Let’s face it, these days, the quest for cards for good credit in 2023 is more crucial than ever. As a smart consumer, you know that good credit can lead to extra benefits like lower interest rates and rewards programs.
But with so many credit cards on the market, how do you pick the good from the bad? This is where we step in – we’ll give you the best advice on what to look for, explaining what cards for good credit offer, their benefits, and their features.
What Does Good Credit Mean for a Cash Rewards Credit Card?
Good credit is a reflection of financial responsibility and trustworthiness. It’s the result of smart financial decisions, responsible borrowing habits, and timely repayments. And is a testament to the ability to manage debts and maintain a healthy balance between credit usage and available credit.
In the world of finance, good credit means better negotiating power when seeking a cash rewards credit card. This leads to more favorable terms and lower interest rates.
It paves the way for easy approval of rental applications, utility services, and even job opportunities. This is because some employers now check financial history as part of their screening process.
Also, good finances in 2023 lead to big savings in interest payments over time, making it easier for people to invest in themselves and secure financial stability.
Credit Score Ranges Explained: What Is a Good Credit Score?
As a measurement of your financial behavior, these numbers range from 300 to 850, with 850 being the best score. The higher the number, the more it shows better behavior and a lower risk of missing payments.
A good credit score ranges differently between the three major credit bureaus and scoring models but falls between 670 and up. A score like this can get lower interest rates, better loan terms, and other benefits that come with responsible borrowing.
Good credit happens when you pay your bills on time, keep your card balances low, and have different types of loans. It’s also the result of avoiding things that have an impact on your credit score, such as too many loan applications within a short period.
Factors That Affect Your Credit Score
Knowing what affects your score, you’re better able to take steps to maintain or improve your creditworthiness. Your score depends on a few factors:
- Payment history. About 35% of your score is based on your payment history. Lenders look at how you’ve managed your finances, including repaying debts on time,
- Utilization ratio. This ratio refers to the proportion of your available credit that you’re using. To the best of our knowledge, any professional journalist and credit card expert will recommend that the utilization ratio stays below 30% of your combined credit. A lower ratio suggests responsible usage and looks good for your score.
- Length of credit history. Your loan history contributes to roughly 15% of your score. Bigger accounts show a better understanding of money management and are considered a positive indicator. This factor also takes into account the average age of your accounts.
- Types of credit accounts. A diverse financial portfolio, including a mix of accounts like loans, cards, and mortgages, contributes 10% of your score. Lenders prefer borrowers with experience in handling multiple types of loans, as it reflects better money management skills.
- Recent credit inquiries. New inquiries account for the remaining 10% of factors that impact your score. Applying for many loans within a short period raises red flags for lenders, as it can be seen as a sign of financial desperation.
Finding the Best Card: Pros and Cons of Credit Cards for Good Credit
|Better interest rates and lower fees. For longer-term savings, cards have attractive rewards programs, such as cashback, travel credit, points, exclusive discounts, and even come in the form of a statement credit or direct deposit. Cardholders can capitalize on these incentives (terms applying) by using their card for everyday purchases, making the most out.||Potential for long term debt. The convenience can easily lead to impulsive spending, which may result in mounting financial obligations if not managed responsibly. High-interest rates on outstanding balances and annual fees can exacerbate the debt, turning it into a long-term burden. Such a situation can negatively impact your score, undoing the hard work put into maintaining good financial standing.|
|Stronger borrowing history. When applying for mortgages, loans, or renting properties, lenders consider creditworthiness when making their decisions. By maintaining a good score, cardholders demonstrate a sense of financial responsibility that opens doors to better opportunities and financial security.||Annual fees and high-interest rates. These fees quickly add up and negate the benefits of having a card in the first place. Cardholders must be diligent in paying off what they owe, including balance transfer fees and annual fees each month, to avoid accruing interest and falling into the debt trap|
|Added perks. Features like extended warranties, purchase protection, gift cards, and travel insurance provide cardholders with peace of mind and a safety net in case of unforeseen events or emergencies. Although extra features will come with an annual fee.||The temptation to overspend. While reward programs may seem attractive, they can encourage unnecessary purchases or balance transfers that may not be viable. This could lead to an unhealthy reliance on loans for day-to-day expenses.|
|Competitive interest rates. This is particularly beneficial if you’re interested in large purchases and balance transfers. Some of the top cards offer balance transfer options with low or even zero percent interest rates. This facility can help you consolidate and pay off debt faster, saving you money on interest payments.||Potential for accumulating debt. It’s tempting to overspend, especially on cards with high credit limits and annual fees. This could damage your score and financial situation by creating a vicious cycle of debt.|
|Enhanced security and fraud protection. Card companies are more inclined to provide superior protection features to customers with a track record of responsible borrowing These features can include zero liability for unauthorized charges, advanced fraud monitoring, and alerts to keep you updated.||Can lead to poor money management. Those who become dependent on cards may struggle to budget and save money effectively. The convenience of swiping can make it easy to lose track of spending.|
Who Should Get a Rewards Credit Card for Good Credit?
