Which is a good credit card?Best Credit Cards of June 2022

Your credit score plays a large role in which credit cards you can get. If you have a low credit score and you work on raising it, that will open up more credit card options for you.

Here’s the best advice you can follow to improve your credit score.

Review your credit report

You’re legally entitled to a free annual credit report from each credit bureau (Equifax, Experian, and TransUnion). Go to AnnualCreditReport.com to request it.

Once you have your credit reports, review them for errors that could be damaging your credit score. If you find any errors, visit the website of the credit bureau that issued the report to file a dispute.

Get a credit card

The easiest way to improve your credit is by using a credit card and paying the bill on time. If you don’t have a credit card, look for cards aimed at consumers in your position.

Starter credit cards are ideal if you don’t have much credit history yet. If you’re rebuilding credit from issues on your credit history, then secured credit cards are the most suitable option.

Stay below 30% of your credit limit

The amount of your credit that you use impacts your credit score. Say you have a card with a $1,000 credit limit. If the balance is $500, that would put your credit utilization ratio at 50%.

A lower credit utilization helps your credit score. As a rule of thumb, aim to stay under 30% credit utilization at all times. It’s good for your credit, and as an added perk, it helps you stay out of credit card debt.

Follow good payment habits

Learn your credit card’s due date and always make your payment on time or early. Each on-time payment improves your payment history, which is the biggest factor in your credit score. You may want to set automatic payments so you don’t miss any.

It’s also recommended that you pay off your credit card every month. While this isn’t necessary for your credit score, it’s a way to avoid interest charges on your credit card purchases.

The right number of credit cards for most people is one. That’s particularly important for cardholders using credit cards for rewards, since the juice may not always be worth the squeeze when carrying multiple cards and using each to optimize rewards for each spending category. It’s even more true for cardholders carrying debt. The best credit cards help you earn big on your everyday purchases while avoiding fees.

But this isn’t necessarily the right mantra for everyone. There’s no doubt that savvy cardholders carrying multiple cards can wring out a good amount of value. With the right strategy and a financial discipline, having a few of the best cards for different uses can be worthwhile.

When should I have one credit card?

You should stick to one credit card if:

• You want to keep your finances as simple as possible.
• You’ve never had a credit card before, or you’ve been using credit cards for less than a year.
• You’ve had problems with missed credit card payments or overspending.
• You value simplicity in managing your finances and don’t want to worry about tracking multiple bills.

When should I have multiple credit cards?

You should carry multiple credit cards if you want more card benefits and you’re confident in your ability to manage everything. There are some big advantages to having multiple cards:

• You can carry cards that earn more in different areas, such as one flat-rate cash back card and another with bonus categories. This is a simple way to maximize your rewards.
• You can use features from each of your cards and get more value overall. Instead of choosing between two of the best credit card deals, you can have both.
• You’ll have more available credit, which helps you maintain a lower credit utilization ratio. This can result in a higher credit score.

The best credit card for most people is the Wells Fargo Active Cash® Card. It earns a 2% cash back rate on purchases, making it one of the most lucrative and flexible credit cards. This card also has a $0 annual fee, a generous sign-up bonus, and a lengthy 0% intro APR offer.

Every consumer has different spending habits and needs in a credit card. The best credit card to have will depend on your unique situation.

We’ve chosen the Wells Fargo Active Cash® Card as the best credit card of 2022 for the following reasons:

• 2% cash rewards on purchases is the highest rate we’ve seen. Other cards offer more in select bonus categories, but 2% across purchase categories is the best deal for the typical consumer.
• Cash back is flexible. While some people find travel points valuable, everyone can use cash back.
• $0 annual fee. It’s always a plus when you won’t need to pay anything extra for your credit card.
• $200 cash rewards bonus. New cardholders earn this welcome bonus after spending $1,000 on purchases in the first three months.
• A long 0% intro APR offer. Adding to this card’s versatility is a 0% intro APR on purchases and qualifying balance transfers for the first 15 months.

Any time you’re going to apply for a credit card, you want to make sure you choose the right one. Here’s how to pick a credit card:

Decide which type of card you want. This will narrow down your credit card offers considerably, so it makes sense to do this first. If you’re most interested in, for example, earning travel points, then there’s no need to look at the best credit card offers for a 0% intro APR.

Compare credit cards in that category. Once you’ve chosen a type of card, it’s time to compare credit cards side by side. Find the best credit cards in that category and then decide which is best for you. Here’s how to compare credit cards:

• Figure out the features that are most important to you. This will depend on the type of card you’re choosing. Let’s say you need a balance transfer card. The features to look at would be the length of each card’s balance transfer offer and its balance transfer fees.
• Check for any annual fees on the cards you’re comparing. If you’re stuck between two credit cards that work for you, one of them may have a cheaper annual fee.
• Use secondary features as your tiebreaker. These are the features that aren’t quite as important but still have value. Secondary features could include sign-up bonuses or a FICO® Score for free.
• Read the fine print. All credit cards display common card features in a standardized format, including an outline of the APRs and lineup of fees. Keep an eye out for the following fees and compare them to other cards: Annual, balance transfer, cash advance, late payment, and foreign transaction.

