You gotta give them credit — these cards stand out from the rest.
That’s according to the U.S. News & World Report ranking of the “best credit cards of 2020,” released Wednesday, which ranked a variety of credit cards from airline and travel rewards, to balance transfer and 0% APR, to cash back and business cards. The ranking factored in rewards rates and sign-up bonuses, as well as annual, foreign transaction and balance transfer fees, and introductory and ongoing APRs.
The winning cards are:
Best Cash Back Credit Card: Discover it Cash Back
If you can keep track of rotating categories (pro hint: put a sticker on the card that tells you what categories you earn in each quarter) and pay your balance in full and on time, this cash back card can be very lucrative. The perks on this no-annual-fee card include 5% cash back on categories like gas stations, grocery stores, restaurants, and Amazon.com, and then Discover will automatically match all the cash back you’ve earned at the end of your first year.
Personal finance site NerdWallet writes that “this card is a winner either as an everyday card or as part of a multicard rewards-maximizing strategy,” but notes that downsides include rotating categories and that there is “slightly less merchant acceptance for Discover in [the] U.S.”
Ted Rossman, an industry analyst at CreditCards.com, notes that “most people prefer cash back cards because they’re [often] easier and more straightforward,” but he cautions that you should only use one if you pay your balance in full and on time, as typically the rewards you get do not outweigh the interest you’d pay if you carried a balance.
Best Balance Transfer and Best 0% APR Credit Card: BankAmericard
If you’re in debt, this card is a solid option: It offers a 0% APR for your first 15 billing cycles for purchases and for any balance transfers made within 60 days of opening your account; plus it has an introductory $0 balance transfer fee for the first 60 days your account is open, and no annual fee.
NerdWallet calls it “nearly perfect for paying down debt,” though it warns that “there’s not a whole lot of value to be had once the 0% intro APR period ends.” In other words, be sure to pay that balance off in full before that period ends or it could be very costly.
Best Airline and Best Travel Rewards Credit Card: Capital One Venture Rewards
If you’re a frequent traveler who pays your balance in full and on time each month, this may be the card for you: Among its perks are double miles on every purchase, a sign-up bonus of 50,000 miles when you spend $3,000 in the first three months, and no foreign transaction fees.
“It has the potential to yield the average spender roughly $1,500 in rewards over the first two years of ownership,” writes personal finance site WalletHub, which notes that this card is in the “travel rewards hall of fame.” One drawback: After year one, there’s an annual fee of $95.
Is a travel card right for you? “General travel rewards cards are a better fit for consumers who travel frequently, or take at least one international trip per year,” says Sara Rathner, a credit card expert at personal finance site NerdWallet. She notes that one NerdWallet survey found that consumers who spend less than $8,600 per year on travel may get more value out of cash-back cards.
If you’re a big spending business that pays its balance in full and on time, this card means business: It offers 5x points on flights and hotels, and when you book flights with points, you get 35% of those points back. It also has a huge sign-up bonus where you can earn 50,000 points after you spend $10,000 and an extra 35,000 points after you spend an additional $10,000 within your first 3 months.
However, the annual fee is extremely high at $595 per year. The Points Guy website, which reviews credit cards, sums up this card by saying it offers “big price, big perks.”
So how do you pick the right credit card for you? First, “if you carry a balance, then put the interest rate as your first priority and don’t worry about rewards, says Rossman.
If you don’t carry a balance, look at your lifestyle and spending. Rathner tells MarketWatch that you need to ask yourself questions like: “What do I typically spend money on? How much do I spend in a given month? What would I want to redeem rewards for? How much effort am I willing to put in to manage a portfolio of credit cards? Given my credit score, income, current debts, and other financial factors, which cards would I be most likely to qualify for?” Once you know those answers, you can find a card that makes sense.
Once a year you should also evaluate which cards you hold. You should do the same when you’ve had a significant change in lifestyle like a marriage, birth of a child, home purchase, or something else major, says Rossman. “Our research shows that only 34% of credit card users have changed their most frequently used card in the past three years, so lots of people are missing out on [credit card] market changes.”