Why a Credit Card’s Looks Aren’t Everything

The credit card you pluck out of your wallet can make as much of a statement as the purse or pants you keep your wallet in. With cards touting sleek metal designs, luxury perks and loyalty program status upgrades, simply carrying a flashy card can make you look like the kind of person who has access to whatever it is they hide behind velvet ropes.

Brand recognition is big, and credit card companies benefit from loyalty and familiarity (sometimes you can benefit from loyalty, too — more on that later). Depending on what you need out of a credit card, though, the option that looks impressive may actually leave you wanting more. It can pay to be practical and even consider a card you may not have heard of before, or carry multiple cards at once for different types of purchases.

I’ve carried high-end cards with pricey annual fees and fancy benefits, and no-fee cards with few extras beyond rewards on my spending. Sometimes I needed the 24/7 concierge service when booking travel, and other times I just needed to earn cash back on pet food. Here’s how I look at credit cards when I’m deciding which to apply for and which to use on a purchase.

Things that are more important than looks

Forget the surface-level stuff. You should be able to squeeze a lot of value out of every card you carry, especially if those cards charge a premium-level annual fee. Keep these factors in mind:

• Cost to carry: Consider the card’s fees. The annual fee is typically the biggest expense if a card charges one, but cards also may charge for late payments, foreign transactions and more. Compare these costs with the dollar value of any benefits you intend to use. This includes the value of a sign-up bonus and other rewards you earn through your spending, plus other perks like Global Entry ($100 in value) or an annual travel statement credit. Ideally, the benefits outweigh the card’s cost. And remember, a perk you don’t use is worth nothing at all.

• How you earn rewards: Aim for a card that earns more where you spend the most. That could be a card with a higher rewards rate in specific spending categories (like travel, groceries or dining out), or a card that earns the same rate of points, miles or cash back on every purchase.

• Redemption options: Consider how much each point is worth when redeemed for cash back, travel, gift cards or other options. NerdWallet’s 2019 Travel Credit Card Study found that the average value of a point or mile is around 1 cent, but point values may be higher or lower depending on what you decide to redeem them for. And remember: Points and miles are worth nothing until you redeem them, so don’t let them sit in your account forever.

• Other perks: Some extras offer time-saving convenience. Priority boarding on flights and late checkout at hotels are common credit card benefits that make travel less stressful.

When to pay attention to a card's brand

Sticking to one bank or loyalty program can help you keep things simple, especially if you prefer to manage all your accounts in one place. You can more easily optimize rewards this way by transferring them to one central account or to a card with better perks or redemption rates. Here are times to stay loyal to a brand, plus one instance where you won’t be able to:

• You already have a relationship with the issuer: Some banks make loyalty worth your while, granting you a higher rewards rate for having other accounts with them. You may need to keep a minimum amount of money deposited in a bank account to qualify.

• You can combine points from multiple sources into one pooled account: Certain credit card rewards programs let you combine points earned on multiple credit cards into one account. You may also be able to combine points with members of your household. If an airline or hotel offers multiple co-branded credit cards, they can all feed into one loyalty program account. This makes it easier to maximize your earning potential within one rewards ecosystem.

• You're shopping for a balance transfer credit card: In this case, it’s less about rewards and more about following the rules. Many credit card companies don’t allow you to transfer a balance from one card to another within their family of products. In this case, you’ll need to look beyond the familiar and focus on the card’s balance transfer fee, as well as how long you can get a 0% interest rate.