Credit Card Methodology

Credit Card Methodology

ValuePenguin offers hundreds of resources for individuals making personal finance decisions. Our mission is to provide honest, reliable and up-to-date information on financial products and services to help you make the best decision.

When it comes to reviewing credit cards, we built an unbiased yet simple evaluation system. We picked the five most important metrics based on what's most important to our readers. Our methodology allows us to effectively compare card benefits from various issuers.

We review cards based on the following criteria with varying weights:

Travel rewards, airline, hotel and cash back cards

15%
Introductory offer
25%
Rewards redemption flexibility
30%
Ongoing value and additional perks
20%
Interest and fees
10%
Customer satisfaction
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Entry-level cards*

10%
Introductory offer
25%
Ongoing value and additional perks
45%
Interest and fees
10%
Customer satisfaction

*Note: Because entry-level cards have higher interest and fees and often do not include rewards, we've given them the following weights.

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On a scale of 1 to 5, we'll assign a score on how well each card performs in each category. We take all of the factors into account to provide a fair assessment.

  • 1: Poor, could use lots of improvement
  • 2: Bad, could use many changes
  • 3: Average, could use some changes
  • 4: Great, could use 1 or 2 changes
  • 5: Perfect, needs no improvement

Introductory offer: 15%

Issuers typically offer sign-up bonuses to incentivize potential customers to apply for a card. While the sign-up bonus can be one of the most exciting features of a credit card, it certainly isn't the most important. Instead, the best cards will offer lasting perks or rewards.

Because sign-up bonuses are still an essential part of a credit card, we made sure to include it as a criterion — but at a lower weight (15%). Besides offering a traditional sign-up bonus, some issuers offer additional welcome perks, such as elite status or companion tickets. These benefits add value and elevate a card's sign-up bonus from good to great.


Rewards redemption flexibility: 25%

Points and miles are all fun and games until it's time to redeem them. We favor cards that offer multiple and diverse redemption options, including (but not limited to) statement credits, transferring points to other loyalty programs, gift cards and points pooling.

Not only is it important to assess the number of redemption options available, but if the redemptions offer value that's worth considering. Some cards may offer tons of redemption options but poor value for your points. Therefore, we'll assign a lower score to credit cards that are part of programs with low rewards value.

Each point earned on a card should be worth at least 1 cent each. Points currencies above this provide great value, while you should steer clear of anything below this number.

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The other considerations we'll take into account include the minimum number of points or cash back required to make a redemption, if rewards ever expire or if there are blackout dates. The more flexible the rewards currency is, the higher we'll rank them.

Usually, cards that will score highly on this category are general travel rewards cards, as they're not limited to one loyalty program and offer multiple redemption options.


Ongoing value and additional perks: 30%

For cards with annual fees, you want to consider whether the credit card is worth keeping in the long run. We analyze rewards rates based on average household expenditure data from the U.S. Bureau of Labor Statistics and Skift's report on U.S. travel consumer spending in 2019.

We'll also evaluate additional perks that come complimentary with the card — such as trip insurance or purchase protection. The more perks a card offers, the higher the rating it will receive for ongoing value. While it's hard to quantify the value of these perks, they can come in handy if you can successfully leverage them.


Interest and fees: 20%

Above all, it's important never to charge more than you can pay back. Otherwise, you'll be hit with unwanted fees — which might negate the value of the rewards you're earning in the first place. We believe in fully informing the consumer of potential fees or charges they may face when signing up for a credit card. And while these aren’t the most interesting aspects of a card, it's crucial to understand what you're signing up for.

According to the U.S. Federal Reserve, the average credit card APR in 2020 ranged from 14.52% to 15.09%.

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One of the most important factors to consider in this category is the regular purchase APR, which is the interest rate applied to all purchases. Credit cards with high APRs will score lower in this category. We also consider a card's annual and whether it offers a 0% promotional APR.


Customer satisfaction: 10%

When it comes to credit cards, you want to make sure that your issuer has your back. For example, we want to score issuers highly if they can handle credit card fraud or claims efficiently. In general, we also want to make sure that you're satisfied with the customer experience and feel valued as a cardholder. When applicable, we use J.D. Power's 2020 U.S. Credit Card Satisfaction Survey.

Credit cards that offer more services will receive a higher score, while cards with limited features will score lower.


ValuePenguin's verdict

While we were able to develop a system that can assess all cards, it's essential to take these ratings with a grain of salt. Depending on your personal finances and priorities, some of these factors will inevitably be more valuable than others. When possible, we try to explain our scores backed up with expert evaluation and objective reasoning. At the end of each review, we always provide card comparisons for suggestions on other offerings.

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