Best Credit Cards in America – Here is how to search & find them
The easiest way to find the best credit cards in the market is to compare them.
Picking the right credit card for your needs appears to be a simple task, but often people are unaware of the associated pitfalls.
With a credit card becoming an essential requirement in life, we look at what you should consider before choosing one, and how picking the wrong option can result in higher fees and missing out on rewards and cashback options.
With so much riding what type of card to pick, one must first understand the different types of Credit Card Offers available in the market. Only after you understand the complete pros and cons of each offer, apply for a credit card.
Best Credit Cards Vs Best Credit Cards
A credit card is tied to how much money you plan to spend in the future, but your current spending habits will help you pick the one with the right interest rates. So, consider the amount you spend currently, and how it will rise in future when you have a family. A credit card is regarded as part of your credit history in any credit assessment.
Thus, you must form good credit card habits such –
- Opt for only a cover enough for you – Do not opt for higher credit ceilings as if left unused over a long period, it can contribute to a low credit score.
- Learn to Pay your Credit Card Bills on time – Like with any other loan, prioritise its payment as it is the most expensive loan you will ever take
- Do not lean back on “Revolving Credit” – Paying just the minimum amount due each month and carrying it over each month is called "Revolving credit". You can easily get charged up to 3 per cent per month on the outstanding amount. Thus, it is essential to pay these dues as soon as possible.
Find Credit Card offers you are more likely to qualify for without impacting your credit score
The Secret of CreditCards
Most people are not aware of the high-interest rate they must pay on outstanding balance carried from one month to the next. Even if you earn rewards on purchases made using a credit card, they are often much less than the interest that you have to pay on balance carried over, so look for other benefits such as – no annual fee. Also, a credit card issuer will allow you to choose between, paying a minimum amount every month or a percentage of the balance due, so compare these options.
How to choose a credit card
Tied to a card is a credit limit that the issuer allows you to borrow. Even if you have a credit limit that goes up to several thousand dollars, it is ideal that you do not exceed it.
As going over the credit limit will cause harm to your credit score. So, when choosing a card, make sure that you are comfortable with the credit limit and utilize about 10 to 30 per cent of it.
And Here is a secret,
Always compare credit cards available in the market to understand what is available.
How many Credit Cards should you have?
As per a survey by NerdWallet in 2019, an American household has an average credit card debt of $7,104. 10% of the people feel it might take them ten years or more to pay off this debt. While there is no magic number of how many credit cards to own, some experts feel it is beneficial to have two to three cards which can be used with having various due dates. You can transfer substantial debt from one card to another by paying off the dues of one card by another. This way, you can delay paying an actual debt by two months.
Sometimes using multiple cards – SUCCESSFULLY – i.e. without any pending debt, you can improve your debt-to-credit utilisation ratio and thus your FICO score.
However, another line of thinking is a more conservative one and encourages to have just one card.
What is APR on a credit card
Annual Percentage Rate or APR on a credit card is the annualization of your interest rate. This is used to calculate the interest rate on the outstanding balance on your credit card.
How to calculate credit card interest
To calculate the credit card interest, you need to be aware of Daily Periodic Rate (DPR) –
(Annual Percentage Rate) / 365 = Daily Periodic Rate (DPR)
DPR * Number of Days of Billing * Outstanding Balance = Interest Charged
Different Types of Credit Cards available in the Market
Credit Cards for Excellent Credit
The Best Credit Cards for Excellent Credit are available to those who meet “ a good credit score” which is 670-739 and 850 is the best as per Fair Isaac Corporation (FICO) – a data analytics company, California. One can enjoy lower insurance rates, loan approval, improved rental options and a ton of other features. Pay attention to your credit score.
Credit Cards for Fair Credit
Credit Cards for fair credit are best suited for people with credit scores ranging from 640 to 699. These people are either building credit from scratch or rebuilding their credit after mistakes. You need at least three years of experience using a credit card responsibly to get most fair-credit credit cards.
It is a starter credit card available even to applicants with limited credit exposure to credit cards. Thus, it is one of the ways to save money while building credit and assumes top priority until you have a good credit score to build a base. Many options are available with fewer entry barriers like an annual fee.
Business Credit Cards
Increase your firm's purchasing power and manage all business expenses with the best business credit cards. It can be used for travel expenses, utilities like fuel, insurance, electricity, for maintenance expenses, for office supplies, for vendor payments, for marketing expenses, and other miscellaneous costs. Interest-free credit period, record keeping, cashless purchases. Save time and effort with various benefits of business credit cards.
