Updated on Jan 14, 2020

Best Credit Cards of 2020

Looking for a credit card? We can help you pick the best credit card for you.
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Independently researched content by us. Free financial advice for you. To do that, we may get compensation when you click on our partners’ products. Our lists consist of the best cards from our partners. Not all cards in the marketplace have been evaluated. View our full advertiser disclosure to learn more.

There are hundreds of thousands of credit cards available, and choosing the best credit card for you matters. We analyzed the credit card marketplace and compiled a list of the best credit cards of 2020. Our top picks range from credit cards that help you book travel to cards that reward you for spending.

Summary

The Best Credit Cards for 2020

A credit card can be a great financial asset in your wallet. Depending on your financial goals, spending habits and lifestyle, you’re probably asking yourself – what is the best credit card? There is no one-size-fits-all, perfect card for everyone because it depends on the individual’s financial situation.

You’ll first want to figure out which type of credit card is right for you when you are ready for one. You can earn hundreds of dollars a year, build your credit or enjoy travel benefits with the right card. Find your perfect credit card by exploring our top picks for the best credit cards of 2020.

Learn More On creditcards.com's secure website

Best for sign up bonus

Chase Sapphire Preferred® Card

Current Offer 60,000 points
Rewards overview 2X points on travel and dining at restaurants worldwide, 1 point per dollar on all other purchases

Redeem for... Airfare, hotels, car rentals and cruises
Annual Fee $95
Highlights Provided by Chase Show Highlights
  • Spend $4,000 on purchases in your first three months to earn 60,000 bonus points. That’s $750 in travel!
  • Get 25% more in redemption value when you redeem through Chase Ultimate Rewards. You can redeem for airfare, hotels, cruises and car rentals.
  • Transfer points to other travel rewards programs for a 1:1 value.
  • Refer friends and receive 15,000 bonus points for each friend who gets approved, up to 75,000 bonus points.
  • Issuer: Chase
  • Annual Fee: $95
  • Balance Transfer Fee: Either $5 or 5% of the amount of each transfer, whichever is greater.
  • Cash Advance APR: 26.49% Variable
  • Foreign Transaction Fee: $0
  • Introductory APR: N/A
  • Introductory APR Period: N/A
  • Introductory Balance Transfer APR: N/A
  • Introductory Balance Transfer Period: N/A
  • Ongoing APR: 17.49% - 24.49% Variable
  • Penalty APR: None

Our two cents

Who should get it

If you’re a jetsetter or you love to eat out, the Chase Sapphire Preferred® Card is an ideal Chase credit card option for you. It’s also a great card for loyal Chase customers with multiple cards and accounts because of its flexible rewards program.

How to use it
  • No intro APR on purchases
  • Annual fee: $95
  • No premium travel perks
Consider this

The best way to optimize the Chase Sapphire Preferred® Card is to use it primarily for travel and dining out, because earned points can be used to book travel through the Chase Ultimate Rewards portal. This card gives you 2x points per dollar spent on any travel and dining, and 1x point per dollar on all other purchases.

Why you'll love it

The Chase Sapphire Preferred® Card is a valuable card for consumers who love to earn points for dining out and traveling frequently. When you sign up for Chase Sapphire Preferred® Card, you unlock a hefty 60,000 sign up bonus after spending $4,000 on the card in the first three months.

Learn More Back to top

Pro Tip


Pair the Chase Sapphire Preferred® Card with another Chase credit card on the Ultimate Rewards platform to fill gaps in your rewards plan.

Best for cash back in rotating categories

Discover it® Cash Back

Current Offer First year cash back match
Rewards overview 5% cash back at different places each quarter; 1% on all other purchases

Redeem for... eDeposit, statement credit, charitable donation, or Amazon purchases
Annual Fee $0
Highlights Provided by Discover Show Highlights
Card Highlights Provided by Discover:
  • INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
  • Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back any amount, any time. Rewards never expire.
  • Use your rewards at Amazon.com checkout.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • No annual fee.
  • Issuer: Discover
  • Rewards Details: 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. 1% unlimited cash back on all other purchases - automatically.
  • Annual Fee: $0
  • Balance Transfer Fee: 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
  • Cash Advance APR: 26.49% Variable
  • Introductory APR: 0%
  • Introductory APR Period: 14 months
  • Introductory Balance Transfer APR: 0%
  • Introductory Balance Transfer Period: 14 months
  • Ongoing APR: 13.49% - 24.49% Variable

Our two cents

Who should get it

The Discover it® Cash Back is ideal for cardholders who like a little variety in their rewards categories while earning cash back, as well as a great rewards match program at the end of your first year.

