Are you considering signing up for a new credit card? If so, then you might think that it’s as simple as filling out an application and seeing if the financial institution approves you. For the most part, it genuinely is that simple. However, at TheDealExperts, we look for the best credit card deals because we look for the best deals on practically everything. Depending on which card you sign up for, you could either be getting a fantastic deal, or you could be missing out on lots of rewards and money savings!
Therefore, if you want to get the most out of your credit card and get the best credit card deal, here’s what you need to consider!
Who Has the Best Credit Card Deals?
Let’s get straight to it. Who has the best credit card deals out there? There isn’t one single best answer to that question. The reason is that credit card deals, rewards, interest rates, and cashback benefits vary so widely that the best value for one person won’t be the best deal for someone else.
Consider a simple example. Alice loves to travel, has a fantastic credit score, and a robust income. Betty doesn’t travel very much but loves to shop online. Betty has a mediocre credit score and an income that’s very much around the median for where they live.
A credit card with fantastic travel perks might make sense for Alice, but it doesn’t make much sense for Betty. She doesn’t like to travel, so why would she bother racking up all those points? Similarly, Alice can probably apply for the best credit cards that banks have to offer and get approved. However, with a mediocre credit score and median income, Betty won’t likely qualify for the most elite cards.
The point is that the “best” credit card deal for one person might not be the best deal for someone else, so figuring out the best value is very personal.
Some Credit Card Companies Do Have Better Deals Than Others
There are, however, companies and credit cards that excel in one area and, for most people, are the best deal in that particular market. The American Express Platinum Card, for example, is well-known as one of the best travel cards. Citi has a card line that has 2% cashback on all purchases. Discover has rotating 5% categories that can give you a significant amount of cashback on various everyday expenditures, including groceries, gas, or Amazon shopping.
In general, for cashback, 2% is the highest that you’ll get on every purchase. Some companies, like Discover, offer rotating categories of a higher percentage (5%), but the cashback on every purchase is still 1%. Others will give 1% on all purchases, 2% on some categories, and 3% on others, like Bank of America does with their BankAmericard. If you want a cashback card with the highest percentage back, you should look for one that gives you 2% back most of the time.
If you’re looking for 0% APR introductory rates on balance transfers or purchases, then the highest number of months you’ll typically find is 18. As of this writing, only one credit card, the US Bank Platinum Visa, offers 0% APR on all new purchases for longer, at 20 months. If you find a credit card with 0% APR for 12-18 months, you’re typically in the ballpark of the best credit card deal for interest.
Typically, for the interest rate, 12-13% is the lowest APR you’ll get for any credit card. An APR of around 20% is more common. If the card you’ve selected has a 29.95% APR, it’s one of the highest on the market, and you should probably avoid it unless you have confidence that you can pay it off each month.
Of course, access to each of these credit cards varies with your credit score and income levels. These are merely suggestions of what you could consider a fantastic credit card deal. Anything with a long 0% APR period, low interest rate (12% or so), and high cashback or other rewards is likely the best deal on the market today.
Why Do You Need To Research Before Applying for a New Credit Card?
Now that you know a little more about the best credit card deals out there, it’s essential to understand why you should thoroughly research your new credit card before you hit the apply button.
Every time you put in a formal credit application, the card company will pull your credit report. They’ll look at things like your current monthly payments, your income, and your overall credit score. Most cards have unadvertised cutoffs (which you can usually find by searching online). Anything below a particular score, like 580, for example, is an automatic rejection. Typically, the more prestigious and rewarding the card is, the higher the cutoff number is.
This inquiry is a “hard pull,” which means that it will show up on your credit report for two years. That inquiry lowers your credit score by a small amount. According to FICO, these hard inquiries typically lower your credit “by less than five points.” If you have bad credit, though, every point matters and a few applications could make your ok credit score turn bad.
The other fact that FICO points out is that people who have six hard inquiries on their credit report are “up to eight times more likely to declare bankruptcy than people with no inquiries on their reports.” So, if you apply for one card, get rejected, try another, get another rejection, and so forth, you could very quickly give a wrong impression on your credit report. You might be able to pay off the credit cards just fine, but the automated approval systems might flag your profile as too high of a risk, and then you’ll struggle to get any credit.
Given all of this, please carefully consider any application for credit you submit. Research the cards online a little and figure out which are the best for you. You don’t want to waste an application on a suboptimal card as you’ll have to wait for two years for that to come off your report! Of course, we have a list of the top credit cards here at TheDealExperts.
