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Which Credit Card Is Best for You?

Last Updated: September 25, 2024

14 min read

Table of contents

Why choosing the right credit card matters

Identifying your financial goals

Exploring types of credit cards

Best credit card rewards for you

Other factors to consider

What are your spending habits?

How to compare credit cards effectively

Applying for the best credit card for you

Key points:

The best credit card for you depends on many factors, including your financial goals, spending habits, and credit score.
Rewards credit cards are popular because you earn miles or cash back on each eligible purchase.
When you apply for multiple credit cards at once, it could hurt your credit score and make you appear as a risk to potential lenders.

If you’re looking for a new credit card, it’s easy to get overwhelmed by your options. Each credit card company usually offers a range of cards with various features, perks, and rewards, but there are often limitations as well. Many credit cards incentivize you to use them by offering cash back rewards or miles on eligible purchases.

If you have a good credit score, you might want a card with a high rewards rate. Other credit cards may be better options for those with a short credit history or a bad credit score.

It’s also important to consider how you’ll use your card. For some people, cards that offer an intro 0% APR at account opening can save money. Or, you may prioritize cards that don’t charge a foreign transaction fee on international purchases if you travel often. Understanding these differences can help you find the best fit for your current financial needs and your future goals.

Why choosing the right credit card matters

Credit cards aren’t one-size-fits-all. Ideally, a credit card encourages you to maintain healthy credit habits, has interest rates and fees you can afford, and offers you the perks you’re looking for. The best credit card for a student who doesn’t have a credit score may not be the best for someone in the middle of their career who wants to get more out of their credit card. Finding the best fit could help you avoid a situation where you struggle to manage your credit card debt and may even help you improve your credit score.

Plus, you’re more likely to use a credit card regularly if it offers rewards and features that you like. That’s important because credit card companies may close inactive accounts, which could impact your credit score. A card that aligns with your financial goals and fits your budget could add value to your wallet and improve your overall financial health.

Identifying your financial goals

To find the best fit, consider why you want a credit card. Credit may give you a little more financial flexibility by helping you manage your cash flow.

But how would a credit card fit into your overall financial life? To answer that question, consider your current circumstances and your ultimate goals. One way to find the right fit is by evaluating your card options based on how they may help you reach those goals.

Building credit history

Your credit history impacts your eligibility for not only credit cards but also an apartment rental, mortgage, personal loan, and more. If you have a limited credit history (or none at all), you may not qualify for some credit cards with rewards programs or high credit limits. However, some cards are designed to help you develop healthy credit habits and build your credit history. These credit cards may have more lenient eligibility requirements so people with bad credit can access them.

Improving credit scores

Like having no credit history, a low credit score could make it difficult to qualify for loans, apartments, or even some jobs. The right credit card may help you rebuild your credit score over time with responsible use. You may be able to find a credit card that doesn’t require a credit score. Paying your bill on time each month and keeping a low credit utilization ratio (the percentage of available credit you’re using) could improve your score over time.

Earning rewards

What if you have consistent spending patterns? In that case, you might want a credit card with more benefits. Credit card issuers offer cards with a wide range of rewards—you could choose the best fit for your budget, shopping habits, and interests.

Travel benefits

Frequent travelers often seek out a specific type of rewards credit card—a travel rewards credit card. In addition to rewards like miles, some branded travel cards offer perks like airport lounge access or priority boarding.

Exploring types of credit cards

With so many credit card options to choose from, how do you narrow your search? Understanding all the varieties of credit cards available could help you identify the best choice to meet your financial goals. The following are some of the common types of credit cards you may encounter.

Cash back credit card

A cash back credit card is a popular type of rewards card. With a cash back credit card, you earn a percentage of all eligible transactions back as cash rewards. Some cash back rewards cards offer the same flat rate across all purchases. Others offer extra perks in specific categories, like groceries. If you want to earn more on various purchases, you might opt for a cash back card with rotating bonus categories.

With the Discover it^® Cash Back Credit Card, for example, you earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.

