With so many credit card options out there, it may be hard to choose a new one.
Are you loyal to a particular airline or hotel chain? Do you want to redeem points as statement credits? Are you a big grocery or gasoline spender? Interested in an innovative use like paying down loan debt or investing? Is the interest rate important, an annual fee a dealbreaker?
If you can responsibly manage more than one credit card—and if you’re like most Americans, you have more than one—you can use different cards to optimize rewards (cash back, points, or miles), annual statement credits, and 0% and low introductory APR offers.
When deciding on a new credit card that is best for you, it boils down to two basic questions: What do you want from a card? And how strong is your financial history?
Here’s a glance at the credit card options available and provisos to consider.
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Cash in on up to $300–and 3% cash back for 365 days.¹
Apply and get approved for the SoFi Credit Card. Then open a bank account with qualifying direct deposits. Some things are just better together.
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Rewards Credit Cards
If you are good about paying off your card every month and never incur interest, you might consider a rewards card. They may offer sign-up bonuses and give consumers rewards in the form of miles, cash back, or loyalty points.
There are variations on a theme, such as:
• Bonus offer + 0% period for purchases
• A set dollar amount in travel or bonus miles if you meet the initial spending requirements
• Flat-rate cash back
• Customizable rewards
A few cards offer an eye-opening 5% cash back in rotating categories, up to a limit (such as 5% back on $1,500 spent quarterly, after which all other purchases earn 1% cash back), and you’ll usually have to manually activate the offer each quarter.
But you can often lessen the work involved and earn more in total cashback rewards with a flat-rate cashback credit card, when all purchases earn the same amount.
Frequent travelers lured by premium travel rewards cards will want to weigh the perks against an annual fee of $450 to $550.
New reward offerings have bubbled up, such as allowing cardholders to put cash back toward loan payments, and are brewing, like increasing card acceptance for rent payments and offering cryptocurrency-related rewards.
When choosing a rewards card, think about your spending habits and redemption preferences, be aware of your credit score (these cards usually require a good score), and pay off your balance each month—rewards cards typically have higher APRs than balance transfer cards.
If you fall behind on payments or carry over balances, all the perks and rewards are unlikely to be worth it.
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Cards for Those With Limited or Damaged Credit
For college students with little or no credit history, there are student credit cards.
If you don’t have great credit, there are also secured credit cards. Generally, they require a deposit from the user. A secured credit card functions like a normal credit card except that it has a backstop: The user puts up an amount of money that the issuer will then use if the cardholder defaults.
The lender offers a certain amount of credit based on the promise that the user will pay off the balance in full every month.
If your account is upgraded to an unsecured account, thanks to good habits, or is closed in good standing, your deposit is returned.
Both of these options can help someone build credit and could lead to a card with more perks if the holder is diligent about paying off the balance every month.
Then there’s at least one brand of card that considers an applicant’s banking history in lieu of their credit score, has no annual fee, and comes with rewards.
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Prepaid Debit Cards
A secured credit card is primarily intended for building credit, whereas a prepaid debit card is good for budgeting and convenience but does not affect your credit.
A prepaid debit card is preloaded with your own money, typically though direct deposit, cash or check deposits, or online transfers from a checking account.
The card is used for transactions until the money runs out. Since there is no line of credit, you cannot run up debt on the card.
This is a great option for a young person who needs to learn how money works or for adults with a bad credit history, though it will not improve their credit scores.
Credit Cards That Save You Money on Interest
If you’re prone to carry a balance month to month, you might want to consider a low-interest card. While these types of credit cards don’t come with bells and whistles like airport lounge access, it is the financially prudent option if you have an irregular income or you carry a balance each month.
It might be best to look for a card that offers an initial APR of 0% and then an ongoing low interest rate.
Keep in mind that low-interest credit cards usually require a good credit score to qualify. Generally, the better your credit score, the lower your interest rate. The lowest advertised APR isn’t always what an applicant gets.
Balance Transfer Credit Cards
If you are in credit card debt, a balance transfer credit card could help you pay off your debt at a lower interest rate.
Interest rates and terms vary widely with balance transfer credit cards. A balance transfer card will often come with a 0% APR introductory period, but once that ends, the interest rate shoots up.
It’s important to pay attention to the fine print if this is an option you’re considering.
Choosing the most rewarding and suitable new credit card can become a research project. It’s best to think about your spending habits, needs, credit history, APR, any annual fee, and perks.
For a limited time, new credit card holders† who also sign up for a SoFi Checking and Savings with direct deposit can start earning 3% cash back rewards on all eligible credit card purchases for 365 days*. Offer ends 12/31/23.
†SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS PROSPECTIVELY BASED ON MARKET CONDITIONS AND BORROWER ELIGIBILITY. Your eligibility for a SoFi Credit Card Account or a subsequently offered product or service is subject to the final determination by The Bank of Missouri (“TBOM”) (“Issuer”), as issuer, pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated. Please allow up to 30 days from the date of submission to process your application. The card offer referenced in this communication is only available to individuals who are at least 18 years of age (or of legal age in your state of residence), and who reside in the United States.
*You will need to maintain a qualifying Direct Deposit every month with SoFi Checking and Savings in order to continue to receive this promotional cash back rate. Qualifying Direct Deposits are defined as deposits from enrolled member’s employer, payroll, or benefits provider via ACH deposit. Deposits that are not from an employer (such as check deposits; P2P transfers such as from PayPal or Venmo, etc.; merchant transactions such as from PayPal, Stripe, Square, etc.; and bank ACH transfers not from employers) do not qualify for this promotion. A maximum of 36,000 rewards points can be earned from this limited-time offer. After the promotional period ends or once you have earned the maximum points offered by this promotion, your cash back earning rate will revert back to 2%. 36,000 rewards points are worth $360 when redeemed into SoFi Checking and Savings, SoFi Money, SoFi Invest, Crypto, SoFi Personal Loan, SoFi Private Student Loan or Student Loan Refinance and are worth $180 when redeemed as a SoFi Credit Card statement credit.
Promotion Period: The Program will be available from 10/1/22 12:01 AM ET to 12/31/23 11:59PM ET
Eligible Participants: All new members who apply and get approved for the SoFi Credit Card, open a SoFi Checking and Savings account, and set up Direct Deposit transactions (“Direct Deposit”) into their SoFi Checking and Savings account during the promotion period are eligible. All existing SoFi Credit Card members who set up Direct Deposit into a SoFi Checking & Savings account during the promotion period are eligible. All existing SoFi members who have already enrolled in Direct Deposit into a SoFi Checking & Savings account prior to the promotion period, and who apply and get approved for a SoFi Credit Card during the promotion period are eligible. Existing SoFi members who already have the SoFi Credit Card and previously set up Direct Deposit through SoFi Money or SoFi Checking & Savings are not eligible for this promotion.
*See Pricing, Terms & Conditions at SoFi.com/card/terms
1See Rewards Details at SoFi.com/card/rewards.
SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.