How To Choose The RIGHT Credit Card (The EASY Way)

If you want to be using credit cards to build your credit score, travel for free, or even just earn some extra cash back, you can’t just be using any old credit card, you really have to be using the ones that fit your needs. That’s why, in this blog, we’ll look at how to choose the right credit card for you, because there are a lot of things to consider from hundreds of cards out there, but some of those things will be more important than others, so I’ll dive a little bit into my own thought process for deciding what things make the most sense to prioritize, and then at the end, I’ll also answer a few common questions that should give you some good direction as we go. 

Let’s get right into it here, but I want to first start off this blog by quickly having you ask yourself whether you’re a beginner with credit cards. So maybe you only have one or two cards, or even zero if you’re truly just getting started, but if you’re a beginner, what I think you really should be focusing on right now is credit cards with no annual fees, and we want to do that for two main reasons. 

First, you might have a limited credit history as a beginner, so it’s going to be a lot harder to get You’re approved right now for some of those cool premium cards that will give you all those rewards and benefits. It’s not impossible to get approved for those cards, but it is less common. Then the second reason you want to start by focusing on no-annual-fee cards is because of the credit score factor called “length of credit history.” 

The length of your credit history is essentially going to look at how long you’ve had your active credit accounts open, and in general, the longer your average age of credit across those accounts, the better. So getting some good beginner credit cards at first that have no annual fees and that you can keep open forever is something that over time has a positive effect on your credit score, and it’s the reason why my first two credit cards both have zero fees and remain open to this day. 

Now that we can get into a whole lot more about secured credit cards, student credit cards, authorized users, and all that stuff when we’re talking about beginner credit cards, those are all good options to look into if you’re really starting from zero credit history at all. The next thing that I think anyone can identify as an important factor to consider when choosing the right credit card is whether you want to earn cashback or points for travel. 

In my opinion, cashback is going to be more straightforward and easier to manage, but travel credit cards that earn points can definitely give you a much higher upside with value if you’re willing to put in a bit of work to understand how to redeem your points the right way. You can always switch back and forth between team cashback and team travel, and even have multiple credit cards on both sides, but I’ve leaned heavily towards team travel in recent years. 

The reason for that goes back to why I even got into credit cards in the first place after I graduated college back in 2018, so I literally only had one boring student credit card back then that didn’t really do much other than start to build my credit. Then, once I graduated, I started to get the urge to travel and see new places, but the only problem is that I’m also very passionate about personal finance and things like budgeting, saving money, and investing. Because I was on a limited salary, I wanted to keep my travel expenses as low as possible, and that really led me into the world of credit card rewards. That’s why, once I got my credit history established, I started focusing on getting credit cards that earned points that I could redeem for travel.

So like I said, it’s really up to you whether you want to go ahead and do that or just go with cashback instead because I know plenty of people that love the simplicity of a good cashback setup, but just know that if you even travel just a couple of times per year and do that or just go with cashback instead because I know plenty of people that love the simplicity of a good cashback setup, but just know that if you even travel just a couple of times per year and fly or stay in hotels and I think there’s going to be a good argument for you to go with that travel route instead, because, like we’re going to talk about next year, you’re just going to have more options and a higher upside. 

Now that brings me to the next two things that I considered and that you should do if you do decide to go with travel cards, and that would be something called the Chase 5/24 rule and flexible points currencies. So many of you that have read other credit card blogs out there probably already know about the 5/24 rule, but for anyone that’s new to this stuff, the Chase 5/24 rule is basically just an unofficial rule that Chase has that says that if you’ve opened five or more personal credit cards across all issuers within the past 24 months, you will automatically be denied for any new Chase credit cards. 

And the reason why this is important is because it brings up the discussion of opportunity costs with credit cards. Now, opportunity costs are simply the value you give up by choosing one option over another. So in the world of credit cards, Chase is known to have some of the best cards for their sign-up bonuses, points multipliers, benefits, and stuff like that. And that makes it the ideal strategy for most people who plan to accumulate a large number of credit cards over time to prioritize Chase cards while you’re still under the 5/24 rule to maximize value while you can. 

If your plan is to only have like three to five credit cards in total, then this rule isn’t as important for you, but for someone like me who’s up to 11 active credit cards and counting, I’m glad that I got my Chase credit cards first under that rule and created a Chase trifecta setup. And by the way, if you want to get some more details on the Chase cards that I use in that setup or any of the other best credit cards out there, I actually recommend a site called Slick Deals that has a ton of information where you can learn more about different offers. 

If you’re not familiar with SlickDeals, they basically just have an entire section on their website dedicated to explaining the best credit cards and offers going on right now. But getting those Chase credit cards also brings me to my next thing to consider when choosing the right credit card for you, which is flexible points currencies. So those Chase cards that I just talked about all earn what’s called “ultimate rewards points,” which is an example of a flexible currency because it allows me to have multiple options for how I want to redeem the points that I earn. 

