Best Credit Cards in January 2025

Credit cards work in two main ways:

• As a payment method, credit cards work as a type of currency between the cardholder and the merchant. When you use your credit card, a credit card network (Visa, Mastercard, Discover or American Express) confirms with the issuing bank that you have funds available and communicates that to the merchant.
• Credit cards work to build credit. Credit card issuers report your account activity to the major credit bureaus. Using your credit card regularly and paying the balance on time is essential to building an excellent credit score, as long as you aren’t using too much of your credit limit.

The best credit card for you will depend on a lot of different factors. You can narrow down your choices by taking inventory of your spending habits, credit history and rewards preferences.

1. Determine what you spend the most on and what you want to buy with the card. You can either get multiple credit cards you can use across several spending categories, or get one card for all your spending. Tiered rewards cards might be more valuable but require more juggling, while flat-rate rewards cards are simpler but may not be as valuable.
2. Look at your credit report and credit score. Your credit score can help you decide whether you need a credit card to build credit before you apply for higher-earning credit cards. You should also look at your credit report and look for errors — fixing them can help boost your chances of getting approved for more valuable cards.
3. Determine whether you want to earn cash back or travel rewards. If you travel often, then a travel credit card is likely better for you. Points and miles are valuable, but redeeming them can be less straightforward than cash back. If you don’t travel often or don’t want to deal with confusing points or miles systems, then a cash back credit card is likely a better fit.
4. Ask yourself how much you’re willing to spend on an annual fee. Some cards have annual fees, but come with benefits to offset the costs. However, if you won’t use benefits like dining credits, travel insurance or TSA PreCheck, then a no-annual-fee credit card could be right for you.
5. Review what kind of credit card benefits you use or would be willing to use. Look for a card with benefits that match your spending habits. For example, if you spend a lot on dining, a card that offers dining credits could align with your goals. Or if you travel often, a credit card with good travel insurance could also save you money.

To get a credit card, follow these steps:

1. Check your credit score to know which cards you’re likely to get approved for.
2. Learn key credit card terms to know what fees you’ll have to pay with your card.
3. Determine what type of card best fits your needs.
4. Compare credit card offers and see if you’re preapproved or prequalified.
5. Gather personal information, like your full legal name, address, Social Security number, annual gross income and employment status.
6. Prepare for an impact on your credit score.
7. Choose where you’ll apply for the card. This is typically done online.
8. Fill out and submit your application.
9. Wait for a response. This usually takes three to five minutes. If your application is denied, you’ll receive a letter.
10. If you’re denied, you can call the credit card reconsideration line for another chance at approval.

How many credit cards should I have?

The number of credit cards you should have will depend on your lifestyle and financial goals. You may use one credit card for cash back on your weekly grocery trips and another to finance a large purchase over an extended time, interest-free. Having multiple cards will increase the amount of credit you have available, which can have a positive impact on your credit score.

Still, some people find it difficult to juggle several cards with different due dates and interest rates. If you struggle with credit card debt or managing payments, keep the number of credit cards in your wallet to a minimum.

1. Use your credit card often. Whether you’re using your card to earn rewards or build your credit, you should use it regularly. You won’t get rewards if your cards stay in your wallet, and your issuer may close your accounts if you don’t use them.
2. Don’t spend more than you can afford. Aim to pay off your credit card each month. Even if you have a high credit limit, you shouldn’t use more than 30% of it at a time. How much credit you use — also known as your credit utilization ratio — factors into your credit score. Keeping your credit utilization low will help improve your credit score.
3. Pay off your balance in full and on time. This is the most important factor in maintaining a good credit score. When you pay off your balance every month, you’ll boost your credit and avoid paying interest.
4. Don’t cancel your credit cards unless you have to. Canceling a credit card can temporarily hurt your credit score. Keep your credit cards — even the ones you don’t use — if they don’t cost you anything. Instead of canceling a card with an annual fee, call the credit card company and ask to waive the fee or downgrade to a card that doesn’t charge an annual fee.

How we chose our best credit cards

To bring you the list of best credit card deals, we use an objective rating and ranking system that compares features across a large set of credit cards (over 200 of them from over 50 issuers). We use calculations to estimate the value of each card for the average cardholder, based on LendingTree and U.S. Bureau of Labor Statistics data.

• Balance transfer cards: We calculate the savings on a balance transfer, based on the length of the introductory period. We assume a transfer amount of $6,000 and a monthly payment of $300. We subtract balance transfer fees, annual fees and the amount paid on interest for any amount left over after the introductory period expires.
• 0% purchase APR cards: We calculate the amount saved on interest given the length of the card’s introductory period. We assume a purchase of $6,000 and a monthly payment of $300. We subtract the card’s annual fee and interest paid on any amount remaining after the introductory period expires. We also add in the amount earned on rewards for the average cardholder, including the card’s sign-up bonus, minus the card’s annual fee. We look at the average rewards earned over two years to balance out a card’s ongoing value with its first-year value.
• Rewards credit cards: We calculate the rewards earned for the average cardholder using Bureau of Labor Statistics data and an annual spend of $20,000, minus the annual fee. This value includes sign-up bonus and annual bonuses (including annual free night certificates). For travel cards, this value includes travel perks like lounge access and travel credits. We look at the average rewards earned over two years to balance out a card’s ongoing value with its first-year value.
• Credit cards for building credit: We calculate how much the average cardholder can save with the card on a yearly basis. If it is a rewards card, we use U.S. Bureau of Labor data and $300 in monthly spend (the typical starting credit limit for an introductory card) to calculate how much the average cardholder can earn in rewards. We then subtract fees — including annual fees and maintenance fees — from this amount.

Depending on the category, we also look at the flexibility rewards, features for building credit and how the card’s overall list of benefits compares to other cards.

Note that our ratings are a starting point for comparing and choosing the best credit card. However, your needs may be different from the average cardholder. You should consider the amount you’re likely to spend in a card’s rewards categories and which benefits you value to choose the best card for you.