How to use it
With the Discover it® Cash Back, you can earn up to 5% cash back each quarter at various, rotating categories including gas stations, grocery stores, restaurants, Amazon.com and more, up to the quarterly maximum each time you activate. Plus, earn unlimited 1% cash back on all other purchases.
Consider this

  • Limit on how much you can earn
  • Rotating bonus categories require activation
  • Discover isn’t as widely accepted as cards in the Visa or Mastercard network

Why you'll love it

There’s a lot to love about a credit card like the Discover it® Cash Back. It lets you redeem your cash back rewards without any fear of those rewards expiring and you’ll automatically get a dollar-for-dollar match at the end of your first year.

Start your application now Back to top

Pro Tip


Keep in mind that a year can be a long time to wait for that dollar-for-dollar match offered by the Discover it® Cash Back card.
Apply Now On Capital One's secure website

Best for travel rewards

Capital One® Venture® Rewards Credit Card

Current Offer 50,000 miles
Rewards overview Unlimited 2X miles per dollar

Redeem for... Travel statement credit; travel booked through CapitalOne.com; gift cards; and more
Annual Fee $0 intro for first year; $95 after that
Highlights Provided by Capital One Show Highlights
  • Enjoy a one-time bonus of 50,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $500 in travel
  • Earn 2X miles on every purchase, every day.
  • Receive up to $100 application fee credit for Global Entry or TSA Pre✓®
  • Fly any airline, stay at any hotel, anytime; no blackout dates. Plus transfer your miles to over 12 leading travel loyalty programs
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Named ‘The Best Travel Card' by CNBC, 2018
  • No foreign transaction fees
  • $0 intro annual fee for the first year; $95 after that
  • Issuer: Capital One
  • Rewards Details: 2 Miles per dollar on every purchase, every day. 50000 Miles once you spend $3,000 on purchases within 3 months from account opening.
  • Annual Fee: $0 intro for first year; $95 after that
  • Balance Transfer Fee: $0
  • Cash Advance APR: 24.49% (Variable)
  • Foreign Transaction Fee: None
  • Introductory APR: N/A
  • Introductory APR Period: N/A
  • Introductory Balance Transfer APR: N/A
  • Introductory Balance Transfer Period: N/A
  • Ongoing APR: 17.24% - 24.49% (Variable)
  • Penalty APR: None

Our two cents

Who should get it

Anyone looking for a fast way to earn miles will get the most out of the Capital One® Venture® Rewards Credit Card. It makes our top credit cards list for the simple fact that you can earn 2x miles per every dollar you spend on purchases.

How to use it
You can take this card anywhere without worrying about foreign transaction fees and earn 2x miles for every dollar. If you spend $3,000 on purchases in your first three months, you’ll earn 50,000 bonus miles. The card’s annual fee is waived for the first year, but $95 annually afterward.
Consider this

  • Annual fee of $0 intro for first year; $95 after that
  • Lesser redemption value for cash back
  • Requires good to excellent credit

Why you'll love it

The Capital One® Venture® Rewards Credit Card stands among the best credit cards for travel rewards. Being able to earn unlimited 2x miles for every dollar you spend makes saving up for a vacation fast and simple.

Start your application now Back to top

Pro Tip


Take advantage of the sign up bonus that nets you 50,000 bonus miles (after spending $3,000 in first 3 months), which translates to $500 toward travel.
Apply Now On Capital One's secure website

Best for flat-rate cash back

Capital One® Quicksilver® Cash Rewards Credit Card

Current Offer $150
Rewards overview Unlimited 1.5% cash back on every purchase

Redeem for... Cash back
Annual Fee $0
Highlights Provided by Capital One Show Highlights
  • One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening
  • Earn unlimited 1.5% cash back on every purchase, every day
  • No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 15.49%-25.49% variable APR after that
  • 0% intro APR on balance transfers for 15 months; 15.49%-25.49% variable APR after that; 3% fee on the amounts transferred within the first 15 months
  • Pay no annual fee or foreign transaction fees
  • Issuer: Capital One
  • Rewards Details: 1.5 % Cash Back on every purchase, every day. $150 Cash Back after you spend $500 on purchases within 3 months from account opening.
  • Annual Fee: $0
  • Balance Transfer Fee: 3%
  • Cash Advance APR: 25.49% (Variable)
  • Foreign Transaction Fee: None
  • Introductory APR: 0% intro on purchases
  • Introductory APR Period: For 15 Months
  • Introductory Balance Transfer APR: 0% intro on balance transfers
  • Introductory Balance Transfer Period: For 15 Months
  • Ongoing APR: 15.49% - 25.49% (Variable)
  • Penalty APR: None

