Best Credit Cards of August 2024

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A BEGINNER'S GUIDE TO CREDIT CARDS

The idea behind credit cards is simple: When you use a credit card, you are borrowing money to pay for something. Later on, you must repay what your borrowed. If you take time to pay it back (rather than pay it in full when your credit card statement comes), you'll be charged interest. The whole credit cards industry rests on this basic premise.

How credit cards work

A basic credit card transaction works like this:

1. You use your card. When it comes time to pay for something, you use your card at the cash register by running it through a card reader (or, if you're online, you enter your card information on the checkout page).

2. The purchase is authorized. The card reader contacts your credit card company to make sure the card is valid for the purchase amount. Assuming everything is OK, the transaction is authorized.

3. The merchant gets paid. The bank that issued your credit card sends money for the purchase to the merchant where the transaction took place.

4. You pay. The transaction shows up on your credit card statement, and you repay the bank for the purchase.

» MORE: What is a credit card?

How credit card rewards work

Many of the best credit cards of 2024 give you rewards for your spending. Rewards come in two basic flavors:

• Cash back. You can use cash back to directly reduce your balance. In some cases, you can have your cash back deposited in a bank account or sent to you as a check.

• Points or miles. Points and miles can be redeemed for travel, gift cards, merchandise or other things. You may also have the option of redeeming points for credit on your statement, just like cash back.

The card issuer sets the rewards rate that applies on your card. There are two basic kinds of rewards structures:

• Flat rate. You get the same rewards rate on all spending done with the card, regardless of what you spend money on. You might get 2 points per dollar on all purchases, or 1.5% cash back on everything.

• Bonus rewards. You earn a base rate on all spending (typically 1 point per dollar or 1% cash back) and then higher rates in certain categories — 5% cash back at gas stations, for example, or 3 points per dollar spent on travel.

» MORE: Cash back vs. travel — how to choose credit card rewards

How credit card interest works

When you borrow money from a bank, you usually have to pay interest, which is the cost of using the bank's money. Credit cards are unusual in that there is a way to avoid interest entirely. Most cards offer a "grace period": If you pay your balance in full on each statement — meaning you don't roll over any debt from one month to the next — you won't be charged interest. If you carry debt, though, you'll be charged interest.

» MORE: How credit card interest is calculated

DIFFERENT TYPES OF CREDIT CARDS

Credit card companies in 2024 offer different kinds of cards to meet different consumer needs. Some people put a lot of money on their cards every month and then pay them off immediately; those people benefit from a card that returns a portion of their spending in the form of rewards. Others tend to carry a balance from month to month; they're better served with a card that offers a low ongoing interest rate. Still others are working to improve their credit; issuers have cards designed for those people, too.

Here are the major types of credit cards.

Rewards credit cards

These cards "pay you back" for a portion of your spending by giving you cash, points or miles. See our roundup of the best rewards credit cards of 2024 for a range of options for different types of users. Or look into specific types of rewards cards:

• Best cash-back credit cards of 2024.

• Best travel credit cards of 2024.

• Best airline credit cards of 2024.

  • Best American Airlines cards.

  • Best United Airlines cards.

  • Best Delta Air Lines cards.

  • Best Southwest Airlines cards.

• Best hotel credit cards of 2024.

  • Best Marriott Bonvoy cards.

  • Best Hilton Hotels cards.

Interest-saving credit cards

• Best balance transfer credit cards of 2024.

• Best 0% APR credit cards of 2024.

• Best low-interest credit cards of 2024.

Credit cards for building credit

The credit cards with the richest rewards, plushest perks, lowest interest rates and longest 0% periods are available only to those with good to excellent credit. If you're still building your credit (or rebuilding it after a misstep), you'll want to hold off on applying for these cards until your score improves. However, banks have designed cards specifically for people working to improve their credit.

• Best credit cards for fair credit of 2024.

• Best credit cards for bad credit of 2024.

• Best secured credit cards of 2024.

• Best alternative cards for no credit for 2024.

• Best college student credit cards of 2024.

