The First Rules of Finance: Your Cheat Sheet for Understanding Credit Cards
Considering all the perks and points that are potentially up for grabs, understanding credit cards is critical when shopping for a new one. Before sifting through the long lineup of card offers, you should compare the institutions behind the cards to determine which is most suitable for your lifestyle. The four major players are Visa, American Express, MasterCard, and Discover. Each offers different benefits, payment processes, and services. One major difference is that Visa and MasterCard, two of the oldest credit card networks in America with the biggest fraction of clients, team up with banks to process payments, whereas American Express and Discover are both the bank and the payment processor. Each card type caters to different interests and needs, but that doesn't mean that more than one card could work for you. To help you make an informed decision when applying for a credit card, we've outlined the major differences between each. Below you'll find a breakdown of benefits for the major players, as well as other important differences that will help you answer which credit card is right for you.
Keep scrolling for the 101 on credit cards as we break down the benefits of each.
Visa makes up almost half of all credit cards used in the United States. It's accepted by over eight million merchants in the United States alone, and it's accepted in over 200 countries worldwide. Visa guarantees pay for merchants and also provides excellent customer service if for some reason you find an inaccurate merchant charge. In addition to its credit cards, of which it has 31 personal options, Visa offers debit cards and prepaid services.
Chase Sapphire Preferred. Earn two Ultimate Rewards points per $1 spent on travel and dining and one point spent on anything else. Spend $4000 in the first three months of opening the account to earn 50,000 bonus points—the equivalent of $625 toward travel
American Express has its origins in the late 1800s and began offering charge cards as early as the mid-20th century. Much like its current marketing, the brand was cultivated to serve traveling and high-priced entertainment. American Express makes up only about 10% of cards issued, but it remains a major player.
The Platinum Card. If you travel often, it could be worth it to spend the annual fee to enjoy the elite travel perks offered with the card, including but not limited to access to airport lounges, credit toward your application for Global Entry or TSA PreCheck, no foreign transaction fees, statement credits for airline incidental fees and even Uber, and Starwood Preferred Guest Gold status.
MasterCard offers only credit cards and debit cards with its issuing partners and does not deliver additional services like guaranteed payment.
Capital One Secured MasterCard. This credit card is excellent for building credit if your credit score isn't in good shape. There is no annual fee, which is unusual for a secured card, and though its APR is 24.99% (higher than unsecured cards), this gives you an opportunity to build your credit.
Of the four, Discover is the least established on the scene, but it's still growing its customer base. It's accepted at seven million merchants in the United States, and it's only accepted in 49 countries worldwide. Despite its relatively low reach, Discover offers excellent benefits including highly rated fraud protection and cash-back rewards.
Discover It. This card offers 5% cash back in specific purchasing categories—such as transportation (including gas), home improvement, restaurants, and Amazon and Target—that rotate quarterly. The 5% is earned up to $1500 spent each quarter, and all purchases after that or out of category earn 1%.
Still undecided? Check out this credit card comparison tool that pinpoints which cash-back option would be best for you, based on how you budget your spending.