Our two cents

Who should get it

The Capital One® Quicksilver® Cash Rewards Credit Card is for those who love simplicity, have good to excellent credit and want to earn rewards.

How to use it
You can earn unlimited 1.5% cash back on all purchases with the Capital One® Quicksilver® Cash Rewards Credit Card. There is no cap to the amount of rewards you can earn on purchases, and your cash back can be automatically applied as a statement credit when it reaches a specific amount ($25, $50, $100 or $200) through Capital One’s auto-redemption feature.
Consider this

  • No category bonus options
  • Annual fee of $0

Why you'll love it

There aren’t any rotating categories to worry about, so you’ll earn 1.5% cash back no matter how you use your Capital One® Quicksilver® Cash Rewards Credit Card. When you earn rewards, you can redeem them for any amount at any time.

Start your application now Back to top

Pro Tip


By regularly using the Capital One® Quicksilver® Cash Rewards Credit Card, there’s potential to access a higher credit line after making your first five monthly payments on time.

Best for balance transfers

Discover it® Balance Transfer

Current Offer Discover matches all cash back you earn at the end of your first year
Rewards overview 5% cash back (up to a quarterly maximum each time you activate) when you use it at gas stations, grocery stores, restaurants, Amazon.com and more, and 1% unlimited cash back on all other purchases

Redeem for... Cash back
Annual Fee $0
Highlights Provided by Discover Show Highlights
Card Highlights Provided by Discover:
  • INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back any amount, any time. Rewards never expire.
  • 100% U.S. based customer service.
  • Get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • No annual fee.
  • Issuer: Discover
  • Rewards Details: 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. 1% unlimited cash back on all other purchases - automatically.
  • Annual Fee: $0
  • Balance Transfer Fee: 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
  • Cash Advance APR: 26.49% Variable
  • Introductory APR: 0%
  • Introductory APR Period: 6 months
  • Introductory Balance Transfer APR: 0%
  • Introductory Balance Transfer Period: 18 months
  • Ongoing APR: 13.49% - 24.49% Variable

Our two cents

Who should get it

Anyone looking to chip away at mounting credit card debt will find what they’re looking for in the Discover it® Balance Transfer card. You’ll get 18 months of interest-free bliss to pay off an outstanding card debt for balance transfers (then ongoing 13.49% - 24.49% Variable APR).

How to use it
Transfer your highest APR balances first to stop accruing interest charges and pay down the balance as much as possible during the Discover it® Balance Transfer’s 18-month introductory period. Try not to make large purchases on the card if your goal is to eliminate credit card debt as you’ll only get six months with no interest on purchases and 18 months for balance transfers (after that ongoing APR is 13.49% - 24.49% Variable).
Consider this

  • 3% intro balance transfer fee (see terms)
  • Up to 5% fee on future balance transfers (see terms)
  • Caps on rotating bonus rewards per quarter

Why you'll love it

The Discover it® Balance Transfer is one of our top credit cards because of its generous window of 0% for 18 months intro APR on balance transfers. So, you can finally have the wiggle room to pay off an outstanding balance with ample time to avoid accruing interest. In addition, many cardholders will appreciate the 6 months months of 0% intro APR on purchases (then ongoing 13.49% - 24.49% Variable APR for transfers and purchases).

