The Best Credit Cards of 2016
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I spend a lot of time during the year reading credit card agreements and combing through the fine print. So when it's time to pick the top credit cards of the year, it isn't difficult to put together a list of candidates for each category.
Believe me, the really good ones stand out. But narrowing down the list and picking the winner isn't always easy. When I pick my favorite card for a category, I consider a lot of different things. Sure, I look at the interest rate, but I also consider the rewards, customer satisfaction, benefits, and more.
So after careful consideration, here's my list of the top credit cards for the year. As is usually the case, the top cards are reserved for those who have excellent credit. A lot of these "top credit card" lists don't include the cards that are available to those with bad credit. I think this is a terrible oversight because so many folks are still recovering from the recession and trashed credit scores.
So I decided to include winners for the "Best Card for Bad Credit" and the "Best Secured Credit Card." When you don't have terrific credit, it's really difficult to find a decent card. I hope my choices can help you rebuild your credit this year.
Okay, let's get to the winners. We'll start with the top dog, so pretend you hear a drum roll.
Credit Card of the Year: Chase Sapphire Preferred® Card
It's difficult to pick the credit card version of "Best in Show" because credit cards tend to fit into specific categories, such as travel or cash back. They aren't really designed to target every demographic out there.
But I think the Chase Sapphire Preferred® Card is one of those rare cards that really does do a good job of appealing to a wide population. This card has a great overall combination of rewards, bonus points, and features of all the cards I've reviewed this year.
Let's take a close look at this card, starting with the outstanding bonus offer. Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $625 in travel when you redeem through Chase Ultimate Rewards®.
Earn 2X points on travel and dining at restaurants & 1 point per dollar spent on all other purchases worldwide. You also get 20% off when you redeem points to book travel (airfare, hotel, car rentals, and more) via the Chase Ultimate Rewards booking tool (for example, a $400 flight requires 32,000 points instead of 40,000). But if you don't want to redeem through Chase Ultimate Rewards, you can transfer your points to partner travel programs at a 1:1 point rate. That's significant because transferring points on other cards usually result in some loss during the conversion.
There are no foreign transaction fees and the annual fee is waived for the first year ($95 after that). The annual fee is $95, which is a bit high, I know. Some credit card geeks scoff at all annual fees, but not me. I'll pay a fee if the rewards far outweigh the costs of the card. And in my opinion, this card is worth the fee if you do a decent amount of traveling.
Obviously, you can redeem points for travel and dining, but you can also redeem them for cash back, gift cards, merchandise, and even experiences, such as hot-air balloon rides. See what I mean? There's something for everyone. Really, this is a terrific credit card.
Cash Back: Blue Cash Preferred® Card from American Express
I'll tell you a secret. The Blue Cash Preferred® Card from American Express is my runner-up for credit card of the year. Yes, it's that good.
You earn 6% cash back on up to $6,000 at U.S. supermarkets. You also get 3% at U.S. gas stations and 1% on other purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. There's a $95 annual fee, but really, the rewards outweigh the costs by far. Assuming, of course, that you never, ever carry a balance.
As a bonus offer, you earn $150 back in the form of statement credit after spending $1,000 in purchases in your first 3 months. Also get 0% intro APR on purchases and balance transfers for 12 months, then a variable rate, currently 13.49% to 23.49%, based on your creditworthiness and other factors. Terms apply.
Military Benefits: USAA Cashback Rewards Plus American Express®
For military service members and their family, USAA provides some of the best financial products available. The USAA Cashback Rewards Plus American Express® card not only comes with exclusive benefits specifically geared to military personnel, but also awards 5% cash back on gas and military base purchases such as those made at commissaries, exchanges, and shopettes, up to a total of $3,000 in purchases each year. Plus, you can also earn 2% for grocery store purchases up to $3,000 in purchases per year, and 1% cash back for all other purchases. The variable APR is 12.40% - 26.40%. There is no foreign transaction fee or annual fee for this card.
Airline Miles: Capital One® Venture® Rewards Credit Card
The Capital One® Venture® Rewards Credit Card is one of the most popular cards out there. The witty "What's in Your Wallet?" commercials have made this card a household name. Often, products don't live up to the hype. But this really is one of those times when the card lives up to the marketing.
It doesn't pretend to be fancy. It just promises unlimited double miles per dollar, every day, and it delivers. The rewards are simple and easy to redeem. There are no foreign transaction fees, and the $59 annual fee is waived for the first year.
Low Interest: Simmons Bank Visa Platinum Credit Card
The Simmons Bank Visa® Platinum Credit Card is a great credit card you've probably never heard of. Simmons Bank is based in Pine Bluff, Arkansas, but you can apply for this credit card no matter where you're located.
Along with exceptional customer service, you get an amazing 7.50% variable APR. That's not an intro rate, and that's not a typo. Not bad, huh?
The only "catch" with this card is that you must have really, really excellent credit. But if you qualify, this is a great credit card to have on hand for those inevitable emergencies that crop up. You know what I'm talking about. Your kid breaks his retainer, the car needs new tires, your house finally needs a new roof.
It's never, ever a good idea to carry a balance. But there are times when life gets awful messy and it's good to have a low-interest credit card on hand.
Balance Transfer: Citi Simplicity® Card - No Late Fees Ever
If you're in credit card debt, transferring your balance to a credit card with a zero percent intro offer can save you a lot of money. There are some good options on the market right now, but I like the Citi Simplicity® Card - No Late Fees Ever from our partner Citi.
You get an 21-month zero percent intro APR on both balance transfers and on purchases. There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater, but most likely, you'll still come out way ahead because you'll save a ton on interest expense.
This card gives you 21 months to pay off your debt. Although this card does offer an intro rate for purchases, I suggest you focus on paying off the debt. Try to resist the urge to use this card for purchases and throw all your extra money at the debt.
After the intro period ends, you'll get a regular rate between 13.49% and 23.49% variable. This card is also a bit forgiving if you make a late payment. There are no late fees or penalty fees.
Bonus pick: If you're sure you can pay your debt off in 15 months, take a look at the Chase Slate Credit Card. With this card, you don't have to pay the balance transfer fee if you make the transfer with 60 days.
Secured: Capital One® Secured MasterCard®
This category has several good choices (see our full list of best secured credit cards), but my pick is the Capital One® Secured MasterCard®. Depending on your creditworthiness, if you make a security deposit of $49, $99, or $200, you will get an initial $200 credit line. Deposit more to increase your line. You can even pay your security deposit over the first 80 days of being approved. You may also get access to a higher credit line after making your first 5 monthly payments on time, with no additional deposit required. There is no annual fee.
Airline-Branded: Southwest Rapid Rewards Premier Credit Card — Free Flight
Any credit card with a free flight gets my attention. With the Southwest Rapid Rewards® Premier Credit Card, you can earn 40,000 bonus points when you spend $1,000 within the first three months. Okay, that's just plain awesome. Earn enough points and you also get a Companion Pass good for one whole year.
Now, there are people who totally love Southwest, and there are those who don't because they don't like the boarding process or the lack of first-class seating. This is an individual thing. There's a $99 annual fee, but if you love Southwest, the rewards are worth the fee.