Student credit card

Students may qualify for a student credit card. Card issuers’ requirements may vary, but you must show that you’re at least 18. Other requirements might include showing a consistent income and that you attend school at least part-time. Money left over from grants, scholarships, or student loans, and some types of regular allowance from loved ones may count toward that income (in addition to pay from employment). If you’re over 21, your spouse’s income may also count. Student credit cards may come with features to help cardmembers improve financial literacy, as well as tools like alerts and reminders to foster good credit habits as you build credit history.

Secured credit card

If you have a limited credit history or would like to improve your credit score, a secured credit card may be a good fit.

Secured credit cards require cardmembers to deposit a sum of money that’s typically equal to the card’s approved credit limit. You can use secured credit cards to make purchases like any other credit card. The activity on secured cards shows up on your credit report. You may be able to improve your credit with responsible credit habits, like making at least your minimum payment each month. If you miss payments or don’t repay your balance, your secured card issuer could apply your deposit to the outstanding amount and close your account.

With responsible use, you may be able to receive your deposit back and upgrade a secured card to an unsecured card. For example with Discover, after 7 months, we begin automatic monthly account reviews to see if you qualify to upgrade to an 'unsecured' card and get your deposit back.¹

Credit card prequalification could help you understand what cards you may qualify for—without damaging your credit score. After you complete a brief form, credit card issuers show you offers with basic requirements that you meet.

See if you’re pre-approved

Best credit card rewards for you

Rewards programs are often a key factor in people’s credit card decisions. Each credit card rewards program may vary significantly in how you earn and redeem rewards. Understanding the basics could help you find a rewards credit card that brings the most value to your financial life.

Types of credit card rewards

Cash back: With cash back credit cards, you may earn a percentage of all eligible transactions back as cash. You could redeem cash rewards as a statement credit or a deposit in your bank account. Some cash back programs offer more in certain categories.
Points: Some credit card issuers offer one or more “reward points” per dollar spent on eligible purchases. Like cash back, you may earn more in certain categories. Redemption options vary across card issuers.
Travel miles: Branded airline credit cards and travel reward cards typically allow you to earn miles as you shop. The value of those miles varies depending on the travel rewards credit card issuer and airline, but typically you can redeem them for flights and other travel-related purchases.

Redemption options

If you want to earn rewards with your credit card, you should also consider how you’d like to redeem those rewards. You can often redeem cash back or points as statement credits or bank account deposits. However, some credit cards may let you use your rewards to make a charitable donation, shop from select retailers, or buy a gift card.

Travel credit cards are sometimes more restrictive. With the Discover it^® Miles Credit Card, you have more flexibility. Easily redeem Miles as a statement credit for travel purchases or get cash.²

It's also a good idea to check reward expiration dates. At Discover, rewards never expire.³ Other credit card companies may require you to redeem your rewards within a set timeframe or risk losing what you’ve earned.

Other factors to consider

While credit card types and rewards programs often play an important role in the credit card decision-making process, your considerations shouldn’t end there. Some other factors might influence the value you get from your credit card and how you use it.

Introductory APR

Your annual percentage rate, or APR, determines how much interest you’ll pay on your credit card balance. If you typically pay off your card in full every month, you may not have to worry about APR. However, if you tend to carry a balance, a card’s interest rate could significantly impact the amount you end up paying.

Many credit card issuers offer an introductory period with low or even no APR when you first open an account. That means you won’t owe as much interest on any eligible purchases you make during the card’s introductory period. This could help you save, especially if you need to make a major purchase during that time. But, to save money, you have to repay your balance in full before the introductory period ends. Otherwise, you’ll have an interest charge—which may be a higher rate than what you had before—on the remaining balance once the intro period expires.

Fees

Although Discover cards have no annual fee, other credit cards may charge an annual fee. This is the amount you pay yearly to keep your account open, regardless of how much you purchase on the card.

When you compare credit cards and rewards, make sure that the value of the rewards you’ll receive is higher than the cost of the annual fee. If you opt for a particular bank credit card or rewards card, you could be surprised at the amount of the annual fee associated with that card. Other fees to look out for include a foreign transaction fee (Discover has no foreign transaction fee) and cash advance fee.