Start your application now Back to top

Pro Tip


The Discover it® Balance Transfer card matches all the cash back you earn at the end of your first year, plus no annual fee and 1% rate on everything else.
Apply Now On Capital One's secure website

Best for no annual fee

Capital One® VentureOne® Rewards Credit Card

Current Offer 20,000 points
Rewards overview Earn 1.25X miles on every purchase, every day

Redeem for... Transfer your miles to over 12 leading travel loyalty programs
Annual Fee $0
Highlights Provided by Capital One Show Highlights
  • $0 annual fee and no foreign transaction fees
  • Earn a bonus of 20,000 miles once you spend $1,000 on purchases within 3 months from account opening, equal to $200 in travel
  • Earn 1.25X miles on every purchase, every day
  • Travel when you want with no blackout dates and fly any airline, stay at any hotel, anytime
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Transfer your miles to over 12 leading travel loyalty programs
  • Enjoy 0% intro APR on purchases for 12 months; 13.49% - 23.49% variable APR after that
  • Issuer: Capital One
  • Rewards Details: 1.25 Miles per dollar on every purchase, every day. 20000 Miles once you spend $1,000 on purchases within 3 months from account opening.
  • Annual Fee: $0
  • Balance Transfer Fee: $0
  • Cash Advance APR: 23.49% (Variable)
  • Foreign Transaction Fee: None
  • Introductory APR: 0% intro on purchases
  • Introductory APR Period: For 12 Months
  • Introductory Balance Transfer APR: N/A
  • Introductory Balance Transfer Period: N/A
  • Ongoing APR: 13.49% - 23.49% (Variable)
  • Penalty APR: None

Our two cents

Who should get it

The Capital One® VentureOne® Rewards Credit Card is a great first-time travel card for people who want to earn rewards and take advantage of no blackout dates and booking travel through any of Capital One’s airline or hotel partners.

How to use it
If you use the Capital One® VentureOne® Rewards Credit Card, you’ll earn 1.25x miles for every purchase. There’s flexibility in how you can redeem your rewards, but you’ll get the most value out of your earned miles by transferring it to one of Capital One’s travel partners.
Consider this

  • Late payment fee of up to $39
  • Lower reward value with cash back redemption
  • Potentially high APR after intro period

Why you'll love it

The Capital One® VentureOne® Rewards Credit Card gives you the opportunity to earn great rewards and rack up an unlimited amount of miles that you can use to travel more frequently. An added bonus is that the rewards next expire.

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Pro Tip


You’ll be able to avoid interest on all purchases and save more during the first year of having the Capital One® VentureOne® Rewards Credit Card (then after ongoing 13.49% - 23.49% (Variable) APR).
Apply Now On Capital One's secure website

Best for dining rewards

Capital One® Savor® Cash Rewards Credit Card

Current Offer $300 cash bonus
Rewards overview Earn unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020.

Redeem for... Cash back
Annual Fee $0 intro for first year; $95 after that
Highlights Provided by Capital One Show Highlights
  • Earn a one-time $300 cash bonus after you spend $3000 on purchases within the first 3 months from account opening
  • Earn unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020.
  • No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
  • No foreign transaction fees
  • Capital One cardholders get access to premium experiences in dining, entertainment and more
  • $0 intro annual fee for the first year, $95 after that
  • Issuer: Capital One
  • Rewards Details: 4 % Cash Back on dining. 4 % Cash Back on entertainment. 2 % Cash Back at grocery stores. 1 % Cash Back on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020. $300 Cash Back after you spend $3000 on purchases within 3 months from account opening.
  • Annual Fee: $0 intro for first year; $95 after that
  • Balance Transfer Fee: $0
  • Cash Advance APR: 24.99% (Variable)
  • Foreign Transaction Fee: None
  • Introductory APR: N/A
  • Introductory APR Period: N/A
  • Introductory Balance Transfer APR: N/A
  • Introductory Balance Transfer Period: N/A
  • Ongoing APR: 15.99% - 24.99% (Variable)
  • Penalty APR: None

Our two cents

Who should get it

The Capital One® Savor® Cash Rewards Credit Card could be an especially lucrative card for consumers who spend a lot on dining out and entertainment, including theater and sports tickets, tourist attractions, theme parks, dance clubs, pool halls, bowling alleys and more.

How to use it
With this card, you’ll earn an unlimited 4% back in dining and entertainment along with 2% back at grocery stores and 1% back on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020.
Consider this

  • Annual fee of $0 intro for first year; $95 after that
  • No travel benefits

Why you'll love it

Not only does the Capital One® Savor® Cash Rewards Credit Card offer exceptional rewards in categories in which many people spend heavily, but it also offers a large $300 sign up bonus (after you spend $3000 on purchases within the first 3 months from account opening). If you spend plenty on dining and entertainment, this card is well worth its annual fee.

