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Choosing the Right Credit Card Is Tough. Here’s How to Find the Perfect Match

The right pick can put more money in your pocket.

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When used responsibly, the right credit card can ease the strain on your wallet with rewards and other card perks as inflation lingers and prices continue to rise. And if you’re just starting out on your credit journey, a card with robust credit monitoring tools can help you build good money habits and track your progress.

Some travel credit cards, for example, can cut your cost on lounge access and checked luggage, while cash-back cards offer you money back on eligible purchases. There are plenty of credit cards to choose from, but it’s all about finding the perfect match.

“It’s a combination of usability and rewards,” said John Ulzheimer, a consumer credit expert. “You want a card that is accepted by most, if not all, of the merchants where you commonly use credit cards. And, of course, if you’re using a card you might as well earn rewards at the same time.” 

Beyond rewards, it’s about your financial goals and needs, too. Whether your goal is to travel more or pay off credit card debt faster, here’s how to pick the right credit card for your wallet. 

First, set your financial goals

“What is the best credit card?” is one question to ask when searching for the right one. The answer depends on your financial priorities. 

Here are a few financial goals people put their credit cards to work on. 

Save money on everyday purchases

If your goal is to pay a bit less on everyday expenses, a rewards credit card -- which can earn you cash back, points or miles -- is the way to go. These cards give you a small percentage back on every purchase you make.

“Whether you choose a card that gives you cash back, points or miles, these valuable rewards can help boost your budget, which is likely feeling tight during inflationary times,” said Andrea Woroch, consumer and money-saving expert. 

For instance, some cards offer boosted rewards rates for select categories, like groceries, gas and restaurant dining. Other credit cards offer a flat rate on all purchases and some offer flexible rotating categories. Choose a card that aligns with your spending habits to make it easy to earn rewards on purchases you’re already making, without overspending. 

“Take a look at your year-end statement from 2022 to see which category you spent the most -- such as travel, dining out, entertainment, etc.,” said Woroch. “Then find a credit card that gives you more points, cash back or airline miles for that category. 

Fund your next trip

With the price of flights and hotel stays rising rapidly in the past year. The travel price index increased by 1.7% last month, while the price of airfare went up 6.4% from January to February, according to the latest Consumer Price Index.  

A travel rewards credit card can cut some of your trip costs. You can earn points or miles on every purchase you make, often with elevated rewards on travel purchases. Premium travel cards can also enhance your travel experience. 

“Airline clubs, free baggage check, the ability to earn status miles (rather than just normal airline miles), and the ability to upgrade into first class when you purchase your ticket are all A-tier perks for a travel rewards card,” said Ulzheimer. 

If you’re a brand loyalist, you can get even more specific -- and often higher value -- rewards with a hotel credit card or airline credit card. These cards can net you free night stays at the hotel chain and discounts on in-flight purchases, respectively, as well as other perks.

Improve or build your credit

Having an open credit card account on your credit report and using it responsibly -- paying your bill on time every month and using less than one-third of your available credit -- is a surefire way to build and maintain strong credit

There are credit cards designed specifically for those with bad credit or fair credit. These cards may have fewer frills than rewards credit cards, but they can help you build your credit so you can qualify for better features in the future.

“The most robust rewards cards will require good to excellent credit, which falls between 690 to 850,” says Woroch. Before applying, look at your credit score and reports from all three major bureaus to improve your score and better your chances of approval, she added. 

If you need to do some work before choosing a rewards card, secured credit cards can help you build or repair less-than-perfect credit. You’ll pay a security deposit as collateral, which typically serves as your available credit line. After a few months of responsible use, some secured cards allow you to “graduate” to a traditional credit card and get your deposit back. There are also a few second-chance unsecured credit cards to consider if you don’t want to put down a deposit. 

Finance a large purchase or consolidate debt

If you need more flexibility to make a big purchase or pay off outstanding debt, a 0% APR credit card can help. These cards offer an interest-free period, usually between 12 and 18 months from account opening, allowing you more breathing room to repay debt. 

“If you’re carrying a balance and paying monthly fees, roll over the balance to a new 0% balance transfer card to buy yourself more time to pay off that debt without interest piling up. This could save you a lot of money each month,” said Woroch. 

You’ll still need to pay the minimum payment on time each month to keep your account in good standing, and have a plan in place to pay your debt in full before the promotional period expires. Otherwise, when the introductory zero-interest promotion lapses, you’ll start accumulating interest on the remainder. 

But beyond paying off debt or funding a large purchase, it’s generally not ideal to choose a card based on its APR alone.

 “If you’re shopping for a card based on its APR then you’re already resigned to carrying a balance and paying interest, which is very expensive on credit card accounts,” said Ulzheimer. “Your better option is probably a debit card.”

