How to Choose the Best Credit Card for You

A recent J.D. Power study found that consumers are not choosing credit cards that are best aligned with their spending habits. While this is a study to help credit card companies figure out how to get their customers to spend more on their cards, it got me thinking: how do we determine the best credit card for our spending habits? There is no one-size-fits-all credit card. Choosing the right card for you requires some thought about how you use it.

To determine the best type of card for you, consider these questions:

Do you use it for convenience?
Do you use it exclusively for booking travel and shopping online?
Are you using it to earn the rewards/cash back plans it offers?
Do you pay off your card each month or do you carry a balance?
Do you have a credit card solely for emergencies?
Are you disciplined in your credit card spending or does it burn a hole in your pocket?
Are you using your card to build or rebuild your credit?
Do you use a debit card for most day-to-day purchases and pull out the credit card for larger purchases?

Here are 5 rules of thumb for choosing the best credit card:

If you make most purchases with a card and pay the balance each month, look for a card that offers good rewards or cash back on purchases. Making purchases this way can help you categorize and track your spending against your budget.
If you book lots of travel, hotels, and car rentals on your card, look for a card that gives the highest level of rewards for these types of purchases.
If you use a card only in emergencies, get a no-frills card with a low interest rate. Don’t worry about whether or not it has rewards.
If you are using a credit card to build or rebuild credit, you also do not need to worry about whether the card has rewards. Look for the lowest rate possible. Also, look for a financial institution that will work with you to enhance your credit score and encourage you along the way. This may include finding the best secured credit card to begin rebuilding your credit.
If you are maxed out on a card with a higher interest rate, you need to look for a card that offers a long-term, low-interest balance transfer option.

Another thing to keep in mind: don’t cut up old cards just because you’ve found a new one that fits better. Remember, the length of time you’ve had your card helps make up 15% of your credit score.

In general, look for a card that gives you what you need, not what everyone else has. If your needs meet the criteria in numbers 1,2 or 5 above, then you'll want to evaluate the best credit cards for balance transfers and rewards. But grabbing a card with rewards that you never use — and then lose — would be silly. Once you’re clear on how you will use your credit card, you’ll know which one to choose.

While looking at the different cards on the market, we encourage you to check out our Platinum card. The low rate, rewards on purchases, and no annual fee make this card a strong choice for most users.