A low balance transfer rate

If you’re struggling to manage the balance on a credit card with a high interest rate, a balance transfer may offer you some relief. You may be able to complete a balance transfer by opening up a credit card and transferring your balance. However, in order to lower your payments, it’s important to find a card that offers a low introductory APR on balance transfers. If you're transferring a large balance, you may find the best option is to have an extended introductory period to give you more time to pay off the balance. Just remember that many balance transfer offers include a balance transfer fee.

Online and mobile banking

According to the Office of the Comptroller of the Currency, online banking refers to a platform on a financial institution’s website that allows you to handle certain transactions and access account information. Look for a card with online resources such as interactive financial calculators to help you manage your budget, track spending, and plan purchases. If you use your credit card to make your bill payments, you may appreciate the convenience of following all your transactions in one place online. Many cards also come with a mobile app, which adds even more convenience. Some may even offer a virtual card, which you could use for online purchases without a physical card.

Payment tools

Paying on time is essential to maintain a good credit standing. As you consider a card, consider the tools available to help you manage your due dates. Find out if you can change a payment due date to one that works better for you, schedule payments in advance, and make a payment free of charge online or by phone. You may also be able to set up automatic payments to help ensure you never miss a due date and incur a late charge.

What are your spending habits?

The best credit card for you should fit seamlessly into your routine. As you look at your card options, ask yourself what you tend to spend money on, where you tend to shop, and how you manage your monthly budget, and consider how you might plug a credit card into these spending habits. With the right card, you could earn rewards on your most frequent purchases or perks at your favorite stores.

For example, someone who drives often might exclusively use a gas rewards credit card every time they fill their tank. Because fuel costs are already part of their budget, they can easily repay their balance each month and enjoy the rewards. If you’re looking for gas rewards, consider the Discover it^® Chrome Gas & Restaurant Credit Card, which offers 2% Cashback Bonus^® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically.⁴

Watch for special promotions, merchant tie-ins, and reward offers or incentives that can add even more value to your credit card.

How to compare credit cards effectively

Once you’ve established your priorities, researched credit card offerings, and narrowed your options, you can compare your top credit card picks. Some online platforms allow you to compare several cards from different credit card companies at once. However, you might also want to build your own checklist based on your unique financial circumstances, budget, and desired credit card features. That way, you can easily focus on your top priority—whether you want to earn the most rewards, improve your credit score, minimize fees, or something else.

The Truth in Lending Act requires credit card issuers to provide information on a card’s APR, fees, and rewards programs to potential applicants (and all consumers) before they apply for a credit card. So, make sure you’ve reviewed all the information available before you apply.

Did you know?

Some credit card issuers make it easy to compare credit card options online. With Discover, you can identify your top choice and see how it stacks up against leading competitors.

Compare

Should you apply for more than one credit card?

For some consumers, having multiple open credit card accounts at once might make sense. For example, you might want one card for everyday spending and another for travel. Plus, multiple credit cards mean multiple credit limits. More available credit could help you maintain a low credit utilization ratio, which plays a key role in calculating your credit score.

However, it’s typically not a good idea to apply for several credit cards at the same time or within a short period. Each time you apply for a new card, the credit card issuer usually conducts a hard credit inquiry. Hard inquiries can impact your credit score. They may also appear on your credit report for up to two years.

If you only apply for one credit card, you may be able to quickly offset the impact to your score with responsible credit habits. But multiple hard credit inquiries within a short timeframe may make lenders view you as a risky borrower. This may do more damage to your score and make it hard to qualify for credit.

Applying for the best credit card for you

Once you’ve compared credit card types, rewards programs, assessed the pros and cons of your top picks, and identified the right choice for your financial goals, you can finally apply for your credit card.

While applying online is the most convenient option for most people, you can also complete your application in person at a financial institution’s local branch or over the phone. You typically must provide some personal information, like your name and Social Security number, as well as information on your financial circumstances (like your income and housing costs). Approval times vary, but sometimes you may have an answer within minutes.

If the card issuer approves your application, you should receive your credit card in the mail soon after. Your card should come with a credit card agreement. The Consumer Financial Protection Bureau explains that a credit card agreement details both the consumer’s and the credit card company’s legal obligations once the account opens, as well as relevant pricing information. It’s important to read and understand the documentation to get the most out of your card and avoid damaging your finances and credit as you begin using your new card.

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