Start your application now Back to top

Pro Tip


With the Capital One® Savor® Cash Rewards Credit Card, you can redeem cash back in several ways including statement credits, checks, or gift cards to restaurants, retailers and hotel chains.
Partner Offer Apply Now On American Express's secure website

Best for common expenses

Blue Cash Preferred® Card from American Express

Current Offer $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply.
Rewards overview 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). Terms apply.

Redeem for... Reward Dollars (redeemed as a statement credit)
Annual Fee $95 (See Rates & Fees)
Highlights Provided by American Express Show Highlights
  • Earn a $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • New 6% Cash Back on select U.S. streaming subscriptions.
  • New 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more.
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). 3% Cash Back at U.S. gas stations. 1% Cash Back on other purchases.
  • Over 3 million more places in the U.S. started accepting American Express® Cards in 2017 and 2018.
  • Low intro APR: 0% for 12 months on purchases and balance transfers, then a variable rate, currently 14.49% to 25.49%
  • $95 annual fee.
  • Terms Apply.
  • See Rates & Fees
  • Issuer: American Express
  • Annual Fee: $95 (See Rates & Fees)
  • Balance Transfer Fee: Either $5 or 3% of the amount of each transfer, whichever is greater.
  • Cash Advance APR: 26.74% Variable
  • Foreign Transaction Fee: 2.7% of each transaction after conversion to US dollars.
  • Introductory APR: 0%
  • Introductory APR Period: 12 months
  • Introductory Balance Transfer APR: 0%
  • Introductory Balance Transfer Period: 12 months
  • Ongoing APR: 14.49% - 25.49% Variable (See Rates & Fees)
  • Penalty APR: 29.99% Variable

Our two cents

Who should get it

If you spend a lot on gas, groceries, or have a large family, the Blue Cash Preferred® Card from American Express is an excellent choice.

How to use it
Use this card when you’re grocery shopping and filling up your tank to maximize your earnings. You’ll earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%) and 6% on select U.S. streaming subscriptions and 3% cash back at U.S. gas stations and on transit.
Consider this

  • Annual fee of $95 (See Rates & Fees)
  • American Express isn’t as widely accepted as cards in the Visa or Mastercard networks
  • $25 minimum redemption for cash back

Why you'll love it

The Blue Cash Preferred® Card from American Express’ extremely high-rate rewards make it the best choice for frequent shoppers or large families. It’s a credit card that makes earning cash back both fast and easy.

Start your application now Back to top

Pro Tip


If you spend just $60 a week at U.S. supermarkets, you could earn over $180 cash back per year with the Blue Cash Preferred® Card from American Express.

Compare the best credit cards of 2020

Card Annual Fee Rewards Rate Welcome Bonus
Best for sign up bonus: Chase Sapphire Preferred® Card $95 2x points on travel and dining, 1x point on everything else 60,000 Ultimate Rewards points after you spend $4,000 on purchases in the first three months
Best for cash back in rotating categories: Discover it® Cash Back $0 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% on everything else Dollar-for-dollar match at the end of the first year
Best for travel rewards: Capital One® Venture® Rewards Credit Card $0 intro for first year; $95 after that Unlimited 2x miles per dollar on every purchase 50,000 bonus miles once you spend $3,000 on purchases within the first three months
Best for flat-rate cash back: Capital One® Quicksilver® Cash Rewards Credit Card $0 Unlimited 1.5% cash back on every purchase One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening
Best for balance transfers: Discover it® Balance Transfer $0 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% on everything else Discover will match ALL the cash back earned at the end of your first year, automatically.
Best for no annual fee: Capital One® VentureOne® Rewards Credit Card $0 Unlimited 1.25x miles per dollar on every purchase 20,000 bonus miles once you spend $1,000 on purchases within the first three months
Best for dining rewards: Capital One® Savor® Cash Rewards Credit Card $0 intro for first year; $95 after that Unlimited 4% cash back in entertainment and dining, 2% cash back at grocery stores and 1% on everything else; 8% cash back on tickets at Vivid Seats through May 2020 $300 cash back after you spend $3,000 on purchases within the first three months
Best for common expenses: Blue Cash Preferred® Card from American Express $95 (See Rates & Fees) 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%) and 6% on select U.S. streaming subscriptions and 3% cash back at U.S. gas stations and on transit, 1% on everything else. Terms Apply. $250 statement credit after you spend $1,000 in purchases within the first three months. Terms Apply.

