Complete Guide to Personal Credit Cards

Everything you need to know about personal credit cards and an easy guide on how to find the best deals available.

Are you in the market for a new credit card? Whether you’re shopping for your first or fifth card, it’s easy to make a mistake when choosing which one to get.
What type of card do you want? What can you realistically get approved for? Should you consider a secured credit card? Which credit card issuers offer the best options for your needs?
Those are just a few basic questions you’ll need to ask yourself when shopping for a new card. So with hundreds of options to choose from, how do you know which card is right for you?This complete guide to personal credit cards will steer you in the right direction so you can be confident in your final decision.

Here are some statistics you should understand when shopping for a new credit card. However, averages can be misleading. Notice how credit card account figures vary depending on the credit score of consumers.

How do personal credit cards work?

Personal credit cards are a form of revolving credit that you can use for just about any purchase. They have a credit limit and you can make purchases with the card up to that limit.

Each month, the credit card issuer will provide you with a monthly statement and how much is due.

Your minimum monthly payment will depend on how much you owe. It’s generally a fixed amount of about $20 to $25 or 1% to 3% of your account balance plus interest and fees.

Personal credit cards often charge double-digit interest rates. Make sure you pay off your balance in full each month to dodge the extra cost.

Households that carry credit card debt each month will pay an average of over $150 in extra interest per year. And 122 million Americans carry credit card debt month to month.

What’s more, credit card borrowers are paying a total of $110 billion in annual interest. It’s important to use personal credit cards responsibly to avoid high-interest debt.

Key credit cards statistics

  • Total revolving debt: $1.03 trillion.
  • Total credit card debt: $829 billion.
  • Credit card balances carried over month to month: $687 billion.
  • Total interest paid annually: $110 billion.
  • Number of Americans who carry monthly credit card debt: 122 million.
  • Total number of households carrying credit card debt: 41.2%.
  • Average American household credit card debt: $5,700.
  • Average credit card debt for balance-carrying households: $9,333.

Why your credit score matters

Your credit score plays a big role in the approval process. Lenders only want to work with borrowers who can and will pay them back.

So, they’ll factor in your score when determining your trustworthiness as a borrower. You’ll qualify for different cards based on your score.

Lenders most often look at your FICO score. The higher your score, the better your chances are at getting approved for the card you want.

  • Excellent—720 to 850.
  • Good—680 to 719.
  • Fair—620 to 679.
  • Poor—300 to 619.


Fixed vs. variable interest rates

A fixed interest rate will remain the same throughout the life of your credit card. However, fixed-rate cards are rare these days due to the Credit CARD Act of 2009.

Most cards come with variable interest rates, meaning your rate will change over time based on a financial index (usually the prime rate).

The prime rate is based on rates of the largest banks in the U.S. It’s typically a few percentage points higher than the federal funds rate set by the Federal Reserve.

Issuers vs. networks

      • Issuer. You’ll get your credit card from a bank or credit union, otherwise known as the “issuer.” The issuer is who you’re borrowing money from every time you swipe your card—for example Chase, Bank of America, Capital OneCitibank, etc.
      • Network. The logo you often see on credit cards is the company—otherweise known as the “network”— that processes the transactions. The largest U.S. card networks include Mastercard, Visa, Discover, and American Express.

How does your credit card affect your credit score?

Payment history

Your payment history makes up 35% of your credit score. Pay on time and your score will increase—pay late and your score will drop.

Amount of debt

30% of your score is based on the amount of debt you owe.

This is called your credit utilization ratio, which is how much you owe on your credit cards in relation to your total credit limits.

It’s recommended that you use only a small portion of your credit card limits as it will show lenders you aren’t struggling to pay your debt. The general rule of thumb is to keep your credit utilization ratio below 30%.

Length of credit history

Your length of credit history makes up 15% of your score.

A short credit history makes it hard for lenders to assess a borrower’s reliability. So the longer your credit history is, the better—it gives lenders insight into what kind of borrower you are.

When you get a new credit card, it will lower the average age of your accounts. Your credit score will drop as a result—so the longer you keep your card open, the better.

New credit

10% of your score is based on new credit. New credit increases the chance of you missing your monthly payments.

So, lenders don’t like to see borrowers take on too much new debt as it may suggest that you’re strapped for cash and might struggle to keep up with payments.

Your score will drop slightly when you open a new card, but you’ll be able to recoup the points quickly.

Credit mix

The remaining 10% of your score is based on your credit mix.

Lenders will see you as a reliable borrower if you’re capable of managing multiple sources of debt (e.g. student loan, mortgage, and a credit card).

If you already have other loans, you could boost your credit score by adding a credit card.

The different types of personal credit cards

Credit card issuers offer several types of credit cards to match every type of consumer. Rewards credit cards, for example, are a great option for anyone looking to earn added perks with every purchase they make.

Here’s a quick summary of the major types of personal credit cards.

