Finding the best credit cards for your lifestyle isn’t always easy. Fortunately, these four make a great place to start.
Secured Credit Card
A secured credit card is a type of credit card backed by a cash deposit. The deposit acts as collateral to protect the lender if you default and don’t make repayments.
Secured credit cards are simple: After you deposit cash, the lender issues a credit line often equal to your security deposit. Then, you use the card and pay it off like any other card. When you close the account or graduate to an unsecured card, you receive your deposit back.
Secured credit cards make great options for credit card beginners and anyone with a poor or no credit history. Because the issuer reports the card to credit bureaus, secured cards can boost your score quickly. As you try to improve your credit, the cash-backed credit limit helps to build responsible credit habits.
Cashback credit cards offer cash rewards on everyday purchases. Most rewards take the form of dollars or points and operate on a percentage basis. (For instance, earning 2% cashback or 2x points on every dollar spent.) You can usually redeem your rewards for a check, bank transfer, or credit statement.
Cashback cards come in three main flavors:
Flat-rate cards offer the same cash back on every purchase (usually 1-2%), making them ideal if you want cashback without complicated reward programs.
Bonus category or tiered cards offer “tiers” of rewards depending on where or what you buy. (For example, 2% on dining out, 3% on groceries, etc.) You may prefer a tiered card if you tend to shop at specific retailers.
Rotating rewards cards change their bonus categories quarterly or yearly. You may like rotating rewards cards if you’re highly organized and want to earn more cashback on seasonal purchases.
Cashback cards make it easy to earn money on the money you’d spend anyway – helping you “save” through shopping.
Gas stations may issue gas credit cards that offer discounts, rewards and perks for filling up. Many, like those offered by Shell or ExxonMobil, offer 5-10 cents off per gallon. Gas cards tend to operate more like store cards in that you can only use them at particular stations or brands.
Gas station credit cards can help you earn cashback on gas while curbing your credit use. Due to their limited acceptance, you can also use them to establish or rebuild your credit without worrying that you’ll overspend.
Travel Points Card
Travel points cards make some of the best rewards cards for frequent travelers. As the name suggests, they help you earn travel-specific rewards and discounts.
Depending on the card, you may receive points or miles on every dollar spent that can help you score free or discounted:
Airport lounge stays
For many people, travel rewards cards make it easy to save up for that much-needed vacation. Some travel points cards also offer redemption options for non-travel expenses, though your points may not go as far.
How Do Credit Cards Help You Achieve Your Financial Goals?
Your credit cards can work for or against your financial goals. It all depends on how you manage your spending.
Build Your Credit Score
You can use credit cards (especially secured cards) to build your credit score and responsible credit habits at the same time. In time, you may qualify for better interest rates or larger loans, such as a car or home loan.
Boost Your Savings with Everyday Spending
Rewards cards make it easy to earn cashback and travel points on everyday purchases. The key is finding cards that align with your spending habits and advance your financial goals.
You can use the cash or points saved to cover your holiday shopping, save for your future, enjoy a free vacation, or reduce your grocery bill. And if you pay off your bill monthly, you’ll enjoy all these perks without paying interest or fees.
Safeguard Against Fraud
Most credit cards now offer built-in fraud protection, too. Aside from letting you off the hook for fraudulent purchases, they may also provide identity theft protection. Defending your financial status from scammers helps you stay on track with your financial goals.
Track Spending More Easily
Credit cards also make it easier to tally up your monthly budget.
When you pay for purchases with cards, it’s difficult to keep track of all your receipts. But with a credit card, you can use the online or mobile app to break down your spending by category, simplifying the budgeting process.
Compare the best credit cards for you
Finding the best credit card can be a hassle – but not with Benzinga. We make it easy to shop and compare credit cards that fit your lifestyle.
Frequently Asked Questions
What type of credit card is most widely accepted?
Visa and Mastercard tie for the most widely-accepted credit card by global merchant acceptance at 52.9 million apiece. Discover comes in second with 44 million merchants.
What is the best option for credit cards?
The best credit card is the one that meets your needs. For instance, while cashback cards can help your savings goals, secured credit cards make it easy to control spending and build credit.