Should I get a credit card?

Getting a credit card can make you feel like an adult and be financially beneficial if you use it responsibly. It’s a decision that can be an important step towards building a credit history that will eventually open the door to buying big-ticket items and being more financially responsible, but it can also have long-term consequences.

With a credit card, you’ll get access to a revolving line of credit from the card issuer. Your credit limit is determined on your creditworthiness. You can continue using the card for purchases as long as your outstanding balance stays within your credit limit.

If you’re new to credit, you might not have enough of a credit history to qualify for some of the best credit cards available. That’s where secured credit cards come into play. Unlike unsecured credit cards (regular credit cards), secured cards require a down payment. That makes them less risky for lenders and easier to apply for.

How credit cards work

A credit credit is similar to a loan, in that it offers you a line of credit that can be used to make purchases, balance transfers or cash advances. After you use it to make purchases, you are required to pay back the amount you spent. A minimum payment is typically required every month by a specific date on the balance, but it is better to pay any balance in full to avoid interest charges.

Some credit cards might have an annual fee, which the fee amount depends on the card and can vary after an introductory period. There may also be other fees associated with credit cards depending on the activity, such as cash advance fees, balance transfer fees or foreign transaction fees.

The biggest pro of having a credit card is the ability to build or improve your credit score, as it is important if you ever want to buy a car or get a mortgage loan, among other things. If you can regularly use your credit card responsibly, you can build credit and grow financially.

How to apply for a credit card

Applying for a credit card is one thing, but getting approved for one is another. It’s as simple as entering your information into an online application. However, it can require some planning and research beforehand. Knowing what credit card issuers are looking for can be useful when you’re completing your application. Here are steps to apply for a credit card:

  • Check your credit score
  • Determine what type of card you need
  • Choose where to apply
  • See if you’re pre-qualified
  • Prepare for a potential impact to your credit
  • Practice responsible credit card habits

When should I pay off my credit card bill?

Always strive to pay your credit card balance in full by your statement due date. There’s no better way to build a solid credit history and healthy credit score. Credit is a powerful tool when seasoned with self control, but without discipline, it can wreak havoc on your financial future. Case in point – the average American household has $16,000 of credit card debt.

If your card has an 18% interest rate and you’re only making the minimum payment (usually around 3% of the total balance), you’ll rack up over $2,000 in interest charges every month and continue to lose ground.

Paying your credit card off in full also helps to keep your credit utilization ratio low. Your credit utilization ratio is the percentage of your available credit that you have used. Credit bureaus use this metric to gauge how responsible you are. When it comes to credit utilization ratio, low is best. Credit cards can negatively affect your credit utilization if you continuously run large balances. We recommend keeping your credit utilization for each credit card below 30%.

Pro tip: You can track your credit utilization on your credit card with some simple math — your balance divided by your credit limit equals your ratio.

How credit utilization affects your credit score

There are five factors that influence your credit score: payment history, age, mix of credit, inquiries, and your credit utilization — which can impact up to 30% of your score. Credit utilization (sometimes referred to as your credit utilization ratio) represents the percentage of your available credit that is currently active.

Imagine you have two credit cards with a total credit limit of $20,000 – one with a $5,000 limit and another with a $15,000 limit. On the first card, you have a $3,200 balance, and on the second you have a zero balance because you just paid it off. Right now, your credit utilization is at a healthy 16%.

If you cancel the second card, your total credit limit will drop to $5,000 and your credit utilization will rise to a whopping 64%. That’s important to keep in mind because experts say that once your utilization ratio exceeds 30% your credit score may be at risk.

How many credit cards should you have?

The number of credit cards someone should have depends on the individual. You should never have more credit cards than you can handle. The short answer is that you should strive to have at least two credit cards – ideally from different issuers and that offers different rewards. The average American has 3.1 credit cards, according to a 2017 Experian survey.

Whether you have two or 20 cards, what’s important is that you use your cards responsibly and take full advantage of the benefits that come along. Make sure you’re not juggling so many cards that you get overwhelmed and can’t keep track of all the payment due dates. The main point of having more credit cards is earning points or cash back on your everyday spending that you pay off every month.


For rates and fees of the Blue Cash Preferred® Card from American Express, please click here

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