The best credit cards offer lucrative welcome bonuses, outstanding rewards programs, and more. While there’s no one-size-fits-all approach to finding the best credit card, we’ve selected some top contenders that have exceptional features.
Whether you’re looking to build credit, save money on interest, or offset the cost of an upcoming vacation, the cards below are great additions to your wallet.
Erika Kullberg's Favorite Credit Cards
- Best for first-time cardholders: Chase Freedom Unlimited®
- Best for dining and entertainment: Capital One SavorOne Cash Rewards Credit Card
- Best for frequent travelers: Chase Sapphire Reserve®
- Best for rotating cashback: Discover it® Cash Back Card
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Best for First-Time Cardholders: Chase Freedom Unlimited®
- Rewards rate: 5% cashback on travel through Chase Ultimate Rewards®; 3% on restaurants and takeout; 3% at drugstores; 1.5% on all other purchases
- Welcome offer: $200 bonus after you spend $500 in the first 3 months from account opening
- Annual fee: $0
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If you’re looking for your first credit card, the Chase Freedom Unlimited® is a good place to start. This is a great choice for covering everyday expenses and can help young adults without a credit history to establish credit — and there's no annual fee.
With this card, you earn 5% on travel purchased through Chase Ultimate Rewards, 3% on restaurants and takeout, 3% at drugstores, and unlimited 1.5% on all other purchases.
It also offers a welcome bonus of $200 after you spend $500 in the first three months from account opening.
Points can be redeemed through the Chase Ultimate Rewards portal or applied as a statement credit on your balance. There are other perks you can access too, like trip cancellation insurance and travel assistance services.
The interest-free intro period, sign-up bonus, and rewards structure make this a good card for someone just getting started with credit cards. The main drawback is that the card’s reward structure can be difficult to keep up with as some categories earn at different rates than others.
Learn more about the Chase Freedom Unlimited®.
Best for Dining and Entertainment: Capital One SavorOne Cash Rewards Credit Card
- Rewards rate: 5% cashback on hotels and rental cars booked through Capital One Travel; 3% on dining, entertainment, select streaming subscriptions, and grocery store purchases (excluding superstores); 1% on all other purchases; 10% on Uber and Uber Eats purchases (through Nov. 14, 2024); 8% on Capital One Entertainment purchases
- Welcome offer: Earn $200 after spending $500 in the first three months
- Annual fee: $0
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If you find yourself regularly dining out, the Capital One SavorOne Cash Rewards Credit Card is good to have in your wallet. It rewards you for dining and entertainment and the points you earn from this card can even be used to pay for future nights out.
Frequent diners and homebodies earn unlimited 3% cashback on dining, entertainment, popular streaming services, and grocery stores. All other purchases earn 1% cashback.
If you're a concertgoer or sports fan, you can earn even more. SavorOne offers 8% cashback on Capital One Entertainment Purchases and you get exclusive presale access to popular shows.
You can also earn a $200 cash bonus after spending $500 in the first three months.
Learn more about the Capital One SavorOne Cash Rewards Credit Card.
Best for Frequent Travelers: Chase Sapphire Reserve®
- Rewards rate: 10x points on hotel stays and car rentals through Chase Travel℠; 5x points on dining purchases through Chase Ultimate Rewards and on Lyft purchases (through March 2025); 5x points on flights booked through Chase Travel℠ (after the first $300 is spent on travel purchases annually); 3x points on restaurants and travel; 1x points on everything else
- Welcome offer: Earn 60,000 points after spending $4,000 in the first three months
- Annual fee: $550
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For frequent fliers, the Chase Sapphire Reserve® is arguably the best travel card on the market. Currently, you can earn 60,000 points after spending $4,000 in the first three months. This is in addition to a $300 annual travel credit.
Points are earned through different tiers of rewards. Hotel reservations and car rentals booked through Chase Travel℠ and dining booked through Chase Ultimate Rewards earn 10x points, while flights booked through Chase Travel℠ earn 5x points (after earning a $300 travel credit). All other travel and dining purchases earn 3x points (again, after earning your $300 travel credit).
The Chase Sapphire Reserve also gives you boosted redemption value when booking travel through Chase Travel℠ — your points are worth 50% more.
This card does come with a pretty hefty annual fee of $550, but many benefits make it worth the fee for the right cardholder. You’ll get access to more than 1,300 VIP airport lounges worldwide. This includes the new Chase Sapphire Lounges. You’ll also get up to $100 statement credit every four years to put towards your application for TSA PreCheck or Global Entry.
If you don’t travel enough to reap the full rewards of this card, consider the Chase Sapphire Preferred®, which offers many of the same benefits for a lower annual fee.
