At a Glance

Whether you are trying to pick your first credit card or you are looking for the next one to add to your wallet, picking the right card can be a challenge. There are a variety of different types of credit cards available to consumers which offer varying benefits, and choosing the wrong type of card can result in having perks that are never used. To that end, learning how to pick the best credit card based on your spending habits is important.

In this article, you’ll learn:

Check your credit

First and foremost, the immediate step to take before considering different credit cards is to check your credit. All credit cards will have recommended credit scores and applying for a card you don’t qualify for will result in a hard inquiry on your credit for no reason. Check your score and then narrow down your list of potential credit cards based on which you qualify for with your score.

Understand the different types of credit cards and which is best for you

As mentioned, learning to choose the best credit card is all about matching your personal spending habits to the type of credit card you’re considering. Below are some of the most common categories for credit cards to familiarize yourself with:

1. Cash back credit cards

The first and most common type of credit card is a straightforward cash-back credit card. This type of card offers a flat rate, typically in the range of 1% to 3%, in cash back for all purchases made with the card. This means that a person who spends $10,000 on a cash-back card would receive $100-$300 back. When choosing the best credit card, it’s worth noting that this type of card is best as a “catch-all” card for those who don’t want to spend time thinking about which card to use for which type of purchase.

Learn more: Are Cash Back Credit Cards Worth It?

2. Rewards credit cards

Rewards credit cards are a unique type that offer varying percentages back in points or cash, sometimes on a rotating basis, in different categories. For example, a rewards credit card may offer 5% back on food purchases, 3% back on drugstore purchases, and 1% back on all other expenditures. This type of credit card is best for those with eclectic purchases. Find the category where the most points are offered back and match it to your spending habits.

Compare: Best Rewards Credit Cards

3. Travel credit cards

A travel credit card offers points back on purchases for travel-related items. This could include purchases for airline tickets, hotels, parking, and other similar categories. For business workers always on the road or avid travelers, picking the best credit card may look like acquiring a travel card.

Compare: Best Travel Credit Cards

4. 0% APR cards

A 0% APR card offers no interest on the card for an introductory period, typically 12-24 months. This is a great option for those who are just getting started with debt or for those who are anticipating a major purchase in the immediate future that will be paid over time.

5. Balance transfer credit cards

A balance transfer credit card is a specialty type of credit card that allows a person to carry a balance from another credit account over to a new card. The company issuing the balance transfer card will pay off your debt with the old card company and move your debt to their card. It often comes with an introductory APR rate.

Learn more: Balance Transfer Credit Cards

6. Secured credit cards

For those who don’t have a strong credit score or perhaps have a limited history with credit, a secured credit card can be an excellent option. This type of card requires a person to make a cash deposit upfront before gaining access to the credit line associated with a card. In the event you default on your debt, the credit card company will keep the cash deposit.

7. Co-branded credit cards

In looking at how to choose the best credit card, consumers who would live and die by a single brand should consider co-branded credit cards. These types of cards are when a banking institution partners with a company to offer a credit card for that company. Common examples are hotel credit cards, airline credit cards, or department store credit cards.

8. Store credit cards

As opposed to a co-branded credit card which can be used anywhere, a store credit card can only be used at the specific company that partnered with the banking institution. This type of credit card is best for those who only shop at a specific store on a consistent basis.

Compare: Best Store Credit Cards

9. Small business credit cards

When looking at how to choose the best credit card for me as a business owner, seeking out a small business credit card can be an excellent strategy. These cards typically come with higher limits and are a great way to keep track of business vs. personal expenses.

Familiarize yourself with basic credit card terms

Before launching into the world of credit cards, it’s helpful to learn some of the common terminology you may start to hear when considering how to select the best credit card:

  • Credit limit: This is the grand total amount that a person could potentially borrow
  • Credit utilization: This is the amount of credit that a person has borrowed compared to their total limit during a billing cycle
  • Interest rate:This is the percentage rate you pay on balances you carry into the next billing cycle after the minimum payment has been met
  • Annual percentage rate: This is the percentage rate you are shown when applying for a card and includes the interest rate, applicable fees, and any other charges
  • Minimum payment: This is the minimum amount you must pay on an outstanding credit balance during a billing cycle to avoid being in default on your debt.

Compare and choose the card that offers you the best value

When looking at how to choose the best credit card for you, it’s important to look at your own personal spending habits. Take the time to look at your monthly expenditures and then break those expenses down into overarching categories. Once you do this, find a credit card that maximizes benefits in those categories.

Compare: Best Credit Cards

Check application requirements and apply for the chosen card

Once you have decided how to select the best credit card for your personal circumstance, don’t forget to check the application requirements to be sure you can actually get the card. Once you are certain you can meet those qualifications, submit your application to see if you are approved.


Generally, the factors to avoid when choosing a credit card are a high APR, bonus perks in categories you will not use, many hidden fees associated with the card, and an extremely short introductory rate.

The most important factor to consider when looking at how to choose the best rewards credit card is whether or not your expenses line up with the categories where cashback is offered.

A widely considered good APR for credit cards is that which is offered for average good credit individuals, which is typically 16%.

The best number of credit cards to have is the amount you can properly manage without relying solely on debt. For those with a strong financial standpoint, having multiple credit cards which maximize points back in different categories can be a great way to earn perks back.