According to the Consumer Financial Protection Bureau, balances dropped an average of 10 percent from March to June of last year, and the trend continued through 2020, proving true even for people who had been struggling financially before the pandemic. New delinquencies on loans and credit card accounts also fell, after being flat or increasing gradually in 2019.
Experts attribute the improvement to a combination of stimulus payments, expanded unemployment insurance benefits and reduced spending on activities like dining out, entertainment and travel, which left many people with extra cash to pay down debt. That in turn pushed credit scores higher: The average score hit 711 in 2020, Experian reports—up eight points from 2019.
“A significant group now find themselves in a much better position than they were a year ago,” says Matt Schulz, chief credit analyst at LendingTree. “A lot of Americans need credit cards less than they have for quite some time.”
To keep Americans charging and paying annual fees, credit card companies have been tweaking and enhancing their rewards to reflect changing needs. Most now reward spending on takeout and delivery services and added or boosted payouts for buying groceries and subscribing to streaming services. And experts say you can expect those lockdown perks to continue, along with more generous offers on traditional rewards categories such as travel, gas, restaurants and entertainment, as issuers compete for your post-pandemic spending.
“Card issuers all want to look like the best option for when people feel comfortable going out and spending again so we’re going to see potentially bigger sign-up bonuses, longer periods for introductory purchase and balance transfer rates, and lower interest rates and fees,” says Schulz. Another plus: With banks relaxing credit standards again and accepting more credit card applications, you shouldn’t have any trouble accessing these new offers later this year either.
To help you take full advantage of this credit card competition and find the perfect card for your needs, Newsweek partnered with LendingTree, the online loan marketplace and comparison site for financial services, for our first-ever credit card ranking. From a universe of more than 1,030 credit cards offered by 195 financial institutions, we evaluated 36 different factors about each to find the best-in-class option in 31 different categories. One or more of them may be just right for you. Kerri Anne Renzulli, Senior Reporter
To identify America’s Best Credit Cards, LendingTree in consultation with Newsweek collected data on candidates from more than 1,030 credit cards issued by 195 financial institutions and credit unions. LendingTree then applied filters to create a short list of eligible candidates in each category, based on the most salient features for each card type. LendingTree supplied the data and made recommendations about the feature weightings for each category, the final scoring system used was developed by Newsweek, based on the factors editors deemed most important to consumers for that type of credit card.
Data sources included MagnifyMoney.com, DepositAccounts.com and information published by each credit card issuer. Altogether, 36 factors were assessed, covering a wide variety of fees, current interest rates, balance transfer details, introductory purchase offers, introductory sign-up offers, rewards rates for purchases and other special perks. For consideration in the best big bank card categories, financial institutions needed to have at least $10 billion in assets; for small bank cards, institutions with less than $10 billion in assets were evaluated. Only credit unions that allow anyone to join were considered. For all business card categories, only cards designated for businesses were considered. For best student offering, cards had to cater specifically to students. For best card for military members, only credit cards offered by banks that cater to military members and their families with at least $10 billion in assets, or by credit unions available to military members and their families, were considered. For best credit card for people with poor credit, cards needed to be either secured or designated as being for low credit score applicants. All other winners were selected from all available personal cards offered by financial institutions of any size.
Newsweek exercised final editorial judgment when selecting the winners. Current interest rate information and introductory offer details are accurate as of May 6, 2021.
The TOP CARDS
Among the more than 1,030 offerings that Newsweek analyzed, these picks, ranked by size and type of issuer, provided the best combination of all the key features consumers typically look for in a credit card: reasonably generous and easy-to-redeem rewards for spending; low-interest rates, in case you occasionally carry a balance; no annual fee; and enticing introductory perks to make switching cards worth your while.
BEST BIG BANK CARD
Cards from banks with at least $10 billion in assets dominate the market, and their greater financial clout typically allows them to offer the most generous payouts. Our winner makes it especially easy to accrue and redeem rewards, plus offers a longer-than-usual period when you won’t be charged interest on balance transfers.
