If you’re wondering what a preferred credit card is, you’re not alone. Many credit card issuers offer cards with names that include the word “preferred” — the Chase Sapphire Preferred® Card, for example, and the Citi® Diamond Preferred® Card — without necessarily clarifying why cardholders should prefer those cards to other options.

Yes, some preferred credit cards offer better rewards than cards that don’t have the word “preferred” attached. But if your credit card issuer charges an annual fee to access those rewards, you’ll need to ask yourself whether paying the annual fee is worth it.

Some cardholders may want to stick with a no-annual-fee credit card — opting for the Blue Cash Everyday® Card from American Express, for example, instead of paying a $95 annual fee for the Blue Cash Preferred® Card from American Express. Other cardholders may want to upgrade from a preferred credit card to a premium credit card, paying a little extra in fees and getting a lot more in benefits and perks.

So, what exactly is a preferred card, and how do preferred cards compare to other cards? Let’s take a look at a few of the best known, to help you decide whether it’s time to add one to your wallet.

How is a preferred credit card different from a premium credit card?

While preferred credit cards and premium credit cards may sound similar, they are two very different products. Understanding the difference between preferred and premium credit cards can help you choose your next card wisely.

Generally speaking, preferred credit cards are designed for people who have built a good or excellent credit score, and are ready to take their credit card rewards to the next level. While some preferred credit cards charge annual fees, they’re generally moderate, and savvy cardholders can easily earn enough rewards to offset the cost.

Premium credit cards, on the other hand, are designed for people with excellent credit who are ready to pay high annual fees in exchange for elite benefits and perks. Many premium credit cards are top travel credit cards — and in addition to the points and miles offered with every purchase, cardholders may receive complimentary airport lounge access, annual airline credits, travel protections and more.

The Chase Sapphire Preferred card, for example, charges a $95 annual fee. The Chase Sapphire Reserve®, one of the top premium travel cards on the market, charges a $550 annual fee — and offers a lot more in rewards, benefits and perks. Which Chase Sapphire card is best for you? It all depends on what you’re hoping to get out of your travel credit card — and how much you’re willing to pay.

Today’s best preferred credit cards

If you’re looking for a preferred credit card, we’ve got four top picks for you to consider. Whether you’re hoping for a travel credit card, a balance transfer credit card, an everyday spending credit card or a business credit card, you have options. Here’s how each of these stacks up to the competition.

Chase Sapphire Preferred Card

The Chase Sapphire Preferred card is a good choice for people who want to test out travel rewards before committing to a premium travel card like the Chase Sapphire Reserve. With a $95 annual fee and numerous opportunities to earn Chase Ultimate Rewards, cardholders can get a lot of value out of the Chase Sapphire Preferred — as long as they’re prepared to use their Chase Sapphire card for a lot of purchases.

The Chase Sapphire Preferred card’s sign-up bonus, for example, rewards 60,000 points to cardholders who spend $4,000 in the first three months. This bonus is worth $750 when redeemed for travel through the Chase Ultimate Rewards portal, and it is considered one of the best sign-up bonuses in the industry. It also offers 5X points on travel-related purchases and excellent travel insurance.

If you want to start earning Ultimate Rewards but aren’t sure you can pay off the credit card balance required to earn that bonus, the Chase Freedom Unlimited® might be a better fit. It offers a similar rewards structure, and while the points won’t get you the 25 percent redemption boost of the Sapphire Preferred, there’s no annual fee.

Citi Diamond Preferred Card

The Citi Diamond Preferred Card is one of the few preferred credit cards that does not charge an annual fee. It’s also one of the rare credit cards that does not offer any credit card rewards.

What do cardholders get when they apply for the Citi Diamond Preferred? The opportunity to take advantage of one of the longest 0 percent intro APR balance transfer offers on the market. Cardholders receive 21 months of zero percent intro APR on transferred balances, as long as those balances are transferred within the first four months of account opening (after that the variable APR will be 16.74 percent to 27.49 percent, based on your creditworthiness) — and this top balance transfer credit card could be just what you need to pay off old debt while avoiding new interest charges.

Plus, new cardholders can earn a $150 statement credit after spending $500 in the first three months — which could make up for the card’s lack of rewards. If you’d rather trade a shortened 0 percent intro APR period for the opportunity to earn rewards on purchases, consider the Citi® Double Cash Card. You’ll only get 18 months of a 0 percent intro APR on balance transfers (after that, the variable APR will be 17.74 percent to 27.74 percent, based on your creditworthiness), but you’ll have the opportunity to earn 2% cash back on new purchases (unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.

Blue Cash Preferred Card from American Express

If your household spends a lot of money on groceries, the Blue Cash Preferred Card from American Express could be your new favorite credit card. With 6 percent cash back on U.S. supermarket purchases (on up to $6,000 in purchases per year), 6 percent back on select U.S. streaming subscriptions, 3 percent cash back on transit, 3 percent back on U.S. gas station purchases and 1 percent back on all other purchases, the Blue Cash Preferred is a good choice for nearly all of your everyday spending needs — including supermarket trips.

The Blue Cash Preferred Card comes with a $95 annual fee. If that’s a little too much for your budget, consider the Blue Cash Everyday Card instead. This no-annual-fee card offers slightly fewer points on groceries and other everyday expenses, but it could be just what you need to save money and get dinner on the table.

Chase Ink Business Preferred Credit Card

Small-business owners can also take advantage of preferred credit cards. The Chase Ink Business Preferred® Credit Card is designed for business owners who are ready to invest in growth. With a $95 annual fee — tax-deductible, naturally — and the opportunity to earn top-level Chase Ultimate Rewards on travel, shipping, internet, phone, cable and online advertising, there are a lot of reasons to use the Ink Business Preferred card for many of your small business purchases.

That said, some small-business owners may not be ready for the spending level required to get the most out of the Ink Business Preferred card — the 100,000-point sign-up bonus, for example, requires cardholders to spend $15,000 on qualifying business purchases in the first three months — and may be better off with the no-annual-fee Chase Ink Business Cash® Credit Card.

Is “preferred” just a marketing term?

Are preferred credit cards really better than the competitors, or is “preferred” just a marketing term? In the end, it’s a marketing term connected to cards that offer desirable perks and rewards a cut above average — but not at the level of a premium or elite card.

There’s no reason to choose a preferred credit card if you don’t actually prefer the card, in other words. If you’d be happier with a premium credit card, a no-annual-fee card, a credit-building card or another of today’s best credit cards, don’t let the word “preferred” prevent you from applying for the card you really want.

If you need help deciding which credit card is right for you, Bankrate’s CardMatch™ can help — and you might even find yourself preapproved for your next credit card.

The bottom line

Preferred credit cards may offer more benefits than other types of credit cards, but there’s no set formula behind that term. So make sure to compare all of your options before applying for a preferred card. You may be better off with a good no-annual-fee card, for example, or you may want to build your credit score before you apply for a preferred card. You may also want to skip the preferred card and go straight to the premium credit card, paying a higher annual fee in exchange for some of the biggest rewards in the industry.