2011 Editor's Choice Awards, Part 1
November 28, 2011
By: Curtis Arnold
Editor's Note: The CardRatings team of credit card experts picked the best credit cards of 2011 based on their features, perks and overall value to consumers. CardRatings.com was recently ranked the No. 1 credit card comparison site in Bing Editor's Picks.
If you've got a high credit score and a solid income, expect major banks to line up at your mailbox like bargain-hungry shoppers on Black Friday. As we compiled our list of the best credit cards for this year's Editor's Choice Awards, we saw something we haven't seen much of from lenders over the past few years.
They're hungry to get back in the game and will to go to unprecedented lengths to attract the best consumers to their portfolios. Looking back to our 2009 Editor's Choice list, banks had circled the wagons, pulled most 0% APR credit cards from the market, and scaled back their rewards programs.
Even though the clouds haven't all lifted from our global economy, banks now face pressure from lawmakers and investors to get cash out of their vaults and into the hands of borrowers. Not wishing to repeat the subprime lending mess of 2008, banks have focused on growing their transaction volume. That's why you'll see plenty of offers that reward you for making lots of small purchases at places like grocery stores and gas stations.
Instead of relying on "revolvers" to manage high balances, credit card issuers want to attract more cardholders who can pay down their balances each month. Rewarding that kind of financial responsibility still makes money for banks, who can avoid paying stiff fees to the Federal Reserve for keeping too much cash on hand. As the prime rate hovers at historic lows, credit card issuers have to rely on great signup bonuses and other incentives, which have led to some of this year's best credit card offers:
Best cash back credit cards
- Fidelity Investment Rewards American Express
It's still hard to find a better deal than this cash back credit card that deposits 2 percent of your purchases into your linked account at Fidelity. It's an easy way to supplement your IRA, or to stash extra cash in a high-yield cash management account.
- Capital One Cash
Jimmy Fallon helped reboot Capital One's cash back reward card in a series of funny ads that highlighted a no-nonsense rebate program that earns cardholders up to 1.5 percent of their purchases as automatic statement credits.
- Blue Cash Everyday Card from American Express
Though we really love the "Preferred" version of this card that offers cash back rebates of up to 6 percent, very few people get approved for that all-star offer. Still, AmEx's "Everyday" cash back card offers a one percent cash back on eligible purchases, with two percent on gasoline at U.S. stand-alone gas stations and select major department stores and three percent at U.S. stand-alone supermarkets, the first $6,000 of purchases at U.S. stand-alone supermarkets in a calendar year qualifies for three percent cash back; one percent thereafter. Note that cash back is earned only on eligible purchases and you can expect to receive your cash back in the form of Reward Dollars that can be redeemed as a statement credit.
Cash back credit card predictions for 2012: I think we'll see more of the same great deals. Issuers have already ramped up their rewards programs quite a bit over the past year or so. I expect issuers to continue to be aggressive with signup bonuses and rewards programs.
Best travel/airline credit cards
- Capital One Venture Rewards
Venture still beats the best airline credit cards by unhooking you from brand loyalty. Book your air, hotel, and car rentals with your favorite companies at the best prices, and you'll still earn free travel fast, with 2 miles per dollar on every purchase.
- PenFed Premium Travel Rewards American Express Card
Military families rely on this flexible travel rewards card with a low APR and no foreign transaction fee. The card's 5 points per dollar spent on airfare purchases is among the most generous travel rewards programs around.
- Chase Sapphire Preferred Card
I like the generous signup bonus offer, namely 40,000 bonus points after you spend $3,000 in the first 3 months of card membership. That's worth $500 towards travel when you redeem those bonus points through Ultimate Rewards. Chase dropped the foreign transaction fee from the "Preferred" version of its Sapphire Card. Even if you're not a frequent flier, bonus points can help cover the cost of your occasional wanderlust, and the 24/7 dedicated customer service is a real plus when you're out on the road.
Travel/airline credit card predictions for 2012: Like the cash back category, I don't predict huge changes in travel and airline rewards program structures. I do expect that issuers will continue to offer aggressive signup bonus offers as well as new and interesting perks to attract consumers with the best credit.
Best low interest credit cards
- Iberia Bank Visa Classic
They're not a household name, but they're quietly recruiting high-income Americans to a no-frills, low interest credit card with a variable rate that's been as low as 7.25 percent.
- Simmons First Visa Platinum
Simmons First National Bank has been rewarding responsible borrowers with personalized service for over a century. During 2011, their low rate card offered a 7.25 percent variable APR.
- USAA Rate Advantage
Fans of USAA rave about its legendary customer service, but we're excited about an APR we've seen dip as low as 6.9 percent. Tied to a prime rate that doesn't look like it's going anywhere soon, qualifying applicants can expect to enjoy low finance charges for a while.
Low-interest credit card predictions for 2012: As low as interest rates are in general, I don't see much room for them to go lower. At the same time, the credit card landscape is too competitive to allow rates to rise very far. I expect that 2012 will see more of the same low rates that are available to consumers with good credit this year.
Best low introductory rate credit cards
- Citi Simplicity Card
After surviving a major restructuring and an embarrassing data breach, Citi emerged stronger and sharper during 2011. Not only do their 0% APR credit cards come with introductory periods of up to 18 months for purchases and balance transfers, they're backed by an enhanced fraud prevention program.
- Slate from Chase
JPMorgan Chase repositioned its no-frills credit card with a limited-time no-fee balance transfer offer. They offer a 15 month introductory 0 percent APR on purchases and balance transfers if you have good to excellent credit. As part of the current introductory balance transfer offer you pay no balance transfer fee when you transfer a balance during the first 60 days your account is open. Slate also comes with Chase's Blueprint system, a clever online service that helps you calculate how much you'll need to set aside to get out of debt before your introductory rate expires.
Low-introductory-rate credit card predictions for 2012: I believe issuers will continue to be aggressive in this area. We will continue to see the longer introductory periods that we've seen this year and I believe that the more recent trend of issuers testing no-fee offers will continue as well. I don't think we'll see a major comeback just yet, but I definitely think we'll see more major issuers testing the waters.
The best credit card deals of the year aren't just for consumers with excellent credit. In Part 2 of the 2011 Editor's Choice Awards, we'll look at some credit cards for fair credit that have helped some Americans get back on their feet. We'll also reveal some of the innovative ways that banks have used credit cards to offer outstanding customer service during a year they endured some awful press.
About the Author
Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of 'How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line' (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).