I could turn those Chase points into hotel points with different hotel programs like Hyatt or Marriott, or I could turn them into airline miles with United or Obvious with British Airways, and I could do all that by using my Sapphire Preferred to transfer my flexible ultimate rewards points over to any one of those programs or many more that have partnered up with Chase. I could also choose to redeem my points for travel through Chase’s portal and effectively get a discount compared to what I would pay in cash for something like a flight, hotel stay, or car rental. 

And I could even redeem my Chase points for cash back if I wanted to, which means that in many situations, you can turn a travel credit card setup into a cash back setup. But if you go with cashback-only cards, then you’re just stuck with cashback as your one redemption option. So I think that having flexible points currencies like Chase Ultimate Rewards Points or American Express Membership Rewards Points is better to get into at first compared to applying for specific airline or hotel cards because, again, you have options with flexible points currencies. 

However, if you choose a specific airline or hotel card, such as United, Marriott, or any of those, you are only limited to one option. All right, now hopefully all that makes sense, and you can kind of see the decision-making process that I’ve gone through as I’ve chosen my own credit cards. But next, let’s get into what I believe are really the three most important things to think about when choosing the right credit card for you. And those are going to be the welcome bonus, the annual fee, and the points are cash-back categories. 

So I want to focus on the welcome bonus first because, in general, it’s important to remember that a credit card’s initial sign-up bonus is going to give us the highest return on our spending and the most upfront value, which is why we want to pick cards that have good bonuses. We also want to make sure that we’re choosing bonuses with minimum spend requirements that are reasonable for us to hit according to our own normal budgets because most offers will say something like spending $500 in the first three months to get a $200 bonus. 

Now, $500 over three months is reasonable for most people, but then we look at some more premium cards, and they could have a higher requirement for something like $4,000 of spending in three months to get maybe 60,000 points. Now along with the welcome bonus, I also have to talk about annual fees because these two things can be closely related, with higher signup bonuses usually coming with cards that have higher annual fees. 

So I tell people not to be afraid of paying for a credit card because what you’re really looking for is positive net value, or for something like the Chase Sapphire Preferred, we might pay $95 per year but in exchange, you get 60,000 points upfront worth at least $750 towards travel plus better points, categories, benefits, and other things like that, which can easily make that annual fee worthwhile. 

But again, I don’t want to get into too much detail about any one card in this blog, so I will have that link here that will explain the best credit cards out there a little bit better. Now it’s easy to justify an annual fee in year one because the welcome bonus is almost always going to offset that annual fee a few times over, but then when your annual fee comes around again in year two, that’s when you really have to evaluate those points and cash back categories, benefits and features, and even the travel insurances and other smaller stuff like that to decide if it’s really worth it for you.

So in terms of points and cash-back categories, you want to try to find cards that align with your spending habits, but you should also decide how many credit cards you want to have. If you plan to have a lot of credit cards, like me, you can try to optimize and get a different card that will be best for each category, so maybe you can get one card that earns a lot on travel, one card that’s good for groceries, one card for dining, one for guests, and approach it that way if you think you can manage it all. 

And once you’ve established a core setup, you can also go ahead and chase all those elevated bonus offers that these credit card companies will have from time to time, because again, welcome bonuses give a ton of upfront value. But, if you’re a more average credit card user who doesn’t want to carry more than two to four cards, I would definitely prioritize finding one or two cards that will earn well for your highest spending categories and another card that will earn well for miscellaneous purchases. 

I would say that for most people, that means maybe finding at least one card that earns four to five percent back on groceries and then another card that earns around two percent back on everything. Getting cards like that first is going to help you set up a good foundation, and then you can always build on that later. Alright, so just as a quick recap for the order of operations here, choosing the right credit card First, if you’re a beginner, stick with no-annual-fee cards as you establish your credit history for maybe a year or two, and if you’re truly starting from zero, try looking at secured credit cards, student credit cards, or getting added as an authorized user under someone with good credit. Then ask yourself if you would prefer cashback or travel rewards. Cashback is going to be simple and easier to manage, but travel points and miles have more upside value and might require a bit more research to learn how to redeem them the best way possible. 

Again, I prefer team travel, and the next considerations you should prioritize when going down that path are the Chase 5/24 rule if you want to take advantage of Chase credit cards, and then I believe you should first get cards that earn flexible points currencies over specific airline and hotel credit cards. Of course, if there is a specific airline or hotel card that makes a lot of sense for you as a frequent traveler and customer, or if there’s some sort of amazing offer going on, then yeah, you can go ahead and opt to get one of those instead, but in general, with travel credit cards, look to get flexible points, and right now Chase and Amex points are my two favorites, while Capital One, Citi, and some other points currencies are good as well. 