Credit Cards for Good Credit
Healthy Credit history is the core decision making criteria in these types of cards. Such cards are offered with lower rates, as the category of the customer is with good credit history. Points or benefits increase with the timely repayment of the outstanding.
The sign-up bonus is a welcome offer for a limited period. One can earn extra rewards with the credit card sign up bonus offers at the best return rates even with the lowest purchases. The bonus may be cashback, points, free hotel stay, free travel, merchandise or gift cards. One should consider the budget to pay off credit cards bills in full before applying for a credit card. Encash these offers wisely. No one wants to pay substantial interest charges on balance just because of some bonus. Before filling a credit card application, compare credit card features and then choose the best cashback credit cards.
Rewards Credit Cards
Two primary rewards cards are cashback and travel cards. One can redeem rewards for cash, shopping vouchers and travel. The best credit cards for travel usually give higher bonuses and rewards if you meet its higher spending requirements. A higher number of purchases brings a more top bonus. More than 60% of credit cards are offered with a rewards program.
Cash Back Credit Cards
If you are paying your credit card bills in full, every month, you can switch to cash back credit cards quickly. Cashback is very popular among online wallets. But you should note that credit cards have been offering cashback since its origin. Users can easily convert cashback points into statement cash credit. Every user will like a credit on their monthly statement. Cashback credit cards are always better than the rewards credit cards because the user can convert reward points into cash credit that can be used in bill payment.
Point Rewards Credit Cards
Use Credit Card for shopping, travel expenses, bill payments etc. and watch your credit card reward points add up. Points can be redeemed for merchandise, dining at restaurants, gift vouchers, products and discounts, worldwide.
Hotel Rewards Credit Cards
Such Cards are used majorly by entrepreneurs or executive class working for corporates. These customers prefer to stay in hotels for a Longer duration. Customers get benefits in terms of Points which shall help them during their next stay. Such cards are majorly used for paying hotel stay bills.
Credit Cards for Bad Credit
If one has a low credit score, it is difficult to get a regular credit card from banks, but don't panic. Still, one can obtain credit through credit cards for bad credit. But applicants with low credit scores cannot enjoy the same benefits as a regular credit cardholder. Before getting a credit card with a bad credit score, the person must prove that he can pay the bill quickly. Otherwise, lower chances of credit card approval. Various financial institutions provide the best credit cards for bad credit. Take time and search for the same.
Featured Credit Card for Bad Credit
Limited or No Credit History
Mortgage can be nearly impossible to qualify if you have no credit or limited credit history to check. Credit cards are considered the best ways to build a credit score. Make day to day purchases and increase the credit score by using cards wisely.
No Annual Fee Credit Cards
There is full availability of credit cards that offer abundant rewards, even without any annual charges. Best credit card features are getting low-interest rates, cashback offers, and rewards points, no annual fee cards, etc. One can have at least two credit cards from the different network so that available offers on purchases can be availed. But keep in mind your budget and ability to pay credit card bills so that you don't drop down the credit score.
Secured Credit Cards
If your credit history is not right, a secured credit card is the option for you. How secured Credit Cards work is by having the customer deposit some fixed cash as collateral against the credit card. If you stand good to keep your credit account deposit will be returned to you, but If you default on your credit card bills, the card issuer will maintain your deposit. In some cases, the card credit limit can be more than the security deposit. Mostly, the credit limit is equal to the security deposit.
Featured Secured Credit Cards
Student Credit Cards
The student credit card has a low credit limit, i.e. up to $15,000. The validity is five years. This keeps you away from any debt trap. College students are eligible to apply for the card. This card helps in building a good credit score provided you manage your credit card debts well. The best student credit cardoffers cashback, good reward points, and discounts so that students can save a lot of money. You can use student credit cards for enrolment for an online course, purchasing books, fuel, and more. Joining fees for a student credit card can be zero or lower as compared to other credit cards.
Travel Rewards Credit Cards
These Cards are for people who have a high frequency of travel, who spend a lot on travel and hotel. In such types of cards, you may get Reward points depending on the amount of travel expenses you accumulate. Photographers, Journalists, sales guys will have such kinds of cards.
