One of the questions Iâm asked the most is, âWhich credit card should I get?â
Thereâs not a one-size-fits-all answer, but hereâs how to narrow it down:
Which credit card to choose if you carry a balanceÂ
If youâre in credit card debt, then you need to prioritize your interest rate over rewards. TheÂ average credit card charges 16.05%. It doesnât make sense to pay interest just to earn 1%, 2% or 3% in cash back or travel points.
If you have credit card debt, forget about rewards for now. You can avoid interest for up to 18 months with the right balance transfer card. And some card issuers (especially credit unions) charge ongoing (non-promotional) rates as low as the 6%-9% range. Donât chase rewards if youâre revolving a balance.
If you have credit card debt, I recommend these cards:
- Citi SimplicityÂ® Card*: 18-month 0% intro balance transfer offer; transfers must be completed in the first four months; 3% balance transfer fee ($5 minimum); 0% introductory purchase APR for 18 months; regular variable APR of 14.74%-24.74%
- Wells Fargo Cash Wise VisaÂ® card: 15-month 0% intro balance transfer offer on qualifying balance transfers; intro balance transfer fee of 3% or $5 (whichever is greater); transfers must be made within 120 days to qualify for intro offer; 0% intro purchase APR for 15 months; regular variable APR of 14.49%-24.99%; regular balance transfer fee of 5% or $5 (whichever is greater)
- BankAmericardÂ® credit card: 12-billing-cycle 0% intro APR balance transfer offer; must complete the transfer within 60 days of opening the account; 3% or $10 transfer fee, whichever is greater; introductory 0% purchase APR for 12 billing cycles; regular variable APR of 12.99-22.99% on purchases and balance transfers
See related: Balance transfer cards with no transfer fee
Which card to pick if you donât have any credit card debtÂ
Now weâre on to the fun stuff! The key questions at this juncture focus on how much effort you want to put in, how you spend your money and what you want to get out of your rewards.
Some people treat credit card rewards like a game. Itâs fun for them, and they spend time looking for the best deals and juggling multiple cards. Yet about three-quarters of credit card holders prefer simplicity and would rather use the same card or two as widely as possible, we found in an August 2019 survey.
You wonât get the best rewards with that approach, but you can still do pretty well. Here are my favorite flat-rate cash back cards:
- Alliant Visa Signature Card: 2.5% cash back on every purchase with a $99 annual fee (waived your first year)
- CitiÂ® Double Cash Card: Essentially 2% cash back on everything (technically 1% when you buy and 1% when you pay it off); no annual fee
If you make more than $20,000 in credit card charges in a typical year, the Alliant Credit Union Visa Signature is a better bet despite the annual fee.
Which card to pick if you’re willing to put in a little work to earn better rewardsÂ
Dividing your spending among multiple cards is the best way to reap higher returns. At this stage, you need to consider how you spend your money. Different cards incentivize different types of spending (e.g., travel, restaurants, groceries, entertainment).
You also need to think about your desired redemption. Cash back has the broadest appeal (after all, who couldnât use a little more cash?), although travel rewards are usually the most valuable. Some 49% of U.S. adults have at least one cash back card, 20% have an airline or hotel rewards card and 19% have a general travel rewards card,Â our research shows.
Chase Sapphire Reserve,Â the American ExpressÂ® Gold Card, theÂ Citi PremierÂ® CardÂ and theÂ Capital One Venture Rewards Credit Card).
Each of these issuers has more than a dozen airline and hotel transfer partners, plus you can book an even wider variety of flights and hotels directly through the card companies. These programs provide tons of flexibility, and in terms of cents per point, they generally offer higher returns than cash back cards.
As you can see, picking the right credit card for you is an individual decision. Iâll leave you with two more thoughts:
Youâre doing well as long as youâre avoiding credit card debt and redeeming rewards for something thatâs valuable to you.
Not everyone wants to fly to the Maldives in first-class and stay in an overwater bungalow. Even if it yields fewer cents per point, a free flight to grandmaâs house or cash back on everyday purchases could make more sense for your particular situation.
You should absolutely consider sign-up bonuses when evaluating credit cards, but donât lose sight of the fact that your credit card strategy should be a long-term pursuit. Especially if youâre new to credit, focus on ongoing value rather than card churning.
* Information about Citi Simplicity has been collected independently by CreditCards.com. The issuers did not provide the details, nor are they responsible for their accuracy.