The Best Type of Credit Card for Your Financial Situation

Maybe you’re looking for your first credit card. Or, perhaps, you’re a seasoned credit user in the market for a credit card that will reward you for your long, healthy credit history.  

The bottom line is, no matter where you are in your credit journey, there are many options for credit cards. It’s easy to get overwhelmed while searching for the one that’s right for you. But while certain factors will vary from person to person, your age can serve as a handy tool for gauging what to look for in a credit card.  

How financial health affects your credit card choice 

Much of this has to do with the length of your credit history. Your credit report—a detailed history of the types of credit you’ve used, how much of your available credit you’ve gone through, and more—is one of the biggest indicators of your financial health. Your credit history is likely to change over time. Many people just starting out are likely to have short credit histories. Those who are a bit more established, however, will probably have utilized more forms of credit over a longer period.  

For this same reason, your credit score is likely to increase with age. According to data from Experian, the average FICO® Score of Americans in their 20s is 662, while that number jumps to an average score of 706 for those in their 50s. Ultimately, your credit history and credit score will affect two factors that go into choosing a new credit card: your eligibility and your financial goals. 

You probably already know that your credit history and credit score are the two biggest factors that lenders, like credit card companies, look at when deciding whether to approve you. If you’re just starting out and have a low credit score or short credit report, you may not qualify for the top-of-the-line credit cards. 

In this case, you may also want to look for cards that have lower interest rates or will help you build credit with low risk. But if you’ve had time to build a robust credit history and are confident in your score, you may opt for a card that offers competitive rewards, like cash back or travel points programs. No matter where you are in life, there’s a credit card out there that’s right for you. So, let’s take a look at some of the best types of credit cards for every financial situation. 

The best types of credit cards for beginners 

If your credit score isn’t stellar, not to worry. There are credit card options for just about everyone, so you can get started building or improving your credit in no time no matter your situation.  

If it’s your first credit card... 

Being new to credit (in other words, having no credit history) doesn’t mean you can’t get a credit card. After all, everyone has to start somewhere! A student credit card is a good option for those new to credit. These cards typically have no annual fee and the biggest requirements are being at least 18 years old and having enough independent income to afford monthly payments.  

If you have no credit, you could also start with a secured credit card. This type of card offers your best chance of approval. Secured credit cards are comparable to debit cards in that you pay with them using money you’ve deposited in a bank account. The card issuer uses this deposit as collateral, just as it would an interest rate with a standard credit card. Unlike debit cards, however, secured credit cards help you build out your credit. For this reason, a secured credit card is also a great option if you have a low credit score and are trying to improve it. 

If you have average or limited credit 

According to Money Under 30, having “average” credit generally means that you: 

• Have had open loan and credit card accounts for at least three years 

• Haven’t had more than one late payment within the past year 

• Haven’t applied for credit more than two times within the past six months 

Consulting your credit score can also help you determine where your credit health falls. If you’re using your FICO® Score, for example, a score of 580–669 is considered “fair,” while a score of 670–739 is “good.” 

If you have average credit or a limited credit history, you’ll want to look for a credit card that offers easy approval and a low (or no) annual fee. (In some cases, credit card companies will waive even a low fee for the first year after approval.)  

While you may not earn rewards from these cards, not having to worry about annual fees is often more important than fancy perks when you’re working on building out your credit. 

The best types of credit cards for intermediate credit 

Those more financially secure may already have one or two credit cards that have helped build up credit history. If that’s the case, you’ll want to look for cards that offer the best possible perks and rewards.  

If you’re paying off debt 

Chances are, you left higher education with more than just a degree. If you’re like the average American, you’re now facing more than $30,000 in student loan debt. And while many people who have been out of school for more than a decade have begun enjoying some of the benefits of a longer credit history, purchasing a home, financing a wedding, and switching from a sedan to an SUV can all contribute to mounting debt. To top it all off, many people overextend themselves and end up drowning in overdue credit card statements with exorbitant interest rates. That’s why it may come as a surprise to hear that you can actually use a credit card to pay off debt—including debt from other credit cards. 

Admittedly, this can be a slippery slope. You don’t want to end up piling on even more debt if you end up unable to pay off the new card. But with a game plan, the right credit card can give you some much-needed time to repay the entirety of your balance. 

You’ll want to look for a card with a lower annual percentage rate (APR) than your current card. Some cards also offer additional perks: 0% APR for 12 or 18 months is common, while some also waive late fees once a year. By transferring the outstanding balance from your old card to a new one, you may be able to pay it off in full with no interest.  

That being said, make sure you look out for balance transfer fees. 

If you’re looking for rewards 

If you were smart with the credit you have used, you’ve likely established a healthy credit score. This can open you up to a whole new range of credit cards with attractive deals, offers, and rewards. But first, let’s answer the burning question: What is a “good” credit score? Going off the FICO® Score scale, a “good” credit score falls somewhere between 670 and 739. So, if you have a score in the low-to-mid 700s, you’ll likely qualify for cards with a variety of rewards, including: 

• Points on everyday purchases, like gas and groceries 

• Cashback deals 

• Travel rewards 

Keep in mind, however, that you’ll want to weigh a card’s perks and rewards against other factors, such as its APR and annual fee. After all, 1.5% cashback may not be worth it if you’ll owe more than 20% in interest on all missed payments. 

The best types of credit cards for experienced credit users

If you’re a seasoned credit user, chances are that you’ve established multiple credit accounts and built out a strong, lengthy credit history. If you’ve managed your credit well (not spending more than you can afford; paying off your full balance on time each month), you’ll have an excellent score and no credit card debt. 

What does all this mean for you? The freedom to choose from some of the most exclusive credit cards available. Despite this, many people fail to take advantage of the benefits that come with building up years of good credit. Many simply stick with the credit card they’ve had for years. According to CreditCards.com, less than 20% of consumers with a long credit history (aged 50–64) changed their primary credit card in a recent five-year period. Besides being proud of all your hard work (which you should be), it’s important that you find the credit card that offers the best rewards and perks for your unique circumstances. 

So, do you go back and forth across the pond for work? Using a travel rewards card can help your travel pay for itself. (Some travel rewards cards even match your miles within the first year of signing up). Or, maybe you’re a foodie that loves trying new restaurants. By finding a card that offers competitive rewards on food and dining, you can earn enough points to enjoy a meal courtesy of your bank. In short, if you are an experienced credit user with good credit, the best type of credit card is the credit card that benefits you the most. 

Great credit means more freedom 

There’s no one-size-fits-all approach to finding the right credit card. Your past experience with credit will help determine which card is best for you. If you’re in the market for a new credit card but have a less-than-perfect credit score or credit report, there are things you can do to change that. Personify Financial has a wide variety of personal finance resources and tips, from how to improve your credit score to everything you need to know about credit monitoring. 

It’s well worth it to put in the work to improve your credit. And when you start to see the benefits of having healthy credit, you’ll be glad you did!