After you’ve determined what you’re looking for in those areas, you can move on to the most important aspects of credit cards, which are their welcome bonuses, annual fees, and point or cashback categories. When you put those factors together, you can pretty easily determine whether you’ll get a positive net value in year one, year two, and year three with any credit card. 

Now that leads me to some of the smaller additional things that I consider last when I’m choosing the right credit card, even though they are still very important to think about, and that would be the other insurance benefits, protections, and features that are sometimes a bit harder to put a value on. So these can be travel insurances primary auto rental coverage airport lounge access; no foreign transaction fees; there are a lot of features that you’ll find on travel credit cards with annual fees, so it’s important to look into these things if you’re looking to use credit cards for travel like me. 

The value that you put on these things really does vary from person to person, so only you can decide if these things are worth anything to you, but for me, for example, I like having airport lounge access on my travel credit cards because that’s a bonus way to sort of enhance my travel experience and get some free food and drinks as well, which have some value, and then I’ve also used things like primary auto rental coverage, better points redemption features, and other travel things like that that make certain annual fees worth it to me. 

By no means is this a comprehensive guide, but rather some things to consider and my own thought process that I go through when choosing the right credit cards for me and my situation. Finally, let’s just answer a few common questions that can really help you decide what cards to get as well. 

Common Questions That Can Really Help You

So the first question here is, “What if I get an annual fee card and don’t really want it anymore in the future?” For this, I would say that before you get any card with an annual fee, start by making sure that you think it’s worth it, not just in the first year but also for the long term. As I said, almost any card can be worth it in year one with the welcome bonus as long as you reach that minimum spend requirement, but in years two and beyond, you really have to see what value it provides and look beyond that bonus. 

But once you get beyond that year one point and your second annual fee hits, you might have two options. Number one, you can ask for a retention offer, where basically you just call up or message customer service and say, “This credit card isn’t giving me as much value as I thought it would,” but you still want to remain a customer, so are there any retention offers available. They might give you some points or a statement credit that can help you offset the cost of that annual fee, but it’s not guaranteed.

But the second option is that you might be able to downgrade your annual fee card into a no annual fee option in the same product family, which is going to help you get rid of that annual fee while still keeping the same account open, which is good for your credit score. Not all cards have this downgrade option. Just do some research before applying for an annual fee credit card so you have a backup plan if things don’t work out in the end. 

Next for question two here what credit score do I need to get approved for any card that I want? So this is also something that’s going to vary from person to person because there’s no one exact credit score that’ll automatically approve you or deny you for every single credit card out there, but in general, if you want to get the best cashback or travel credit cards, I would aim to get your score into the 700s first while also having a good income to report on your application. 

Make sure you prioritize things like making payments on time and having a good credit utilization rate. You also might have to stick with those secured credit cards or other beginner no-annual-fee cards for a year or two. That way I can establish myself like I did because I was patient, and then I can set myself up to get approved instantly for almost any credit card that I want later on. 

Then for question three, should I consider the APR percentage when choosing a credit card? So for this, I would say yes and no. Yes, because if you carry a balance, you want that to cost you as little interest as possible, so a lower APR is better, but no, because I don’t want you to be using credit cards in the first place, and if you plan to carry a balance because the interest rates are so high and even higher right now in 2023, then it’s never going to be worth it.

Always treat your credit cards like cash by using them if you already have the money set aside in your bank account. That way you can pay off your statement balances on time and in full every single month. That’ll help you to avoid interest completely while also collecting rewards and building your credit score at the same time. So for me, the APR does not matter at all because I’ve never paid a single cent in interest by paying off all my cards on time and in full. 

And then, for a fourth question here, should I consider 0% APR offers? So for this, I would also say no under most circumstances, and the reason for that is that I don’t want people to get into the habit of carrying a balance. I personally have never used a 0% APR offer because I want to avoid debt unless it’s something that I can really leverage for cash flow over the long term, so something like a 30-year mortgage on a rental property, for example. 

Even if it’s 0% interest and you can handle the balance, that 0% offer is only valid for 12 to 18 months, depending on the card, and that’s just too short. Now if you’re opening a business credit card to buy something for your already established business and then taking advantage of a 0% APR offer, then I think that’s more reasonable, or if you’re doing a balanced transfer, that might be okay in some situations, but I really wouldn’t rely entirely on balanced transfers because there is a fee associated with them, and a 0% balance transfer is really just a short-term solution to a long-term debt problem that many people face. 

So for the most part, focus on paying off your balances and don’t open up a credit card just because of a 0% APR offer. I would open credit cards with the same thought process that we went through in this blog and really try to pick credit cards that are going to bring meaningful value into your life. So I like to browse through articles on websites like Slick Deals to give me more ideas on what cards to apply for and to help me gather information.