Card typeCard purposeExamplesIdeal for…
Cashback credit cardsEarn cash rebates on purchasesCards with high rates on everyday purchases, such as gas, groceries, and restaurantsRegular consumers
Rewards cardsEarn miles and travel perksCards with signup bonuses, miles, and moreTravelers and higher credit scores
Credit building/repair cardsHelp build or rebuild your creditSecured, and bad credit cardsPeople with bad credit or no credit
Low interest credit cardsMinimize interest when carrying a balanceBalance transfer credit cardsSpecific types of users

Cashback credit cards

These cards offer cashback rewards when you use them to make purchases. You can typically redeem your cash back in the form of a statement credit, paper check, direct deposit to your bank account, or gift cards.

The different types of cashback credit cards include:

      • Flat-rate cards. These cards offer a flat rewards rate on all of your purchases.
      • Tiered-rate cards. These cards offer bonus rewards on certain spending categories.
      • Rotating rewards cards. These cards offer bonus rewards on certain spending categories that change every few months.

Some cashback credit cards offer a small signup bonus worth between $100 and $200. Most cashback credit cards don’t charge an annual fee, but some do.

Top cashback credit cards

Travel rewards credit cards

Instead of offering cashback rewards, travel credit cards offer points or miles that make it easier to afford your next vacation.

Many also offer special travel perks such as priority boarding with your favorite airline, elite status with your go-to hotel chain, or various types of travel insurance.

The three main types of travel credit cards include:

      • General travel cards. These cards offer rewards you can use to book most forms of travel.
      • Airline cards. These cards offer rewards and perks that you can use with a specific airline.
      • Hotel cards. These cards offer rewards and perks that you can use with a specific hotel brand.

Travel credit cards often offer large signup bonuses. Like cashback cards, not all travel cards charge an annual fee. But some of them charge hundreds of dollars, so be careful when comparing your options.

Low-interest credit cards

Do you need to finance a large purchase, transfer a balance, or carry a balance from month to month? If so, it might be a good idea to get a low-interest credit card.

The two main types of low-interest credit cards include:

      • Balance transfer and 0% APR cards. These cards offer a 0% introductory APR on new purchases for a set period.
      • Low ongoing APR cards. These cards don’t offer a promotional APR upfront, but they do offer a low (often single digit)  interest rate.

Some low-interest credit cards also offer cashback or travel rewards, but not all. As such, it’s important to consider your priorities when comparing these cards. Low-interest cards typically don’t charge annual fees.

Secured credit cards

If you’re new to credit or need help rebuilding your credit, consider getting a secured credit card. A security deposit is required to open the card, but it’s typically easy to get approved.

Your credit limit is based on the amount you deposit. This refundable deposit acts as collateral to enable banks can lend to you without risk on their end.

So if you reach your limit and don’t pay back your debt, the issuer will take the cash you deposited. Aside from that, secured credit cards function similarly to other credit cards.

You can use a secured credit card to build or rebuild your credit. Just make sure the provider you choose reports your payments to the three major credit bureaus.

Secured credit cards may charge an annual fee, but some of the best don’t charge one at all. You may even get rewards or the security deposit back before you close the account.

Store credit cards

Most major retailers offer a store credit card that you can either use exclusively at that specific retailer or everywhere. These cards often provide cardholders with bonus rewards and perks for using the card at the store.

Because some retailers don’t allow you to use their card anywhere else, they can be limiting. However, they’re generally more liberal when approving people with a thin credit profile, or even a poor credit score.

Store credit cards typically don’t charge annual fees.

Check out our list of 255 retail stores that offer credit cards.

Student credit cards

These cards typically offer rewards and other incentives designed specifically for college students. Some even encourage students to learn how to use credit responsibly or reward students for good grades.

Student credit cards usually don’t offer sign-up bonuses, but they don’t charge annual fees either. Some of the top student cards offer rewards—either cashback or travel—on your purchases.

Charge cards

Charge cards are rare and American Express is the only major U.S. credit card provider that offers them. They differ from other credit cards in that you’re required to pay your balance in full each month.

Being so, there’s no interest rate or minimum payment on a charge card. Late payments can result in fees and additional penalties depending on the card’s terms.

Since there is no predetermined credit limit, purchases are approved based on spending, payment, and credit history.

If you can get approved, the American Express Gold Card and Platinum Card are worth looking into. American Express charge cards offer travel rewards, but they do come with high annual fees so be careful.

Common personal credit card benefits

In addition to offering rewards, many credit cards offer additional benefits including:

      • Fraud protection. If someone steals your credit card and makes a purchase, you’re not liable for it.
      • Price protection. If you purchase an item and the price drops within 60 to 90 days, you can request a reimbursement for the price difference.
      • Purchase protection. If an item you purchase gets damaged or stolen within a few months, you could get reimbursed for the amount you paid to get a replacement.
      • Return protection. If a store won’t take your item back, you may be able to send it to the credit card company and get your money back.
      • Extended warranty. If you purchased an item with a warranty of a year or longer, your credit card will generally add a year or two to that warranty.
      • Rental car insurance. Most credit cards offer insurance to cover damage to a rental car. The insurance is usually secondary, however, which means it kicks in after your personal car insurance policy.

Other credit cards, especially travel credit cards, add even more benefits including various types of travel insurance and protections.

