Finding a credit card that matches your shopping needs
Quick insights
- To maximize the benefits of shopping with a credit card, it may be a good idea to consider ones that match your spending habits and financial goals.
- As you evaluate credit cards, you may want to consider each card’s rewards program, interest rates and fees, as well as your repayment habits.
- Rewards credit cards often offer varied spending categories to earn rewards at an accelerated rate.
From household essentials to splurge items, you might have a variety of shopping needs. Credit cards are a widely accepted payment option and may offer features such as rewards on eligible purchases or welcome bonus offers.
However, there are also potential costs associated with credit cards, including interest charges and fees. Selecting a credit card that fits your individual needs and financial goals—and using it thoughtfully—may help you make the most of its features while managing potential risks.
Factors to consider when exploring credit cards for shopping
Some credit cards have features tailored to different needs and goals. Here are several factors you may want to consider as you consider each credit card.
Credit card types
Different types of credit cards can serve different purposes. Whether you want to build credit, earn rewards or limit interest charges, it can be helpful to choose a card that aligns with your financial goals.
Here are a few credit card types you may want to consider:
- Rewards credit cards: Typically offer accelerated rewards earning potential in select spending categories (e.g., 3x points on travel and dining purchases). May be suitable for those with varied spending.
- Travel credit cards: Often reward travel-related purchases and may offer other benefits to help streamline travel. May be suitable for frequent travelers.
- Co-branded credit cards: Usually co-branded with a bank and a brand (retailer, hotel, airline or other vendor). May be suitable for those who buy frequently from a specific brand.
- Starter credit card: Designed to help cardmembers build or improve their credit score. May be suitable for those new to credit cards.
Your shopping habits
Reviewing your spending patterns—including your monthly budget and main expense categories—can help you choose a credit card that complements your financial habits.
Knowing your main expense categories can be useful if you’re interested in rewards credit cards. It’s typically recommended to select a credit card that offers accelerated rewards earning potential in the areas where you spend the most. Some common credit card rewards categories include travel, dining, gas stations, grocery stores and drugstores.
Your monthly budget might be relevant if the credit card has a welcome bonus offer. These promotional offers usually provide rewards or cash back to new cardmembers when they meet a certain spending requirement within a specified timeframe. Your monthly budget can provide insight into whether you can meet the offer’s minimum requirements without overspending.
Your repayment patterns
Your payment habits—especially with credit cards or lines of credit—may further influence your credit card preferences. If you tend to carry a balance from month to month, it can lead to interest charges. Credit card interest typically compounds daily, meaning that each day, interest is calculated on both the original money you owe and any previously accumulated interest.
Compound interest can cause credit card debt to grow rapidly, and the cost of these charges can quickly exceed the rewards. Setting up autopay may be a useful way to help avoid missing payments.
Your preferred rewards type
Rewards programs can vary, offering different types of rewards like cash back, points or miles. You may want to consider a rewards type that helps you maximize the value and usefulness of your credit card based on how you plan to use it.
Here are some common reward types:
- Points: Earned through eligible purchases and may have flexible redemption options, potentially allowing you to redeem points for travel, merchandise, gift cards and more through the rewards program.
- Cash back: May be calculated at a flat rate (e.g., 1.5% cash back on all purchases) or at accelerated rates in select categories (e.g., 3% cash back on dining). Cash back is usually awarded as a statement credit or via direct deposit.
- Miles: Typically awarded by airline credit cards, miles can often be redeemed for flights and other travel expenses.
While cash back rewards often have a clearly defined monetary value, the estimated worth of rewards like points and other rewards types may vary based on how you redeem them. For example, 10,000 points might be worth $100 as a statement credit but only $70 if used for merchandise. If you want to maximize the cash value of your rewards, it can be helpful to know the estimated worth of different redemption options.
Beyond cash value, you may want to consider how useful the available redemption options are for your lifestyle.
Your budget
Some credit cards charge annual fees. The fees can be hundreds of dollars, so it may be helpful to assess your budget and determine if a card’s annual fee is worth it for you and your circumstances.
Annual fees aren’t the only charges you could incur with a credit card. Knowing the credit card fees can help you determine whether the card is too costly.
In summary
Many factors can go into considering credit cards that align with your shopping needs. It may be helpful to know your financial habits and goals. That way, you can evaluate whether the card’s rewards and their redemption options, fees and interest rates complement them.