Getting a card isn’t something you should take lightly, as it can have a big impact on your finances. It’s a good idea to think about whether a card is a good fit and if you’re prepared to use it sensibly. You’re probably good to apply if any of the following personalities sound like you.
The Credit Strategist
The strategist understands how money management works and uses this knowledge to their advantage. They are experienced in optimizing their loans, making payments on time, and can afford an annual fee. For them, a card isn’t just a way to make purchases or access funds, they’re aware of the benefits and rewards that come with it.
The strategist selects the card that compliments their spending habits and financial profile. They know what option is best for cash back, which helps them achieve a healthy score and maximize the card’s potential.
This type of spender also knows the significance of responsible money management. They keep their utilization low, pay their bills on time, and avoid balance transfers, treating their card as financial asset.
The Infrequent Traveler
When you have good credit, you have a chance to apply for the best credit card for airline miles no annual fee with lucrative rewards programs. The infrequent traveler can earn the best prices on thousands of points or miles booked through Capital One Travel based on their everyday purchases. These can be redeemed for travel-related expenses like flights, hotel stays, and rental cars.
These cards are best for travel because they offer insurance, airport lounge access, and other travel perks that can enhance the travel experience and provide peace of mind during their occasional trips.
The infrequent traveler is likely to appreciate the worldwide acceptance and convenience provided by a card. This allows them to make hassle-free transactions abroad without worrying about interest charges and foreign transaction fees while still enjoying the benefits offered by their card.
For the foodie, dining out and exploring new tastes is an essential part of their lifestyle. So having a card that caters to their food interests is crucial. Many card companies provide reward points, statement credits on dining expenses, plus cash back on all other purchases, which in turn translate into long-term savings.
Exclusive access to gourmet events, priority reservations at renowned restaurants, and complimentary dishes or beverages add even more value to a foodie’s dining experience (although it is likely to cost an annual fee).
Plus, the foodie who travels searching for exotic flavors can benefit from a card that offers travel rewards and discounts. These perks can include airfare discounts, hotel deals, and even vacation packages designed to satisfy their culinary cravings.
The homemaker is responsible for managing the household budget, paying bills, and making sure that expenses are covered. Because of this, they understand financial management and the importance of maintaining good spending habits.
An option like the Capital One Venture Rewards Credit Card, for example, can be a great way for them to take advantage of rewards programs, cashback, statement credits, and other perks that can benefit the entire family.
Because the homemaker is detailed and organized, they’re more likely to avoid excess fees and have good credit because they pay off their balance and annual fee each month.
Choosing a Credit Card for Good Credit in 2023: What Card is Best for Cash Back, Best for Travel, and Are They Worth the Annual Fee?
To select the right card, you need to research, self-assess, and compare different offers. It can feel a little daunting, but these detailed steps will help you make the right decision.
- Identify your spending habits and goals. Maybe you’re a student, or you travel a lot and want to earn rewards on flights and hotels? Or are you more interested in cashback or statement credits for everyday purchases like groceries and gas? Identifying your priorities will help narrow down the list of cards to those that suit your lifestyle best.
- Research the types of credit cards available. There are cards that offer points, miles, or cash back on all other purchases; low-interest or balance transfer cards that consolidate debt; secured credit cards for people with bad credit; and charge cards that require payment in full each month. Which one is right for you?
- Compare different lenders. Look closely at the interest rates (APR), annual fees, sign-up bonuses, reward structures, redemption options, and how the terms apply. Be sure to read the fine print for any hidden fees or restrictions they might have. For example, rewards can only be used after the first 3 months from account opening.
- Consider extra features. These include travel insurance, purchase protection, extended warranties, or access to special events. While these perks aren’t the most important factor, they do enhance the total value of a card.
- Review your credit report. Make sure there’s nothing that could negatively impact your application. For example, any errors like unexplained accounts or old accounts that have been paid but haven’t been removed from your report.
How to Maintain and Prevent Impact to Your Credit Score
It’s surprising, but not everyone knows how to make sure they’re doing the right things in terms of borrowing. Here, we’ve outlined the steps to maintain a healthy score and keep it that way.
- Pay your credit card bill on time. Late payments negatively affect your score. To avoid missing due dates, set up reminders or automatic payments for your bills. And stay within your loan limits, too. Utilizing a high percentage of your available credit can hurt your score, as it suggests a higher risk to lenders. Aim to keep your utilization ratio below 30%.
- Review your credit report for errors. Mistakes do happen, and administration errors can lower your score. So, as long as you check your report at least once a year, these errors can be caught early and then disputed.
- Have a mix of different types of credit. Lenders like to see that you can manage various types of finances responsibly. But don’t open too many new accounts at once, as this can lower your average account age and looks bad on your report.
- Don’t close old accounts (unless you have to). Keeping older accounts open can increase the average age of your accounts and boost your score.
- Be cautious. When applying for new lines of credit, do not submit too many applications at once, as lenders will see multiple inquiries as a sign of financial struggles.
Want Travel Rewards? Here’s How to Raise Your Credit Score From Good to Excellent
Having an above-average score means even more opportunities and benefits. If you’re wondering how to raise your score from good to excellent, here is a detailed list of strategies and habits you should adopt.