Citi Double Cash
INTEREST RATE: 13.99%-23.99% BALANCE TRANSFERS: 0% interest for 18 months REWARDS: 1% cash back when you buy, 1% when you pay
BEST SMALL BANK CARD
Smaller banks with less than $10 billion in assets typically can’t compete with the big boys on rewards but make up for it with better rates and introductory features. Our winner excels on both those fronts, and also gives more generous rewards than commonly found in this category.
Rewards Credit Card from Dollar Bank
INTEREST RATE: 12.24% INTRO OFFER: 0% interest for six months on new purchases, balance transfers REWARDS: 1.25% cash back
BEST CREDIT UNION CARD
Federal laws cap the interest credit unions can charge, making them the place to find low rates. Our winner excels on that score and also offers great extras like refunds for the cost of TSA PreCheck and Global Entry and no foreign transaction fees. (Only cards offered by credit unions anyone could join were considered.)
Summit Credit Union Ultimate CashPerks
INTEREST RATE: 11.15% INTRO OFFER: 0% interest for 12 months on new purchases, balance transfers REWARDS: 3% cash back on airlines; 2% on hotels, dining; 1.5% on all other purchases. Plus, a concierge service to book travel, tickets or dinner reservations.
BEST Business Cards
BEST FOR SMALL BUSINESSES (OVERALL WINNER)
Lucrative rewards on all spending, a generous sign-up bonus, plus tools to help business owners keep their operations running smoothly make this Capital One card a standout. Free employee cards, integration with bookkeeping software and the ability to purchase above your credit limit with no fees, when needed, are appealing extras.
Capital One Spark Cash for Business
INTEREST RATE: 20.99% SIGN-UP BONUS: $500, if $4,500 is spent in first three months REWARDS: 2% cash back on all purchases, including by employees; spending of, say, $25,000 per month earns about $6,000 in annual rewards
BEST FOR START-UPS
Small business entrepreneurs often need access to low-cost borrowing to help cover start-up costs and benefit from generous rewards in the business categories where they initially spend the most. The winner excels on both counts, plus provides a hefty $750 signup bonus if at least $7,500 is spent in the first three months, no annual fee and free cards for other employees.
Chase Ink Business Cash
INTEREST RATE: 13.24%–19.24% INTRO OFFER: No interest on purchases for 12 months REWARDS: 5% cash back at office supply stores and on phone, internet and cable services up to $25,000 a year; 2% at gas stations, restaurants up to $25,000 a year; 1% on all other purchases
BEST FOR BUSINESS TRAVEL
Flying to woo clients, meet suppliers or attend conferences might not have been on the books last year, but, as pandemic restrictions ease up, those delayed travel plans can soon come off standby. In addition to solid rewards for hotel stays, flights, car rentals and meals out, the winners (Capital One is best for smaller spenders, Chase for bigger ones) offer large sign-up bonuses, free employee cards, and integration with bookkeeping software.
Capital One Spark Miles for Business
INTRO OFFER: 50,000 miles if you spend $4,500 in the first 3 months REWARDS: 2 miles per $1 spent on all purchases PERK: $100 credit for Global Entry or TSA PreCheck
Chase Ink Business Preferred
ANNUAL FEE: $95 INTRO OFFER: 100,000 points if you spend $15,000 in first three months REWARDS: 3 points per $1 on first $150,000 spent a year on travel, shipping, social media and search engine advertising and phone, internet and cable services; 1 per $1 on all other purchases
BEST BUSINESS HOTEL CARD
If you or your employees routinely travel for work, it can pay to become loyal to a specific hotel chain that will often reward your spending to the tune of 6 percent or more. The category winner doubles that already generous reward at its properties, plus offers a free weekend night stay perk for spending, no foreign transaction fees and complimentary entry to airport lounges.
Hilton Honors American Express Business
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