There’s a credit card for nearly every scenario. Whether you’re going on vacation, get 1-2% cash back, wanting to get frequent flyer miles, or need a balance transfer there’s no shortage of options.
Below we outlined the best types of credit cards for 2021.
1. Get Cash Back
- With cash back cards you earn a percentage of the amount you spend each month – typically 1-2% cash back. If you spend $10,000 on that card each year you’ll earn $100 at 1-percent.
- Chase Freedom Unlimited = 5% cash back on seasonal categories, 1.5% cash back on all others
- Cash back cards are popular for businesses too, especially if they have large re-occurring expenses each month (ex: monthly ad spend on Google or FB).
- It can be hard to get a cash back credit card if you have a bad, or even mediocre credit score. Good ones require a credit score of 700-850.
2. Consolidate For A Lower Interest Rate
- For those with credit card debt you can take advantage of 0% intro APR cards.
- Most new cards offer a “teaser rate” for the first 12-18 months on all purchases, and sometimes balance transfers.
- Citi Diamond Preferred Card = 0% interest for balance transfers and purchases in the first 18-months
- If you have bad credit you may get approved for a one-off balance transfer. This type charges a 3-4% of the balance transferred, but depending on your high interest card it’s probably worth consolidating.
- Or for a long-term, or low-rate card. These have low interest rates – for example, 6-7% – and last as long as it takes you to pay off the money.
3. Get Travel Perks
- You’ve probably noticed that the airlines offer their own travel reward calls – for each dollar you spend you’re earning “air miles” and may earn you perks (ex: car rental or upgrading to first class).
- AAdvantage MileUp Card (American Airlines) = 2 miles for every $1 spent
- Gold and platinum cards usually give you extra benefits– such as travel discounts and overseas assistance.
- You can also get airline-specific travel cards through American Express.
4. You Have Bad Credit
- If you’ve had trouble with your borrowing in the past, credit card issuers may not be willing to offer you a new card. If this is the case you’ll need to get a pre-paid or secured credit card.
- Pre-paid card = you need to deposit the amount you can spend
- Secured credit card = they require you to put up a percentage of the total credit line to secure the line of credit (usually 25-50% of the total credit amount).
- ** Cards for bad credit usually come with an annual fee of $35-99.
- Once you show that you can pay your card each billing cycle, other issuers are more likely to offer you a card in the future.
- For anyone with a credit score below 600.
5. Pay The Full Amount Each Month
- Charge cards don’t come with a specific credit limit and balances must be paid in full each month and most charge an annual fee.
- American Express Gold Card = $250 annual fee
- Cardholders get points for each dollar spent. Points are redeemable for purchases, dining, airfare, upgrades or hotel expenses.
- It’s the best type of credit card if you need to be reimbursed for erroneous or fraudulent charges.
- Charge cards are quicker to reimburse vs. a regular credit card.
- Fees and penalties are much higher than typical credit cards.
6. Reward Specific Credit Cards
- Online and retail stores sometimes offer their own cards and offer better cash back.
- Amazon Rewards Cards = 5% cash back on Amazon, and 1% cash back anywhere else
- Uber Cash Card = 3-5% cash back on Uber, 1% cash back on other purchases
- ExxonMobil Smart Card = 6-10¢ off every gallon of gas
7. Credit Cards For College Kids
- Low credit line, but low interest cards for college students looking to establish a credit score. Usually offered at conventional banks, but we recommend getting your student card at your local bank or college credit union.
- Student cards = expect 13-20% interest (with $500 credit line)
- School credit unions will give you the best interest rate and can be your go-to option when shopping for a home mortgage or car loan.