Learn more about the Chase Sapphire Reserve® or read our full review.
Best for Rotating Cashback: Discover it® Cash Back Card
- Rewards rate: 5% cashback on rotating categories each quarter (up to $1,500 in purchases, then 1%; activation required); 1% on everything else
- Welcome offer: Discover Cashback Match™ will double all cashback earned in the first 12 months
- Annual fee: $0
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The Discover it Cash Back card is a great way to get rewarded for everyday purchases, as you can earn 5% cashback in specific categories that rotate every quarter. These can range from filling up your gas tank to using your card in a digital wallet like Apple Pay.
Categories require activation each quarter, and rewards earned in the bonus categories are capped at $1,500. All other purchases outside of the featured quarterly category are eligible for 1% cashback.
Discover’s 5% cashback offer is one of the highest rewards for a cashback card that doesn’t charge an annual fee. When used strategically, the Discover It card can help you earn cashback on things you were already planning on spending money on, like gas and groceries.
Points can be redeemed as statement credits toward your balance or they can be redeemed through partners like Amazon.
What Are the Different Types of Credit Cards?
There are several types of credit cards you can choose from. Depending on your goals, habits, and comfort level you can maintain one or several cards.
Rewards credit cards
These cards offer rewards for your spending, such as cashback or points that can be redeemed for airfare or hotel reservations. Rewards can typically be redeemed as cash, a statement credit, or making travel reservations through one of the card’s partners.
Balance transfer credit cards
These cards allow you to move a credit card balance from a high-interest card onto a card with no interest for an introductory period. This allows you to avoid paying interest for a while and can help you get out of debt sooner.
Store credit cards
You’ve likely been prompted to sign up for a retailer's card during a recent shopping trip. If you’re a brand loyalist and making a big purchase, they can be useful — just be aware they usually come with high interest rates and don't always offer rewards.
Secured credit cards
If you don't yet qualify for a credit card or are worried about debt, a secured credit card can be your first step. These cards set a limit based on a deposit you pay upfront, and are a low-risk way to start building credit.
Business credit cards
These cards often have business-specific perks, such as bonus rewards rates on office supplies, travel, telecom purchases, or advertising. Depending on the card, they can be useful for business travel by helping you rack up points or gain access to airport lounges.
How Credit Cards Work
Think of a credit card as a mini loan. It gives you access to a set amount of money (aka a credit limit) that you can use to buy things or pay bills.
You use it like a debit card
You swipe your card at a point-of-sale terminal or enter your card number to complete an online purchase. Unlike a debit card, though, which deducts the sum of a transaction from your checking account, a credit card transaction is added to your account as an outstanding balance.
You have a monthly billing cycle
Every month you’ll receive a statement that itemizes these expenses. There’s generally a grace period between the end of your billing cycle and when your payment is due. This typically lasts around 21 days, during which no interest is applied to your balance as long as you pay it off in full by the due date.
When it comes to paying your credit card statement, you’ll have the option of paying the balance in full or making the minimum payment — usually 2% to 3% of your balance.
When you pay on time and in full, you won’t be charged interest. If you only pay the minimum, however, interest will be charged on the remaining balance. You’ll also lose your grace period for the next billing cycle, meaning you’ll start to rack up interest much faster on new purchases as long as you carry a balance.
Pros and Cons of Credit Cards
Credit cards can be a useful payment tool, especially if you can pay off your balance every month. That said, the value of a tool depends on how you use it and what your needs are.
Pros of credit cards
- Build credit: Lenders look at your credit score to determine your creditworthiness. A good score can help you qualify for a mortgage or get a lower interest rate on your next auto loan. By paying on time and keeping a low balance — ideally, no balance at all — your score can improve over time.
- Earn perks and rewards: Get rewarded for your regular spending habits. For example, if you already spend $500 each month dining out, charging those meals to a credit card that offers cashback or points on dining allows you to earn rewards on those purchases.
- Convenience: Swiping a credit card is far easier than carrying cash around or having to remember how much money is in your checking account. It’s easy to hold onto and ensures you’ll always be able to pay for something.
- Fraud protection: Credit cards offer $0 fraud liability, meaning you won’t be on the hook for charges you didn’t make. Many issuers have highly sophisticated fraud detection protocols that can identify fraudulent charges before they post to your account, stopping scammers in their tracks.
- Consumer protection: If you receive the wrong order or don't receive your order, you can contest the payment with your credit card company. By law, you’re allowed to dispute a transaction — known as a chargeback — and your credit card company will step in to resolve the disputed transaction on your behalf.
Cons of credit cards
- Risk of overspending: If you’re not careful, you could wind up spending more than you planned, since credit card transactions aren’t directly withdrawn from your bank account. It can feel like free money until the payment comes due.