CHOOSING THE BEST CREDIT CARD FOR YOU IN 2024

If you're a beginner to credit cards, see our step-by-step guide to choosing a credit card. It starts by helping you figure out what cards you can qualify for, then walks you through deciding what kind of card best fits your needs. The process in short:

1. Check your credit.

2. Decide on a broad card type.

3. Narrow your choices.

4. Apply for a card that gives you the best overall value.

» MORE: How to pick the best credit card for you

Comparing credit card features

Every credit card delivers value in its own way, through its own unique combination of features. And there are trade-offs involved. If you want rewards, for example, you'll probably have to accept a higher interest rate. If you want high-value perks, you'll likely pay an annual fee. If you want a low interest rate and no fees, you shouldn't expect much else from the card. In other words, you're unlikely to find a single card that offers a high rewards rate, a long 0% period, a rock-bottom ongoing interest rate, generous perks and no annual fee.

Here are the main points of comparison when looking at credit cards.

Annual fee

Some people are dead-set against paying a fee just for the privilege of carrying a credit card. But paying an annual fee is worth it in certain circumstances. With any annual fee, the math comes down to whether the value you get from the card exceeds the dollar amount you pay. Still determined not to pay? See our best credit cards with no annual fee of 2024.

Other fees

Depending on what you plan to do with the card, you'll want to take these other fees into account:

• Balance transfer fee. See our best credit cards with no balance transfer fee of 2024.

• Foreign transaction fee. See our best credit cards with no foreign transaction fee of 2024.

• Cash advance fee. Using your credit card to get cash is expensive.

• Late fees and returned-payment fees. These fees can be steep, but they are avoidable.

» MORE: Credit card fees and how to avoid them

Introductory interest rate

Credit card companies drum up business by offering people with good credit a low introductory interest rate.

Ongoing interest rate

The ongoing rate is what you pay after any introductory rate expires. Some cards charge a single rate for all cardholders; others allow for a range of rates depending on your creditworthiness. In general, the better your credit, the more likely you are to qualify for a low rate. That said, if you pay your balance in full every month, your interest rate doesn't actually matter because you're never charged interest.

Rewards

Cash-back cards refund a certain percentage of the purchase price. Other cards give you a certain number of points or miles per dollar spent. Every card sets its own rewards structure, so apples-to-apples comparisons can be difficult. But when comparing rewards programs, think in terms of:

• Earn rate. What do you get for every dollar spent?

• Redemption value. How much do you get for your rewards when it comes time to use them?

• Redemption options. How much flexibility do you have in using your rewards?

Sign-up bonus

The sign-up bonus or welcome offer is a sum of cash (say, $150 or $200) or a batch of points or miles (say, 40,000 points or 50,000 miles) that you can earn by spending a certain amount of money in your first few months with a card. The purpose is to get you in the habit of using the card. The bonuses on many travel cards are often big enough to cover the card's annual fee for the first few years. See our best credit card sign-up bonuses of 2024.

Perks

Unlike rewards, which are what you receive for using a credit card, perks are benefits you get just for carrying a card. With some cards, particularly travel credit cards, it may be the perks that provide the bulk of the value. Premium credit cards, which have annual fees of $450 and up, tend to offer the cushiest perks. Airline credit cards and hotel credit cards can easily pay for their annual fee with their perks. A full list of potential perks would be too long to include here, but common examples include:

• Airline/airport benefits. Lounge access. Free checked bags. Priority boarding. Elite status.

• Hotel benefits. Free nights. Automatic room upgrades. Early check-in/late check-out. Free amenities. Elite status.

• Statement credits. Automatic credit for such things as travel expenses, purchases from selected merchants or the application fee for trusted traveler programs such as TSA PreCheck and Global Entry.

• Purchase protections. Extended warranties. Protection in case of theft or damage. Price protection (which refunds the difference if you find the same item cheaper elsewhere). Return guarantees.

• Rental car coverage. Supplemental coverage on top of your own auto insurance policy, or even primary coverage in place of your own policy. Learn about credit card rental coverage and see our best cards for rental car coverage.

• Cell phone insurance. Coverage in case of loss or damage. You usually have to pay for your service with your card to qualify. See our best cards for cell phone insurance.

