American ExpressAmerican ExpressAmerican ExpressAmerican ExpressAmerican Express
United StatesChange Country
credit intel
shop small

What Credit Card is Best for You in 2020?

Before choosing a credit card, make sure to do some research around the best cards that fit your needs. Here’s how to choose one in 2020.

By Eliott M. Kass | American Express Credit Intel Freelance Contributor

6 Min Read | December 20, 2019 in Cards

choosing a credit card

 

At-A-Glance

When choosing the best credit card for you, it’s best to think carefully about how you will use it.

The right mix of card features depends on your spending habits and credit history.

More generous rewards are expected in 2020, making it a good time to apply for a new card.

With a bewildering number of credit cards on offer, how do you choose which credit card is best for you? And even if you have one or more cards already, are they the right ones—or should you choose a new credit card for 2020? After all, credit card benefits can change from year to year, even though the basics of choosing a card don’t.

 

Here’s a look at why you might want to choose a new credit card in 2020 and how to pick the best one to meet your needs.

 

Four Things to Consider When Choosing a Credit Card

When choosing a new credit card, it pays to think hard and choose wisely—it’s usually a long-term commitment! Roughly 25 million Americans keep the same card for at least 10 years.1 Here are four things financial experts say you should consider.

  1. Why a new card? People’s reasons for choosing a credit card vary. Some want more spending flexibility, while others want to consolidate debts. The experts say your primary reason for wanting the card should determine the type of card you look for. If general spending is your aim, it probably makes sense to choose a card with low interest rates and rich rewards. If you want to use it for debt consolidation, a no-fee balance transfer credit card may be your best choice.
  2. Will you carry a balance? If you do, it may be more important to choose a low annual percentage rate (APR) credit card with low fees instead of one that offers generous rewards. Do the math: Credit card interest is averaging slightly over 17% per year,2 while you usually only receive 1-2% per purchase in cash back or other rewards.3 So, if you expect to carry a balance month to month, even generous rewards won’t offset a high APR. If you can find a card with an introductory 0% promotional APR on purchases, you can avoid paying interest entirely—if you can zero out your balance before the promotional APR expires.
  3. What will you spend on? If you don’t plan to carry a balance, then a card that offers large rewards can really work in your favor. But different cards offer higher rewards for specific types of purchases. Choosing a credit card that rewards airline travel makes little sense if you rarely fly, or one that offers discounts on restaurants if you only occasionally eat out. To reap the advantages of a rewards program that aligns with your spending, it’s good to review your monthly expenditures to see where your money really goes.
  4. Will you qualify? There’s little more frustrating than getting declined for the perfect card for your needs. Lenders qualify card applicants based on many criteria, and the standards for some cards are more stringent than others. To maximize your chance of acceptance, credit authorities suggest:
  • Pay it down. Improve your credit score by paying down your balances; make sure your payments are on time and avoid new borrowing.
  • Count all income. Carefully document all your income on the credit card application. If you’re 21 or older, you can include all of your household’s income—including that of your spouse or partner.
  • Be realistic. Choose to apply for a credit card whose requirements are aligned with your credit history. If you have a low credit score, you may not get approved for a card that offers a sign-up bonus or other premium rewards. But some lenders welcome applicants with less than pristine credit reports, although their cards may carry higher interest rates and offer fewer rewards

 

Why You Might Want to Choose a New Credit Card in 2020

But if you already have one or more credit cards, why should you even think about swapping them out or adding a new one to the mix?

 

Credit card companies change their offers all the time, and in 2020 they are expected to offer more flexible rewards and step up their efforts to woo groups like affluent millennials. Cash back, for instance, is now recognized as the reward most preferred by people of all income levels, so expect to see lots of cards that promote this incentive.4 So, if you haven’t chosen a new card in a while there’s a chance you may be missing out on some really good opportunities.

 

Plus, choosing a new credit card may help boost your credit score. Adding a new card’s credit limit without increasing your total spending may improve your credit utilization rate, which is the ratio of the credit you use to your total credit limit.5 That ratio is one of the factors that contributes to credit scores.

 

Also, if your credit score has improved since the last time you applied for a card, you may be able to qualify for a lower interest rate.

 

The Takeaway

To choose the best credit card in 2020, you need to consider why you need—or want—it in the first place and what sort of items you plan to buy with it. Then you can look for the optimal mix of fees, rates, and spending rewards. Credit issuers are expected to offer even more attractive rewards, making 2020 a good time to choose a new credit card.

Related

Elliot Kass

Elliot Kass is a journalist who has covered global business and technology from New York, London, and San Francisco for more than 30 years.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

The material made available for you on this website, Credit Intel, is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.