Bankrate credit card ratings methodology

We also rate rewards and cash back cards based on how easy it is to use your rewards. After all, points and cash back aren’t useful if you can’t redeem them. We assign a score for each card’s redemption and flexibility based on factors like rewards expiration dates, restrictions, blackout dates, limits, minimum redemption thresholds, redemption options and ability to transfer points on a scale of 1 to 5.

The flexibility score makes up 15 percent of a rewards card’s overall score and 20 percent of a cash back card’s score since cash back cards tend to have more caveats and restrictions with when and how you can redeem rewards.

A balance transfer or low-interest card’s overall rating is determined primarily by the quality of its intro APR offers, its ongoing APR and its fees.

We score intro APR offers in two ways: Based on the introductory rate itself and the length of the promotional period. While cards that offer a 0 percent introductory rate are always at an advantage, this can be offset by the length of the intro APR period. This means a low-interest card that carries a 3.99 percent intro APR can still receive a high overall score if it offers an especially long promotional period.

We score these features as well as a card’s balance transfer fee and ongoing APR based on where they rank relative to those of other balance transfer or low-interest cards. 

For cards considered primarily balance transfer cards, the intro balance transfer APR and intro balance transfer APR period length are weighted more heavily than the intro purchase APR and intro purchase APR period length; the opposite is true for low-interest cards. Balance transfer fee is also weighted more heavily for balance transfer cards than for low-interest cards, while ongoing APR is weighted more heavily for low-interest cards. 

This takes into consideration the primary intent of someone looking for a card in each category. In the case of balance transfer cards, that’s to get as much time as possible to pay off debt at the lowest possible cost. For low-interest cards, that’s to save on interest charges on new purchases or on a balance you plan to carry long term.

We also take into account any potentially costly fees like foreign transaction fees, penalty APRs and cash advance fees, though these factors have less of an influence on a card’s rates and fees score than intro APR offers, balance transfer fee and ongoing APR.

The rates and fees score makes up 80 percent of a balance transfer card’s overall score and 70 percent of a low-interest card’s score, since other factors (like customer experience) can become more important if you’re carrying a balance long term on a low-interest card. 

Credit-building cards — especially unsecured cards for bad credit — tend to carry high fees, sometimes including annual fees, monthly fees, card activation fees and more. Since building credit should be your primary focus at this stage — not covering card costs or trying to offset them via rewards and perks — cards in this category almost always receive a higher score if they carry low fees.

To assess a card’s cost, we first add up all of its ongoing charges, assuming a worst-case scenario. For example, a card that charges a $50 to $99 fee depending on your creditworthiness is scored based on the higher fee. 

We then subtract the average rewards earnings offered by the card and rank its total cost minus rewards relative to the cost of other cards in the category. You can check out our scoring breakdown for rewards and cash back cards for more details on how we determine a card’s average earnings.

Cards that rank in the top 20 percent (meaning they have some of the lowest costs) receive a score of 5 in this rating subcategory, cards in the bottom 20 percent receive a score of 1, and so on.

A credit-building card’s cost score makes up 45 percent of its overall rating.

Also key to evaluating the quality of a card designed for someone with limited credit history or a bad or fair credit score is how easy the card makes it to build positive credit history. 

To judge this, we rate a card’s credit limit and deposit requirement. Cards that offer a high starting credit limit will make it easier to keep credit utilization low, while cards that require a high minimum deposit can make it harder for many people to get started with building credit.

We evaluate credit limits differently for secured and unsecured credit cards:

• For unsecured cards, we consider a card’s starting limit, typically listed in its terms. 
• For secured cards, we consider its maximum limit, since these cards allow you to put down a large deposit, get a matching limit and have more room to keep your credit utilization low.

Since credit utilization is a key credit scoring factor, making up 30 percent of your FICO credit score, cards that offer you some control over your limit can be a big help if your focus is building credit. As such, secured cards typically have an advantage when it comes to scoring in this subcategory.

On the other hand, unsecured credit-building cards may be more accessible since they don’t require a security deposit upfront. This means that cards that have no deposit requirement or a low deposit requirement will score better in this subcategory.

A card’s score in this category makes up 25 percent of its overall score.

Along with ongoing cost in the form of fees, we also consider the relative standing of each card’s average APR. This is given greater weight in the credit-building category than in any other primary card category.

That’s because credit-builders are likely to either have little experience with credit (and, for that reason, be at greater risk of falling into debt and being burdened with high interest charges) or have made financial missteps in the past (and be at risk of gathering debt and interest charges again). 

We calculate each card’s average APR and compare this against other cards in the category to assign a 1 to 5 rating.

The card’s score in this category makes up 10 percent of its overall score.

We adopt a unique scoring model when evaluating perks on a credit-building card. Instead of benefits like lounge access or dining credits, we consider whether a card offers perks that can help you build credit or save money. 

These include whether the card offers features like:

• A rewards program
• Access to your credit score, credit report or other personal finance tools
• The ability to get preapproved or prequalify for a card with only a soft credit pull
• Guidelines on when you can increase your credit limit or graduate from a secured to an unsecured card account

We rate each of these features and combine ratings to determine an overall perk score. This score makes up 10 percent of a credit-building card’s overall score since we consider these features nice to have but not key to building credit. 

As students are notoriously short on cash, a card’s ongoing cost plays a key role in its overall score and is the most important scoring factor for a student card, accounting for 45 percent of a student card’s overall score. 

To calculate a student card’s cost, we rank its annual fee and average APR relative to those of other student cards and note whether the card carries other common fees like foreign transaction fees (relevant for students who plan to study or travel abroad), a penalty APR or fees that aren’t waived the first time a cardholder pays late (in case students new to credit struggle to keep up with card payments). We factor ongoing rewards into a card’s total cost since many student cards also earn cash back in student-centric categories.

Since students face a lot of expenses, we also consider whether a card carries an introductory APR on purchases or balance transfers, as well as where a card’s intro APR period ranks relative to the offers available on other student cards. A student card’s introductory offer makes up 10 percent of the card’s overall score.

We rate student benefits based both on our standard credit card perk tier list and whether they offer unique value to students. As such, a student card that comes with student-centric perks (like a credit to Amazon Prime Student) could earn a higher score than a card with more common perks like car rental insurance. Student cards also tend to offer better rewards than typical credit-building cards, so we rate each student card’s rewards program as part of this category, ranking its estimated ongoing earnings relative to that of other student cards. 

A student card’s score in this category makes up 35 percent of its overall score.

As in other card categories, we rate student card issuer customer experience based on information in J.D. Power’s annual Credit Card Satisfaction Study, Consumer Reports ratings and/or Better Business Bureau rankings.

Customer experience makes up 10 percent of a student card’s overall score.

We calculate a business card’s value similarly to a rewards or cash back card’s value, but use a different spending assumption (around $40,000 per year based on data about average small-business spending). We rate how each card’s rewards rate, average reward redemption value, sign-up bonus value and annual bonuses compare to its annual fee. 

Offering an introductory APR on new purchases or balance transfers also plays a key role in a business card’s value score, since these features could make it easier for small-business owners to earn rewards on large business purchases, free up cash flow, or otherwise use credit to grow their business.

We rate each of these elements and aggregate them as a value score. This makes up 45 percent of a business card’s overall score.

As with cash back and rewards cards, we rate how easy it is to use your business card’s rewards. We assign a 1 to 5 score based on redemption flexibility, including whether rewards expire, restrictions on when and how you can redeem and whether you can transfer points.

The flexibility score makes up 20 percent of a business card’s overall score.