- High interest rates Credit cards have notoriously high interest rates compared to other forms of loans. If you make charges without the means or a plan to pay them off, you could have spiraling credit card debt.
- Credit score impact: Credit utilization is a significant factor impacting your credit score. If you’re constantly carrying a balance and wind up maxing out your credit card this can adversely impact your ability to apply for other forms of credit, like a mortgage.
- Fees: Depending on the card, you can end up paying fees. Premium cards like the American Express Platinum charge hundreds of dollars each year to have one of their cards.
How to Choose the Best Credit Card for You
Choosing a credit card depends on your spending habits and how you plan to use it in your budget. Here are the biggest factors you’ll want to take into account as you compare credit cards:
Know your credit score
Your credit score determines what type of cards you're eligible for. Premium cards or cards with lucrative welcome offers are typically reserved for borrowers with good to excellent credit.
When you’re evaluating credit cards, take a look at your credit score to get a sense of which cards you may be eligible for.
Understand the card’s features
When you identify a card that works for you, check how that card aligns with your budget — and your goals. For example, if you’re looking to offset the cost of your next vacation with credit card points, a travel rewards card might be the most appealing.
Factor in fees
Weigh the cost of an annual fee on a credit card with the benefits you’ll receive. Some cards come with infamously hefty fees, but those cards also offer significant value through rewards, welcome offers, and various credits which, if fully used, can more than offset the fee.
Also, keep in mind the potential cost of foreign transaction fees on a credit card if you plan to travel or frequently purchase from merchants based abroad.
If you’re planning on transferring a balance to your new credit card, be aware of the balance transfer fee.
Consider the network
Mastercard and Visa are two of the most common credit card networks. While American Express and Discover have historically had limited acceptance by merchants, this trend is less significant than it once was. That said, it’s important to get a credit card that you’ll be able to use where you want to.
For example, Costco does not accept American Express cards, so if you frequently shop there, you’ll want to make sure you have at least one other card in your wallet.
How to Build Credit with a Credit Card
When you aren’t able to pay off your balance, credit cards can be a slippery slope into debt. But if you keep a low balance, they can be an important tool for building better credit.
These are a few ways you can use a credit card to increase your credit score:
Make payments on time
Payment history is an important part of how your credit score is calculated. Make payments on time and in full each month. You may incur penalties if you miss a payment and, depending on how late a payment is, it could be reported to the credit bureaus, impacting your score.
Keep your credit utilization low
Maintain a low balance to keep your credit utilization low. Experts recommend keeping your credit utilization (the amount of available credit you use) between 10% and 30%. If your credit utilization is high, paying off some debt to lower it can help boost your score.
Diversify your credit
Credit cards can help increase your credit score, but they aren’t the only thing. Having other loans like a mortgage or auto loan creates what’s considered a good credit mix. If you have other loans but not a credit card, adding a credit card to the mix may increase your score.
FAQs
Should you pay an annual fee?
It depends. Even though some credit cards charge an annual fee, those cards might provide you with more value in the long run. This is especially true for travel cards. Many of the added rewards that come with these cards, such as lounge access, might be invaluable to you depending on your personal situation.
Do the math and compare the rewards across fee-bearing cards and cards with no annual fees. If the rewards exceed the cost of the annual fee, it could be worth paying it.
What’s the best credit card?
The best credit card for you depends on your financial situation and your goals. For example, a simple no-frills credit card like the Chime Credit Builder Visa® Credit Card is available to those with limited credit and is a great way to start building credit.
If you're a traveler, the Chase Sapphire Preferred is a great beginner travel card, with a big sign-up bonus and low annual fee. Its big sister, the Chase Sapphire Reserve, comes at a much higher cost but delivers high-end travel perks to back it up, so it’s often the best choice for frequent travelers.
What’s the advantage of using a credit card instead of a debit card?
A debit card is directly linked to a bank account. When you buy something, the money is withdrawn from your account. A credit card, on the other hand, isn’t connected to a bank account. It essentially acts as a mini loan to cover the cost of the transaction until you can pay it back.
A credit card can protect against fraud and scams. If someone steals your credit card information, they can make fraudulent purchases with your card number, but they won’t access your bank account and saved money. Consumer credit cards provide $0 fraud liability, ensuring you won’t have to pay for fraudulent charges.
It also comes with opportunities to earn rewards for purchases that you won’t get with a debit card. Many credit card companies have special cards that offer cashback on purchases or allow you to earn points you can redeem for travel. This can help you maximize the value of spending money, especially if it’s on things you’re already planning to purchase.
Disclosure: Opinions expressed here are the 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.