What Should You Consider Before Applying To Get the Best Credit Card Deal?
Before applying for any new credit card, there are a few things that you should know to avoid an unnecessary dent in your credit score.
First, you should know your credit score. There are a few ways to get this for free. Some possible ways are to go to AnnualCreditReport.com (this site is the one that the US government recommends) or CreditKarma.com. There are quite a few other sites that will do this, as well. If you already have a credit card, some companies like Bank of America or Discover, are already providing you with an updated credit score each month.
Note that there are many different scoring methodologies out there (FICO vs. VantageScore, for example), but they’re all relatively similar. As long as you have a good FICO score, for instance, you should have a good VantageScore.
Credit scores range from 300 at the lowest end to 850 at the highest end. It’s relatively challenging to hit 300 or 850, so most people fall somewhere in the middle. Generally speaking, credit card companies classify people into buckets, with each bucket having a likelihood of default.
For Experian, for example, the buckets look like this:
- Exceptional (800-850). If you’re in this range, the world is your oyster, and you’ll usually be able to get credit without denials and receive excellent terms.
- Very Good (740-799): People in this range usually get approved for credit, but they may not get the best possible interest rate or terms. They’re generally still quite good, though, so you should expect to have a decent interest rate.
- Good (670-739): People in this bucket still often get approved for credit, but they may start to have worse terms. That credit card might have a 25% APR instead of the best possible 18%, for example.
- Fair (580-669): In this range, applying for credit becomes more of a roll of the dice. Some companies will lend to people in this category, but some will flat out reject you. American Express, for example, will likely decline any application for anyone in this range.
- Poor (580 and below): Below 580, applying for credit is challenging. Expect high interest rates and many declines. You may have to look into secured credit cards to rebuild your credit.
Before you apply, get a free copy of your credit report and know the bucket in which your score falls. Knowing this (especially if your score is low) will save you unnecessary applications that could hurt your score even more!
Your Income, Gross and Net
Every credit card application will ask you for your income, so this is something that you should review before you apply. Most applications will ask for your gross income, which is the amount you earn before taxes. If your offer letter says “$50,000 a year,” that’s your gross income. There are occasionally some applications, though, that ask about your net income. This term refers to the amount you get after all taxes and other deductions. So, if you earn $1,000 a week and have $300 taken off for taxes, your net pay is $700.
For people with a W-2, this information is as simple as reviewing some paystubs. However, for self-employed people, if you don’t pay yourself via a W-2, you should go back and take a look at your average income over the past year or two. Also, think about your future income. Put a figure down that is realistic.
Your Debt-to-Income Ratio
Credit card companies look at many things before issuing an approval. One of the key metrics is your debt-to-income (DTI) ratio. To calculate this number:
- Take your monthly gross income and then look at all the minimum payments you have.
- Include your loan payments, car payments, and rent or mortgage, as well.
- Divide the payment amounts by your monthly gross income and multiply by 100. That number is your debt-to-income ratio.
As a quick example, let’s suppose you make $5,000 a month, or $60,000 per year. You have an apartment with $1,000 rent. Adding the minimum payments of your credit cards comes out to an extra $250 a month. You also need to make a car payment of $250. Finally, you have some student loans that take up $500 a month. Altogether, that’s $2,000 or a DTI ratio of 40% ($2,000 / $5,000 = 0.4 * 100 = 40%).
The Federal Reserve defines a DTI ratio of 40%+ to be a sign of financial stress, so you should aim to keep your ratio low. Under 30% will ensure the highest probability of approval on your application.
If you have a DTI over 40%, you may wish to consider holding off applying for a new credit card until you pay off some existing debt.
How Do These Factors Affect the Best Credit Card Deals I Can Get?
Let’s say you look at the advice above and, while your score isn’t perfect, you think it’s good enough to at least have the company approve you for the card. You may be wondering if there’s any reason to hold off applying. Is there any benefit waiting to apply for a card, or as long as you have the bare minimum to make the company accept you, is that enough?
The benefits you receive from a potential credit card are the same, no matter your score and income. If they advertise a low 0% APR period for 18 months, you’ll get that 18 months whether or not your score is 680 or 800. Similarly, if they say you’ll get 1% cashback on all purchases, you’ll get that no matter your score.
