US credit cards
In the following, we provide a comprehensive list of credit card products in the US. We organize the credit cards in five tiers.
Tier 1: Cards to avoid
There is no good reason to get tier 1 cards. They are just bad products for people who do not know better. Tier 1 cards are characterized by charging excessive fees without providing any benefit that goes beyond tier 2 cards. The main lesson should be: Never pay an annual fee for a credit card if it does not give a unique benefit over other cards without an annual fee. If you have bad credit, you should rather apply for a secured tier 1 card (explained later) than getting an expensive tier 1 card! Examples of tier 1 cards include:
All cards from Credit One. CreditOne bank tries to imitate CapitalOne (a reputable lender).
All cards with annual fee that do not provide special benefits. Examples of such cards also exist from reputable lenders. For example, the QuicksilverOne and Venture Rewards from Capital One, which should be carefully distinguished from their more premium siblings Quicksilver and Venture.
Tier 2: Cards to start
If you do not have a credit card yet, you should start with tier 2 cards. Typical starting credit cards that are offered by almost all banks or credit units are characterized by the following perks: They do not have an annual fee, they usually have a foreign transaction fee (i.e., it is expensive to use them outside of the US or on non-US websites, because you get charged an extra 1-4% on every purchase) and they offer a low cashback rate of 0-1% cashback on all purchases. There is nothing bad about such tier 2 cards and as they are free, you can keep them open even after having progressed to tier 3 and tier 4 cards. Examples of tier 2 cards include:
PNC points Visa credit card.
Capital One Platinum.
Tier 3: Cards to expand
After 6-12 months, your credit score will have sufficiently improved to apply to tier 3 cards. These cards are characterized by providing some non-standard benefit that goes beyond tier 4 cards. They either provide additional cashback of 2-5% in specific categories or they do not charge a foreign transaction fee (making them suitable for travel) or they give large signup bonuses (airline miles or money). They are typically harder to get than tier 2 cards and what sets them apart from tier 4 cards is that they do not require such high income and/or such good credit scores, as we will discuss next. Examples of tier 3 cards include:
Capital One Quicksilver.
Citi Double Cash.
Bank of America Travel Rewards Credit Card.
Chase Freedom Unlimited.
Discover It Miles.
American Express Everyday Preferred.
Tier 4: Cards to aim for
After a few years of building your credit, you may want to apply to tier 4 cards. There are a few cards that are hard to get and that provide unrivaled benefits that even justify an annual fee of up to a few hundred dollars. They regularly come with a large signup-bonus of 300-1000 USD worth of points or miles. They typically require a spotless credit history (going back at least 2-3 years) and a sizable household income (50k USD and more). To receive the signup bonus, these cards often require an initial spending of 3-5k USD over the first three months after opening the card. Most of these tier 4 cards are particularly aimed at frequent travelers, such that they become most valuable if you regularly book hotels and flights.
US Bank Altitude.
American Express Platinum.
Bank of America Premium Rewards.
Chase Sapphire Reserve. This is probably one of the best cards to get for frequent travellers.
Tier 5: Cards to waste money on
From a purely rational perspective, there is no reason to get tier 5 cards. For most people, the benefit vs. cost ratio peaks at tier 4, but if you are very rich (millionaire, mid-sized business owner etc.), you may become eligible to apply for extremely selective credit cards. Typically, their main perk is that they are extremely selective and people are proud to have them.
American Express Centurion Card. This card is expensive with limited benefits, but it is famous for being invite-only.
J.P. Morgan Reserve Card. This card is very similar to the Chase Sapphire Reserve card, but harder to get and more expensive.