How to pick the right personal credit card

If you’re interested in getting a credit card, there’s no single best card out there for everyone. As such, it’s important to do some research to make sure you get the right one for you. Here are three steps to get it right.

1. Check your credit

Different credit cards are targeted toward different borrowers. For example, the best rewards credit cards and cards that offer 0% APRs typically require good to excellent credit, which starts with a FICO credit score of 670.

However, there are secured credit cards and cards for fair credit if your score is lower. The important thing is that you apply for a card that fits your credit score. Otherwise, you could get denied.

2. Review your spending habits

Some credit cards offer bonus rewards on specific purchases. So if you spend a lot on groceries, get a personal credit card that offers bonus rewards on groceries.

The same goes for other purchases, such as gas, eating out, and travel. If your expenses are all over the place, consider getting a card that offers a high rewards rate on all your purchases.

If you don’t need a rewards credit card, move on to the next step.

3. Consider your needs

Go back and reread the descriptions of the different types of credit cards above and consider which one suits your needs the best.

Be honest with yourself; if you really need a 0% APR credit card, focus on the 0% APR instead of the rewards that some of the other cards offer.

It’s easy to be tempted by credit cards promotions that could end up costing you more in fees than you get in return.

Best credit cards for beginners

Student card

If you’re a college student, look into various students credit cards to help avoid high annual fees and interest rates.

No annual fee

A no-annual-fee credit card is a good, simple option for people who want to begin building a credit history.


Low-interest cards are great for those who are new to credit and still learning how to stay current on payments. Compared to its rewards and premium card counterparts, it’s much less costly to pay off debt over the span of a couple months with a low-rate card.


If you’re in the habit of overspending, a low-income credit card can force you to avoid the temptation as these cards often come with low credit limits. Terms may vary, but you generally need an annual income of at least $15,000 to qualify for a $500 credit limit.

Pros and cons

Personal credit card pros

Build or rebuild credit

The more consistent you are at making on-time payments, the more your credit score will benefit.

Safer payments

Unlike a debit card, the money you spend isn’t deducted from your account until you make a payment.


Swiping your card is easier and more convenient than carrying around cash or a checkbook.

Rewards and benefits

Personal credit cards come with different reward structures that cater to various types of borrowers. They also offer fraud protection and other attractive perks.

Purchase now, pay later

If you want to make a large purchase that you can’t afford, a credit card can help. But make sure you’re able to pay off the purchase without going further into debt. You can even avoid interest altogether during a promotional period by paying off the balance before it expires.

Personal credit card cons

Bad credit score

Applying for several cards can negatively impact your credit score. So make sure you know your score before you begin applying. If your credit score isn’t up to par, work on increasing it to improve your chances of qualifying for the card you want.

Can spend too much

Make sure to regularly check your account to keep tabs on your spending as it’s easy to overspend with a credit card. You can land yourself in a web of debt without even realizing it.

Unable to pay your balance

The longer you carry a balance on your credit card, the more interest you’ll accrue. This could end up being a costly mistake that you’ll want to avoid.


Some cards charge fees such as annual, balance transfer, cash advance, foreign transaction, late fees, and more.

The bottom line

Personal credit cards can be beneficial if you use them responsibly, but they can hurt you if you don’t.

If you’re not a disciplined consumer, then borrowing money via credit can be dangerous. A good rule of thumb to is never to carry a balance. Instead, pay it off before it starts accruing interest.

Start comparing personal credit cards side-by-side to find the best offers on the market today.

Compare multiple cards to see what kind of interest, fees, rewards, and other benefits they offer. You may be surprised by the deals you can get.


Personal credit cards can offer a lot of value to consumers, but they're not a great fit for everyone. Here are some things you should consider about credit cards before you apply for one. Compare the pros and cons to make a better decision.

  • They can help you build credit.
  • You can earn rewards and get other benefits.
  • You can avoid paying interest by paying off your balance in full each month.
  • They offer fraud protection and other benefits.
  • They're more convenient to use than cash.
  • They tend to charge higher interest rates than other forms of credit.
  • Their minimum payments are designed to keep you in debt.
  • A high credit limit could tempt you to overspend.
  • Some charge annual and other various fees.

Your best credit card in 3 steps

If you're interested in getting a credit card, there's no single best card out there for everyone. As such, it's important to do some research to make sure you get the right one for you. Here are three steps to get it right.

1. Check your credit

2. Consider your spending habits

3. Consider your needs

Personal credit cards can be very beneficial if you use them responsibly, but they can hurt you if you don't. Know your limits and tendencies to make the right decision.

Start comparing personal credit cards now. You may be surprised by the deals you can get.

The bottom line

If you’re not a disciplined consumer, then borrowing money via credit can be dangerous. A good rule of thumb to is never to carry a balance. Instead, pay it off before it starts incurring interest.

If you're looking for a personal credit card, use SuperMoney's credit card review page to find the best cards on the market today. Compare multiple cards to see what kind of interest, fees, rewards, and other benefits they offer.

As you take the time to do your due diligence, you'll have an easier time getting a card that will benefit you for a long time.