What will change, however, is the credit limit you receive and the APR you get. Both of these can affect your finances in ways that you might want to consider before applying.
The credit limit you receive when you apply for a credit card affects more than what you can buy. Higher credit scores and income levels typically result in higher limit approvals. Higher limits not only mean that you can put more on the card, but they also protect your credit score from going down in the future.
An example best illustrates this concept. Consider someone with a 700 credit score. This person has one credit card with a $10,000 limit on it. As of right now, there is a balance of $2,500 on the account. Our friend walks into an Apple Store and sees a shiny new iPhone. They don’t have the $1,200 on hand, but, no problem, they can get the Apple Card and make the interest-free monthly payments! Goldman Sachs (the bank behind the Apple Card) approves the individual with their score and income levels for a $1,500 limit. They put the $1,200 iPhone on their card and walk away.
Next month, this person sees their credit score drop by 30 points. What just happened? This one decision had two adverse effects on the score. First, any hard inquiry causes a credit score to drop by a couple of points or so. Second, they’ve completely changed their credit utilization ratio. Before, it was 25%, well under the 30% target that leads to the best credit scores. Now, they have the original $2,500 plus $1,200 for the phone and a new combined limit of $11,500. The new utilization ratio is 32% ($2,500 + $1,200 = $3,700 / $11,500 = 0.3217 x 100 = 32.17%). That’s now above the 30% threshold.
Therefore, the approval winds up blocking this person’s access to the best credit terms. Suppose they need a $10,000 loan to fix the roof. They might receive an offer at 25% APR instead of 15%. Then, not only would the iPhone cost $1,200 on the Apple Card, but you now have to factor in the extra 10% APR on the subsequent $10,000 loan (which, incidentally, is much worse than the little bit of interest on the $1,200 phone).
Now, if they had waited until their income was higher and their Apple Card limit was $10,000, then the application would, eventually, help their score a little. The combined balance would still be $3,700, but the total limit would be $20,000. Their new utilization ratio would be 18.5%, which is less than the original 20%. The subsequent “roof leak loan” would still receive 15% APR instead of the higher 25% APR, and overall, they’d save quite a bit of money.
The APR you receive reflects the amount of risk that the lender believes they are assuming by extending you the credit line. The more chance and uncertainty that the lender takes, the more they have to charge in interest. The best credit card deals have a lower APR.
Of course, the APR you receive has a significant impact on your overall financial health. Let’s say you have a card at 20% and a card at 30%. You put $1,000 on this card and make only the minimum payments. With the 20% APR card, you’ll pay off the balance in 10.9 years. You’ll pay $990.60 in interest on this debt. Certainly not the best, but not the worst either.
At 30%, though, this simple $1,000 charge becomes a nightmare. Making only the minimum payments, you’d take 24.3 years (that’s almost as long as a mortgage!) to pay off this debt and spend $3,725.63 in interest.
Even though these APRs only differ by 10% (in absolute terms), you will take 2.5x as long to pay the debt and spend nearly 4x the interest while paying it off.
Even if you’re pretty sure you’ll never carry a balance, you should still want a card with a low APR. You never know what life will throw your way, and paying hundreds or thousands in interest every month is not a sustainable solution.
What Should You Look for in a New Credit Card?
Let’s suppose you’ve got your score and relevant financial information, and you’re confident in your ability to get a new credit card. The next step is to look at cards.
You might be thinking that most credit cards are the same. After all, one might offer half a percent back, while the other might offer 1%. Some have rotating 5% categories, while others have lower interest rates. However, the truth is that credit cards have very different benefits, some of which are more valuable to certain people than others.
When thinking about getting a new credit card, you should first have a clear understanding of what your financial goals are with this new card. Think of a credit card as a financial tool. It should help you achieve your goals in some meaningful way. Do you want to travel a lot? Perhaps a card with travel points is right for you. Are you looking to save on interest? Maybe you should pick a card with a 0% APR balance transfer promotion.
Therefore, make a mental list of a few important things to you for your next new credit card. As noted earlier, credit card rewards and perks have such variety that there’s almost always a card that will fit your desires.
With that said, please keep in mind that the rewards you earn will likely impact you very little compared to the cost of carrying a balance month-to-month. So, to the extent that you can, try and pay off your balance every month to avoid unnecessarily spending your money on interest. If you expect to carry a balance regularly, you should aim for a credit card with the lowest interest rate possible. There’s no point getting 5% back if you’ll pay a 25% APR. You’d be much better getting a card with 15% APR and getting no cashback!