Balance Transfer Credit Cards
This Card can be used by Customers who prefer to rotate funds without clearing the entire outstanding. Example if a customer has spent heavily on Card X, the customer can wisely delay the repayment by shifting the total payable amount to another Card Y just before the due date of Card X. Customers which are very systematic in approach and do not forget the due date can manage such cards well. Some of the customers carry 2 to 3 Balance transfer credit cards to just keep shifting the payable amount. Such cards should have lesser charges for a balance transfer.
0% APR Credit Cards
In these types of credit cards, you don't need to pay interest for a fixed period. These cards are useful when you make large transactions. However, be certain to read the terms and conditions in detail to understand them better.
While being an alert reader, you are certainly gathering information on various credit cards, their features and charges – read on to know more useful nuggets of information to understand the various uses and nuances of credit card usage.
- Did you know you could use credit cards for your business needs?
Yes, you read it right. While you still wait for your payments to roll in, you can use credit cards to pay off employees for a month or so and pay interest to keep the credit rolling. While it might not be a financially prudent way of sustaining, it is certainly a great stop gap arrangement. Look for cards which can give you discount on interest charged in the form of points or rewards for taking a card loan.
- No use of credit card?
It is very much possible that you got signed up for a card while shopping free of cost at a retail store and now you are wondering if it has any implications? Well – Yes and No. You will not be charged anything unless the sign-up contract says so – check the fine print. But it will certainly not affect your credit score if you are not interested in using the card. However, if you plan to apply for a mortgage later, ensure to close such unused credit as it shows unnecessary blocking of money someone else could be using. It might pull down your credit points for few months but as you keep working on making timely payments, your score will improve in few months’ time.
- Inquiry of Credit Score.
Credit rating companies interpret multiple inquiries of credit – “hard inquiry” as a negative point. A hard inquiry is defined as the initial due diligence done by lenders such as banks while evaluating on whether to give our loans to you or your business. Your consumer credit score is checked which shows up with small negative points in our overall score. One or few hard inquiries are nothing to worry about.
However, if you have multiple hard inquiries one after the other, the credit scoring algorithms are programmed to treat this as a anomaly and deduct points on these. A Hard inquiry of “hard pull” can be indicative of tough times of the owner. Thus, be careful of where your credit score is being pulled out and also how many times you apply for loans. Hard pulls stay on your credit report for a period of two years.
- Cards for Building Credit
It might seem like a dream but there are credit cards you can start using to build an initial credit history. If you are a student or a new jobber, there are various student cards or elf-builder cards which you can utilize to gain credibility. You can earn commission or cashbacks on spending as well and also create great credit history over the usage of few years or so.
- Know the components of your credit score?
So, this is an interesting tip for people to understand how to treat your credit card and what to do or not do. Credit Utilization o is simply how much of the credit allotted to you has been used. This ratio is an important one and makes up to 30% of your FICO score. That is a huge chunk of judgement on this bit of information. While credit card companies will always want to push more credit on your card if you are a regular spender – resist the temptation. It helps them to tempt you to spend more but may make your credit score go south. Always have 20% more than what you actually need as your credit limit.
The rest of your FICO score contains about 35% of your payment history .Other smaller factors are your credit history , length of your accounts, credit mix (what different types of debt do you hold). Also, how much credit do you still hold and how much have you taken out newly and how much is paid back.
Always keep an eye on your credit history every months and check if you are not signed up for unnecessary credit. Reduce your credit limits on cards if necessary.
- How many cards should I have?
Another most common question which people are confused about. If you have regular spending needs – Not habits or desires – choose cards which can give you cashback and rewards accordingly. So, if you are a traveller – choose travel-based cards to get maximum advantage. Atleast two cards from different issuers – each offering a different set of rewards should cover your bases. You can cover all your spending patterns.
Another way can be to compare different cards of the same issuer – and transfer the benefits accrued in one to another to avail a larger deal. Of course you would have to do a thorough research on various conditions and confirm with customer care while availing them.
Apart from these you can take two cards of different credit cycles and gain almost two months of free expenses if you pay the expenses borne on one card by another and you can get one more month to pay the bill on this card.
- How much of credit history is good?
As per FICO, the minimum amount of credit history needs to be at least six months before you can be considered credit worthy. You should have had at least one credit account to be considered. That means you should have either paid on one loan or taken out a credit card so you can show that you are handling a debt. Your FICO score will start getting generated only after six months if servicing a debt. Also, if you have old debt – more than 10 years old – it will not show up on your credit score. FICO accounts for only the last 10 years of debt used and serviced. Late payments and delinquencies remain on the credit score up to seven years.