There are thousands of card products to choose from. Here are some factors to consider when comparing your options.
In this topic, you'll learn:
Most credit cards work the same way - you borrow money and repay it according to the terms of the card agreement. However, depending on your unique financial needs, there may be significant differences in card terms, costs, and benefits. There's no single right credit card for everyone - but by understanding your needs and comparing your options, you can find one that fits your situation.
When looking for the best card for you, remember the difference between soft and hard credit inquiries. A soft inquiry happens when lenders screen you for preapproved offers and doesn't affect your credit score. When you apply for credit, that's a hard inquiry and affects your credit, typically to a small degree. However, applying for many credit cards in a short period can affect your credit score. So, narrowing your choices to a card or two before applying is best.
Since fees, interest rates, penalties, and perks can vary widely between cards, here are some factors to consider when looking for the best deal.
Your Credit Score
Knowing your credit score can help you focus on cards you're more likely to qualify for and compare options that fit your profile. As your score increases, costs decrease, and you get more card options like points that can be redeemed for cash or credit towards other services. And for those with poor credit, secured cards (which require a deposit that typically serves as the credit limit) may help build or rebuild credit over time as payments are made on time and balances kept low.
If you don't know your credit score, you have a few options - a free credit score service and a paid service. Websites that offer free scores, like Credit Karma and Credit Sesame, use your personal information to market products to you and don't require a credit card. Other sites, like the credit reporting bureaus, offer "free" scores as part of a credit monitoring service for a monthly fee (after a free trial month). If you don't cancel, you'll get charged. On the other hand, you can pay for your score from myFICO.com for $20 with no recurring charges.
Once you know your score, here's what it means:
When you search for a card, you'll find that most offer some description of the expected credit score range. If your credit rating is under the required range, save a hard credit inquiry for other cards with a higher chance of approval.
Your Spending Behavior and Reward Options
If you tend to carry a balance from month to month, cards with lower interest rates or balance transfer offers may be worth prioritizing.
Some cards offer a 0% introductory APR on balance transfers, which may reduce interest charges during the promotional period - potentially helping you pay down the balance faster. Keep in mind that intro rates expire, balance transfer fees typically apply, and the ongoing APR after the promotional period may be significantly higher. Review the full terms before transferring a balance.
If you consistently pay your balance in full, you'll mostly likely choose to focus on the perks that matter most to you - from cash back to travel points. Cash-back cards offer a percentage of your spending back as a statement credit or direct deposit. Travel rewards cards let you earn points or miles that can be redeemed for flights, hotel stays, and other travel-related expenses. Some cards offer rotating bonus categories, while others provide a consistent rewards rate across all purchases.
When exploring card options, the cards with the lowest fees and most generous benefits are restricted to those with good to excellent credit. Still, there can be significant differences between cards - no matter your credit score. Some cards may offer extended purchase warranties, trip cancellation coverage, and price protection on eligible purchases (terms and conditions vary by card). If a card offers benefits you'd actually use, those perks can add real value - so it's worth reviewing what's included before you apply.
Another consideration, especially when exploring cards that offer generous benefits, is whether or not the card charges an annual fee. It's worth evaluating whether the benefits provided by the card justify the fee - which can sometimes reach several hundred dollars per year. For example, someone who travels often may find airport lounge access worth the fee. But if a fee-based card offers more cash-back than a no-fee card, whether or not it's worth it depends on your annual spending. Calculate how much you'd need to spend to offset the annual fee and compare that to your typical spending habits.
Comparing Card Costs
Federal law requires that credit card companies give you a disclosure statement - sometimes called a Truth in Lending disclosure - before you open an account. This document outlines key fees, rates, and terms.
The Schumer Box
Named after the senator from New York, the Schumer Box is a table that discloses critical facts about a credit card, including interest rates, fees, terms, and conditions. It includes:
When shopping for a card, this box will help you compare cards. A clear understanding of how interest is charged and when penalty fees and interest rate increases would be triggered is critical. Compare benefits for cards with similar costs as described in their marketing materials. Pay close attention to the annual percentage rate (APR) for purchases, as this is the interest rate you'll pay on any balances you carry from month to month. Also, note any foreign transaction fees if you plan to use your card while traveling internationally.
Finding a Credit Card
There are dozens or even hundreds of credit card comparison websites on the internet, and virtually all of them have one thing in common - they're paid when you sign up for a card they promoted. A credit card may not be listed if it doesn't pay a referral fee. So comparison sites could best be described as "comparing cards for which we're paid a referral fee."
Card comparison sites may offer many options, but what if the best card for you isn't on those websites?
One strategy would be to use comparison sites to get a broad sense of the options available for people with similar credit scores. Then, consider an old school approach: contact your bank or credit union. Many banks and credit unions offer credit cards with rates and rewards worth comparing, and there may be additional benefits if you already have an established relationship.
Professional organizations or other associations you belong to may also offer co-branded cards worth comparing.
The Takeaway
Ultimately, the best credit card for you will depend on your financial situation and spending habits. By understanding your credit score, comparing costs and benefits, and exploring your options, you can find a card that helps you make the most of your money.
CAMPUS serves over 140,000 members from all over the world. As a not-for-profit cooperative, we are owned by our members. So at CAMPUS, you’re not just a member - you own the place! Profits are returned to our member-owners in the form of no- and low-fee financial services and best-of-market rates on deposits and loans.