- Make payments on time. Your score is heavily influenced by your payment history. Paying all your bills on time, as well as paying off any existing credit, will improve your score over time. Set up reminders or automate your payments to avoid any chances of missing a due date.
- Maintain a low credit utilization ratio. This ratio is the percentage of your available loan limit. To get a good or excellent credit score, keep this number under 30%. You can do this by paying off balances in full each month or requesting an increase in the amount of money you can borrow from your credit card issuer.
- Diversify your credit mix. A diverse financial portfolio shows you are capable of managing different types of loans. Having a healthy mix of installment loans, such as mortgages or auto loans, and revolving loans, like credit cards, can boost your score.
- Be cautious while applying for new credit. After you make an application to a new lender, they will either run a soft credit pull or make a hard inquiry, which shows up on your credit report and lowers your score. Limit the number of hard inquiries by applying for new loans only when necessary and going for pre-qualified offers whenever possible.
- Keep track of the age of your accounts. Older accounts have a positive impact on your score. Avoid closing old accounts unless absolutely necessary, and consider keeping your oldest cards or accounts active by using them for small purchases every now and again.
- Make sure your report is accurate. Incorrect or fraudulent information can have a negative impact on your score. You can detect any inaccuracies or inconsistencies in your report by keeping an eye on it.
How Can People With Good Credit Scores Compare the Top Credit Cards for Good Credit?
There are cards available for good credit scores, and you need to know how to compare them. Doing so will mean you find one that fits your financial needs. If you’re looking for affordable interest rates and high loan amounts, then choosing a credit card means following the next steps.
High interest rates and hidden fees can quickly negate the benefits of some cards. To avoid any surprises, always compare the annual percentage rate (APR) of different lenders. A lower APR means you’ll pay less interest on your outstanding balance.
The benefits of a card should outweigh the cost of its annual fee (if the card has one).
For example, if you travel or make large purchases, a card with a $100 annual fee may be worth considering if it offers travel rewards, cashback, or statement credits after you spend on purchases on your new card within the first 6 months.
Don’t forget to consider any extra fees the lender has, such as foreign transaction fees, cash advance fees, or even a balance transfer fee on the amounts transferred.
Card fees can add up fast and affect your budget – especially if you’ve been lured in by 250 statement credit perks that come with a rewards card.
Knowing your priorities will help you narrow down the best lenders specializing in credit card introductory deals. For example, are you looking to consolidate existing debt at a lower interest rate? Or maybe you want to maximize rewards for upcoming travel plans?
Consider the length of the introductory period, the interest rate during this time, and any annual fees or penalties. On some cards, 0% APR is available for a longer period of time, while on others, it’s only available for a temporary period.
Remember to check if the card has an introductory APR or a promotional annual fee for a certain period, as these rates can increase after the promotional period ends. Some lenders will only apply introductory offers 3 months from account opening.
Some credit cards have tiered or flat-rate rewards. Tiered-rate options provide different reward percentages based on spending categories (E.g., groceries, gas, dining), while flat-rate cards offer a consistent reward percentage across all purchases.
Assess which type of rate structure will maximize the rewards you can earn based on your spending habits. Additionally, take note of any caps or limits on rewards earnings.
Some cards impose a maximum amount you can earn per quarter or year, while others might require meeting minimum spending thresholds before you start accruing rewards (E.g., rewards are granted within 3 months from account opening).
Make sure to choose a lender that doesn’t restrict your potential earnings. But it’s also worth considering that the more rewards a card has, the more likely there is to be an annual fee.
Research various companies online when picking a card to compare lender reputation. Look for customer reviews, testimonials, and ratings on trusted third-party websites like Consumer Reports or even the lender’s website.
These sources will have unbiased experiences of real customers, giving you valuable insights into the overall satisfaction, benefits offered, and potential annual fee drawbacks of using the card you’re interested in.
Have a look at the lender’s track record on Google. Companies with a long-standing presence in the market are more likely to be reliable and have a proven history of meeting customer expectations.
Bottom Line: Top Credit Cards for Good and Excellent Credit
The leading cards available to people with good and healthy scores have a plethora of available financial or credit offers to choose from. With a good rating, you’ve got all kinds of options.
Not only can they provide you with better loan amounts and rates, but it ensures that you’re making the most out of any promotions or deals available during this time.
These cards have competitive rewards, low-interest rates, and exclusive perks that cater to a wide range of consumer needs. And for people who want to keep their good credit, always make sure to evaluate each card’s features, benefits, and potential drawbacks before applying.
Sources Used in Research for the Article:
- Credit Scores, Federal Trade Commission, https://consumer.ftc.gov/articles/credit-scores
- Credit Cards Key Terms, Consumer Financial Protection Bureau, https://www.consumerfinance.gov/consumer-tools/credit-cards/answers/key-terms/
- What is a credit score, Consumer Financial Protection Bureau, https://www.consumerfinance.gov/ask-cfpb/what-is-a-credit-score-en-315/