FAQs

• What's the best way to compare credit cards?

  You can figure out which credit card is right for you by following these simple steps: 

  1. Figure out your credit score. This could help eliminate cards you don't qualify for. 
  2. Decide which features are most important to you. For example, if you're planning on making large purchases that you won't pay off immediately, you may want a card with a promotional 0% APR. Likewise, if you're a frequent traveler, you might want a rewards credit card or airline card.
  3. Compare multiple cards on terms, perks, and rewards. Using our tool above, select a few cards that have the general features that you want. Then, compare specifics, like the card's interest rate or length of its promotional 0% APR offer. If your card earns cash back or rewards, compare things like its earn rate on bonus categories (like groceries and gas) and whether it has valuable insurance built into it.
  4. Narrow down to one card. In general, it's not a great idea to apply for multiple cards at one time. So once you've identified a card that packs the most punch, apply for it on its website. 
• What are the different types of credit cards?

  If credit cards were people, they would be a lively, quirky bunch, more idiosyncratic than conventional. Nonetheless, each would belong to a specific group, perhaps not unlike how people congregate with those who share their interests. In general, here are five types of credit cards you'll often encounter. 

  • Cash back: These cards earn a percentage of your everyday purchases as cash money, which you can get as a statement credit, check, deposit into your checking account, gift card, among others. Many of these cards have a base rate (such as 1%) and bonus categories that earn higher rates for certain purchases, like groceries, gas, and dining out. 
  • Rewards credit cards: These cards earn points or miles, the value of which depend on how you redeem them. These cards can pack more value than cash back cards, but you may have to redeem points for specific purchases -- like travel -- to get the most value. 
  • Balance transfer cards: Balance transfer credit cards can help you pay off high-interest debt by transferring a balance from a loan or credit card to a card with low interest or a promotional 0% APR. You may have to pay a fee to initiate this balance.
  • Credit builder cards: Or "cards for bad credit." These credit cards may not have the most lucrative perks, but they can help you build or mend your credit score. Many require an upfront deposit -- known as "secured credit cards" -- which become collateral if you don't pay a balance after a few missed payments. 
  • Student credit cards: For all those who want to start building credit early, these cards are made for you.  

  In addition to these categories, you'll find numerous subcategories. For instance, airline and hotel cards may fall under rewards credit cards, along with certain store cards which earn points for that specific store. Grocery and gas cards might be a subcategory of cash back cards, while 0% APR cards can overlap with any of these categories.

• Should you pay an annual fee to use a credit card?

  It might seem counterintuitive to pay a fee to use a credit card, especially if you have excellent credit. But sometimes the card's perks and rewards more than pay for the annual fee itself, in which case you would actually be leaving money on the table if you used a no fee card instead. 

  To find out, you'll need to examine the card's rewards program and decide if your spending will generate enough rewards to make up the credit card's fee. For instance, if your card has a $95 annual fee and earns 2 points (worth $0.01 apiece) for every $1 spent -- like the Capital One Venture Card -- you would need to spend $4,750 to earn enough points equal to $95.