Capitalize on welcome bonuses

One of the best ways to rack up points or cash back quickly is to open a new credit card with a generous welcome bonus. In order to earn the bonus, you typically have to spend a certain amount of money on the card within the first months after approval -- usually between three and six months. 

“Look for a good sign-up bonus like free cash or extra miles just for signing up. This could be enough to cover roundtrip flights or enough cash-back to pay for a new purchase,” said Woroch. 

Before jumping on the juiciest sign-up bonus you can find, check your monthly spending and make sure you’ll be able to meet the threshold without overspending. You don’t want to go into debt to earn a welcome bonus. Most importantly, make sure the card is a good fit for your spending and lifestyle in the long run. A welcome bonus is a one-time offer and when it’s done, the card should still be valuable to you. 

Consider annual fees

As you look for credit card options, one important aspect you should consider carefully is the annual fee. There are plenty of credit cards that don’t charge an annual fee. Other cards, however, do -- some can be hundreds of dollars. 

“Some travel rewards cards, for example, have annual fees that are around $500 per year,” said Ulzheimer. “That seems really high until you start adding up the retail costs of the benefits like airline club access, upgrades and companion tickets. When the math indicates you’re getting 4 or 5 times the value of your annual fee, it makes a lot of sense regardless of the amount.” 

Look for value beyond rewards

Aside from earning rewards to offset other costs, most credit cards come with other perks and benefits that can save you time and money. Some of these extra perks alone might make a particular card compelling, but it’s best to check the fine print to understand the ins and outs of each offer. Common cardholder perks include:

Rental car insurance. Some cards offer primary rental car insurance, which means the card company will cover you in the event the rental is damaged or stolen. Keep in mind that some credit cards only offer secondary rental car insurance to cover anything your own car insurance doesn’t. But you’ll have to use your car insurance to the full extent first. 

Trip cancellation or interruption insurance. If your trip gets canceled or you have to interrupt your trip for an eligible reason, your credit card may reimburse you for non-refundable expenses purchased with the same card up to a specific amount, like your flight or hotel accommodations.

Purchase protection. Some credit cards will cover any purchases made with the card that get accidentally damaged, stolen or lost. Purchase protection reimbursement amounts vary from card to card, and they usually come with a fair amount of restrictions and exclusions.

Extended warranty. Cards that offer this benefit usually extend the life of the warranty of purchases made with the card -- usually up to a year. Similar to purchase protection, this benefit usually comes with multiple exclusions and restrictions, so make sure to read the fine print when shopping for options.

Cellphone insurance. If your phone gets broken or stolen, your card issuer may cover the repair or replacement as long as you pay your cell phone bill with the card. Cellphone insurance usually is based on a certain coverage amount per claim or a maximum per year, with a cap on the number of claims you can file per year. However, this benefit might help you save money by not having to pay for cell phone insurance through your mobile carrier.

Secure shopping. With identity theft and data breaches on the rise, credit cards offer several ways to protect your data when you shop, either in-store or online. The easiest way to shop more securely with your credit card at brick-and-mortar stores is by using the contactless option, which is now widely available in the US. When you “tap” to pay, your credit card creates a one-time code that transmits your card number to the payment terminal, making it difficult for the personal information on your card to be stolen.

Virtual card numbers. As physical credit cards have become more secure, online credit card fraud has risen. Entering your credit card information online, especially on websites you’re not familiar with, can be risky. 

To mitigate risk, you can use a virtual credit card number. Virtual credit cards create a placeholder number in lieu of your card’s actual number that can typically be used just once and then expire. Some credit card issuers give you the option to create virtual numbers for your physical credit cards, which can be used online. Here are a few issuers that offer virtual card access: 

  • Citi
  • American Express
  • Capital One

The bottom line

Choosing the right credit card among the dozens of options can be overwhelming. When deciding, keep your financial needs and goals top of mind to find the right one for you. A credit card should complement your regular spending by earning rewards on what you’re already buying. Most importantly, think about how you’ll responsibly use the card to avoid debt and accruing interest.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Antonio Ruiz-Camacho is a principal writer covering personal finance. Prior to this, he was with Bankrate Credit Cards and CreditCards.com, where he led the editorial team for nearly five years. His writing has appeared in The New York Times, Texas Monthly, Texas Highways, Salon and elsewhere. Also a fiction writer, he earned his MFA from The University of Texas at Austin's New Writers Project and is the author of the award-winning short story collection "Barefoot Dogs."
Dashia is a staff writer for CNET Money who covers all angles of personal finance, including credit cards and banking. From reviews to news coverage, she aims to help readers make more informed decisions about their money. Dashia was previously a staff writer at NextAdvisor, where she covered credit cards, taxes, banking B2B payments. She has also written about safety, home automation, technology and fintech.
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