Consider a Card’s Annual Fee, If There Is One
When looking at credit cards, you might notice some of them have annual fees. The American Express Platinum, for example, has a yearly fee of $550 at the time of this writing. However, with this card, there are many travel perks not found on other American Express products. For people who enjoy traveling, it might be worth the annual fee. However, if you don’t expect to travel much, paying a $550 yearly cost is expensive (and, remember, if you carry a balance, not only will you be responsible for the annual fee, but you’ll also pay interest on it!)
Some credit cards unlock additional perks with an annual fee. For example, the free card might have 0.5% cashback, but the $95 a year one has 1%. In this case, think about how much you expect to put on the card each month. If you put on $1,000 per month, 0.5% will give you $5 a month in cashback, while 1% will give you $10. A $5 a month difference is only $60 per year and probably isn’t worth the $95 fee. However, if you put $10,000 on the card each month, it most definitely is!
Please pay attention to this fee and make sure it’s worth it before signing up for your new credit card! The best credit card deals typically have no annual fee, although there are some times when you’ll want to pay for one to get certain perks. Never pay a yearly fee for a card with standard perks like 0.5% or 1% cashback. There’s almost always a card out there that offers this without a cost!
There’s Quite a Bit To Consider Before You Hit the Apply Button
If you’re thinking of a new credit card, there’s quite a bit to consider before you apply. Think about what your financial goals are with this card, what rewards you get, what costs there are (annual fees and expected APR), and know your key financial metrics. Make sure that you apply for cards that advance your financial position in a meaningful way since a wasted application will have a small impact on your credit score for two full years.
If you apply and receive a rejection response, please pay attention to the reasons for the denial! Credit card companies must provide specific reasons for their rejection within 60 days of your application, by law. Before applying for credit again, look at those reasons. Use that information to guide your next steps before applying for credit in the future. After all, if you receive a rejection from one company for having too high of a debt-to-income ratio, you probably will receive similar rejections if you apply elsewhere.
If you want to see some of the best credit cards around, take a look here on TheDealExperts for some of the top credit cards. That list contains the cards that are the best in terms of rewards, annual fees, and credit limits. If you’re looking for the perfect new credit card, that list undoubtedly has it!
Frequently Asked Questions about Credit Card Deals
Below are some questions that people often ask us about the best credit card deals.
No one card has the best offer. Some cards have better offers than others, but the best offer tends to come down to your personal needs. If you want travel rewards, American Express is typically a great choice. For top cashback, consider Chase Freedom Flex or Citi Double Cash.
Typically, Citi, Chase, Bank of America, and the other large financial institutions will have the best offers. Sometimes, your local credit union can also have fantastic offers.
The best credit card deal that you can have is different for each person. For people with excellent credit who want the best rewards, the Chase Sapphire Preferred card is typically the best. If you’re looking for cashback, the Capital One Quicksilver is a fantastic option. People who have bad credit may find the Capital One Secured MasterCard to be the best option.
Apply online! That’s the best way to apply for most of these cards. You’ll need some necessary information, like your address, Social Security number, and income. Before you apply for the card, please make sure that you check your credit score to see if it is high enough that you can reasonably expect approval. There’s no point applying for a credit card that requires a 680 minimum score if yours is 500! That’s only going to hurt your credit score even more.
Most people find American Express, Discover, Capital One, and Citi to be some of the best credit card companies out there. Each one has its strengths and weaknesses. Ultimately, to get the best credit card deal, you should focus less on the company and more on the credit card itself.
The best credit card to have is one that will give you the perks that you need while advancing your financial goals in a meaningful way. For each person, that’s different. If you need to reduce your interest payments, the best card might have a 0% APR for balance transfers for 18 months. If you want travel perks, the best card could be the American Express Platinum card. Decide on what extras you want and find the card that has those!
The cards with the broadest acceptance worldwide are Visas and MasterCards. Discover and American Express have high acceptance rates in the US, but worldwide, they don’t have the same clout. Therefore, if you’re looking for the best credit card to use, you’ll typically want a Visa or MasterCard.
According to JD Power’s credit card company rankings, American Express has the highest satisfaction rate. Discover ranks second, and Bank of America ranks third.
Most people have the most satisfaction with American Express, Discover, or Bank of America. Of course, Chase, Citi, and other high profile banks also have some of the best credit card deals.