitations.

Also, review the eligibility criteria, such as income and credit score. Ensure you’re applying for a card you’ll most likely get approved for.

Why? When you submit a card application, the issuer will perform a hard inquiry on your credit report, which can temporarily lower your score. Many inquiries or rejections can signal to future lenders that you may be financially stressed or have a higher credit risk.

Once you've found a card that suits your needs, visit the issuer's website to begin the application process. After submitting your application, the card issuer will review it. This process may take a few days to a few weeks. If approved, you will receive your credit card in the mail.

The bottom line

The best credit card for you is one you’ll use regularly and responsibly. Your best bet is shopping, comparing offers, and finding a card matching your spending habits.

Once you receive your credit card, make sure to start off on the right foot by using your card responsibly. Make payments on time and keep your credit utilization low. Remember, managing your credit responsibly is crucial to avoid debt and maintain a good credit score.

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.