The simplest way to apply for a credit card is online, where you can complete an application in minutes. Here’s how to apply for a credit card online:

1. Choose a credit card and click “Apply Now”: You’ll find this link on the credit card page.
2. Fill out the required information: Card applications ask for your personal information, including your name, mailing address, date of birth, and Social Security number. They also ask for financial information, including your income. Some companies might ask about your net worth.
3. Submit the application: You may receive an instant decision of either an approval or a denial (hopefully approval). The card issuer could also put your application under review, meaning it needs more time to decide.

Whether your credit card helps or hurts you all depends on how you use it. To ensure that your credit card provides value and doesn’t get you in debt, here are a few key guidelines:

• Use your credit card regularly: To build your payment history and increase your credit score, you need to use your credit card for at least one purchase per month. That’s just a minimum, though. If you have a rewards card, consider putting your purchases on your credit card to earn as much back as you can.
• Only charge what you can afford: It’s safest to only purchase what you can afford with the money you have your bank account. This will help you avoid overspending and debt. The exception is when you have a card with a 0% intro APR on purchases, since those are designed for financing expenses.
• Pay on time and in full: Late payments can lead to fees, interest charges, and a lower credit score. Missing a payment does not help your credit score; carrying a balance does not help your credit score. It’s important to always pay on or before the due date. Once again, 0% intro APR credit cards are an exception. You can carry a balance on those during the intro period without interest (though you still need to make the minimum payment).
• Take advantage of your card’s perks: All of the good credit cards have their share of benefits. Spend some time learning what your card’s benefits are so that you can use them when you need them.

Annual percentage rate (APR): The annual percentage rate is charged for carrying a balance on a credit card, expressed as an annual percentage. With credit cards, the APR is the same as the interest rate.

Balance: The amount owed on a credit card, including all unpaid transactions and fees. The balance at the end of a statement period is called the statement balance.

Balance transfer: Moving a balance from one credit card to another. This is usually done when the new card offers a lower APR. Not every credit card offers balance transfers, and many of the cards with this feature charge a balance transfer fee.

Cash advance: Withdrawing cash from a credit card, most often through cash advance checks, using the card at an ATM, or by wiring money with the card. Cash advances usually have a higher APR and start accruing interest immediately, so it’s a poor way to use a credit card.

Credit card: A credit card is a revolving line of credit issued by a bank and connected to a revolving line of credit. The cardholder can use their credit card for purchases and possibly other types of transactions, although this depends on the card.

Credit limit: The credit card’s spending limit. This can vary based on the type of transaction. On credit cards that offer cash advances, there is typically a lower credit limit for cash advances than for purchases. A transaction that would exceed a card’s credit limit will be declined unless the cardholder has opted to allow over-the-limit transactions (and any potential fees that come with them).

Credit score: A credit score is a rating of a consumer’s creditworthiness. The score indicates how likely it is that they will make bill payments on time and repay what they borrow. Credit scores are calculated based on the consumer’s financial history.

Interest: A fee charged for borrowing money. The APR determines how much interest a credit card company can charge on balances. Use our interest rate calculator to get a sense of how much interest adds to your monthly bill.

Minimum payment: The minimum amount a cardholder can pay by the due date to remain current on their credit card bill and avoid a late fee.

FAQs

• How does a credit card work?

  A credit card allows you to pay for purchases by borrowing money. The maximum amount you can borrow at one time is called your credit limit. The money you’ve already borrowed is your balance, and the amount you have left to borrow is your available credit.

• What is the best credit card?

  The best credit card for many people is the Wells Fargo Active Cash® Card. It will get you a 2% cash rewards rate on purchases, making it one of the most lucrative and flexible credit cards. The $0 annual fee and lengthy 0% intro APR offer are also a big draw. While this is an easy pick to recommend for many people, it’s important to know that the market is packed with plenty of the best credit cards, ones included on this shortlist and not. The best credit card to have will depend on your unique situation.

• How do I compare credit card offers?

  You can compare credit card offers with our side-by-side credit card comparison tool. Pay attention to key features like the APR, annual fee, rewards system, welcome offers, and credit requirements.

• How many credit cards should I have?

  The right number of credit cards for most people is one. That’s particularly important for cardholders using credit cards for rewards, since the juice may not always be worth the squeeze when carrying multiple cards and using each to optimize rewards for each spending category.

• How should I use a credit card?

  Whether your credit card helps or hurts you all depends on how you use it. To ensure that your credit card provides value and doesn’t get you in debt, here are a few key guidelines:

  • Use your credit card regularly
  • Only charge what you can afford
  • Pay on time and in full
  • Take advantage of your card’s perks