• Credit tracking and security. Free credit score. Credit monitoring services. Ability to "lock" your card.

Credit-building help

When you're looking to build or restore credit, several features are more important for you than for people who already have good credit.

• Reporting to credit bureaus. If you're using your card responsibly, you want your credit score to reflect that. Make sure that your card reports payment activity to all three credit bureaus, the companies that assemble credit reports.

• Deposit requirements. If you're getting a secured credit card, you'll need money for a security deposit. Minimum deposits are usually in the $200 to $300 range.

• Upgrade opportunities. As your credit improves, it's nice to be able to upgrade your account to a better card.

• Incentives for responsible behavior. Some cards might boost your rewards rate if you pay on time, or give you access to a higher credit line.

How many credit cards should you have?

Just as there is no single best credit card for everyone, there is no perfect number of credit cards to have. It depends on your needs and how much effort you want to put into managing your credit cards.

• There's no limit to how many cards you can have. Each lender evaluates your credit on its own term, but there's no hard limit where you have "too many cards."

• You don't need to have multiple cards to maintain good credit score. Credit scoring formulas tend to reward you for having different types of accounts — credit cards, mortgages, loans, etc. — but it's not necessary to have multiple accounts of each type. One credit card, responsibly managed, is enough.

Advantages of carrying multiple cards

• Maximizing rewards: One card may pay you a higher rewards rate on groceries. Another may reward you handsomely at restaurants, or on gas purchases, or for spending on travel. Having multiple cards allows you to maximize your total rewards.

• Flexibility: Some cards are more widely accepted than others. It’s good to have a backup in situations where one card isn’t accepted. Additionally, if a card is lost, stolen or compromised, you'll have another option while you wait for a replacement.

• More available credit: A key factor in your credit score is your credit utilization, or how much of your available credit you're using.

Risks of carrying multiple cards

• Losing track of spending: The more cards you have, the harder it is to remember how much you’ve spent on which card.

• Missing a payment: Multiple due dates increase the risk of missing a payment, which can trigger a late fee or (if it's late enough) even damage your credit.

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METHODOLOGY

NerdWallet's Credit Cards content team selected the best credit cards of 2024 in each category based on overall consumer value, as evidenced by star ratings, as well as their suitability for specific kinds of consumers. This page includes selections across multiple categories, and a single card is eligible to be chosen as among the "best" in more than one category. Learn how NerdWallet rates credit cards. Factors in our evaluations include:

• For cash back cards: Cash-back earning rates, rewards structures (such as flat-rate or tiered categories), annual fees, redemption options (including minimum redemption amounts), promotional APR periods for purchases, bonus offers for new cardholders, and noteworthy features such as loyalty bonuses or the ability to choose one's own rewards categories.

• For travel rewards cards: Annual fees, foreign transaction fees, rewards earnings rates, ease of use, redemption options, domestic and international acceptance, promotional APR periods, bonus offers, and cardholder perks such as automatic statement credits and airport lounge access.

• For balance transfer and 0% APR cards: Annual fees, balance transfer fees, the length of each card's 0% introductory APR period, ongoing APRs, credit-profile requirements, cardholders' access to credit scores, and other noteworthy features such as rewards or perks that give the card ongoing value beyond the promotional APR period.

• For college student cards: Annual fees, rewards programs (both earning rates and redemption options), promotional and ongoing APRs, bonus offers for new cardholders, incentives for responsible behavior, free credit scores and other credit education, availability to applicants with thin or no credit history, and other noteworthy features such as a path to upgrade to a different product later on.

• For credit-building cards (including bad credit or fair credit): Annual and other fees, deposit requirements for secured cards (both the minimum and maximum allowed), interest rates, upgrade options, the availability of free credit scores and other credit education and tools, reporting to credit bureaus, and other noteworthy features such as a rewards program or the ability to qualify without a credit check

• For business cards: Annual and other fees, rewards rates, the earning structure (for example, flat-rate rewards versus bonus categories), redemption options, bonus offers for new cardholders, introductory and ongoing APRs, and other noteworthy features such as special financing arrangements, free cards for employees or tools for managing business expenses.