Citi Simplicity

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With most things in life, what’s “best” is inherently subjective and depends on each person’s needs and perspective. It’s no different with credit cards. Even a card with tons of great perks won’t be the right fit for everyone.

When we pick the best credit cards each year, sometimes old winners are surpassed by new cards with superior benefits. In other instances, our picks reflect the new priorities of the people most likely to use the cards.

The three new winners in 2024 reflect both types of changes. Here are the cards that won and why they earned our votes this year.

Category: Best balance transfer credit card

Why the Citi Simplicity® Card won: Basic math tells the tale of the Citi Simplicity® Card’s triumph over last year’s winner, BankAmericard® credit card. The Citi Simplicity® Card gives cardholders 21 months without interest on balance transfers compared with 18 billing cycles on the BankAmericard® credit card.

The balance transfer fee on both cards is 3%, the industry standard. Note, however, that the transfer fee on the Citi Simplicity® Card increases to 5% if the balance transfer is made after the first four months of account opening.

As an added bonus, the Citi Simplicity® Card doesn’t charge late fees. Other cards, including the BankAmericard® credit card, can charge as much as $40 for a single late payment.

Category: Best airline credit card

Why the United℠ Explorer Card won: The Delta SkyMiles® Gold American Express Card had a long run as our top pick for airline credit card, and for good reason. Its perk of a free checked bag for you and up to eight (eight!) traveling companions each time you fly Delta is unmatched. Terms apply. But this year we named the United℠ Explorer Card as the 2024 winner by virtue of its credits and lounge access.

The United℠ Explorer Card offers up to a $100 credit every four years for Global Entry, TSA PreCheck or NEXUS, a nice perk that gets you through airport security faster. You can get a $100 statement credit with the Delta Gold, too — but you’ll have to spend a lofty $10,000 to qualify, and it’s only good toward a Delta flight.

United℠ Explorer Card holders also get two lounge passes a year, good for entry into any of the over 45 United Club lounges. For a mid-tier travel card, that’s a really luxurious benefit. By contrast, the Delta SkyMiles® Gold American Express Card eliminated the ability to access the lounge for a $29 fee (and other Delta cards will restrict lounge access in the future).

Category: Best credit card for college students

Why the Discover it® Student Chrome won: Yes, the Capital One SavorOne Student Cash Rewards Credit Card has a higher rewards rate in some eligible spending categories than the Discover it® Student Chrome. The Discover card earns 2% cash back at gas stations and restaurants up to $1,000 in combined purchases each quarter; 1% thereafter. The Capital One card earns 3% cash back on several popular spending categories, including dining and purchases at grocery stores, but it lacks some key benefits that appeal to many students. The Discover it® Student Chrome offers:

  • A waiver on the first late payment fee. 

  • A breather on interest for new purchases. The card has the following promotional APR: 0% intro APR on Purchases for 6 months and 10.99% intro APR on Balance Transfers for 6 months, and then the ongoing APR of 18.24%-27.24% Variable APR. A break from interest, even for just a semester, can be a big help in financing major purchases like textbooks.

  • A potentially big sign-up bonus. The Discover it® Student Chrome has the same welcome offer found in any one of Discover’s nonstudent cards: INTRO OFFER: Unlimited Cashback Match for all new cardmembers – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 cash back into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. Say you spent $300 a month on your Student Chrome. Assuming a 1% cash back rate, you would come away with $72 by your account anniversary. 

Source: nerdwallet.com

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A penalty annual percentage rate (APR) is a heightened interest rate that can be issued if a person doesn’t use their credit card according to the card agreement. Card issuers explain the exact criteria that can lead to a penalty APR in multiple ways, like the terms and conditions section of a credit card application and in cardholder agreement documents. 

A CD rate refers to the interest someone can earn on a certificate of deposit over time.

Key Takeaways: 

  • Banks provide the criteria for issuing penalty APRs in their cardholder agreement documents.
  • APRs only apply to a card’s balance at the end of a statement period.
  • Most penalty APRs last for a minimum of six months.

How Penalty APR Works

Bad credit card habits, such as routinely neglecting a minimum payment, can result in a penalty interest rate. Penalty APR usually maxes out at 29.99 percent, which can still be manageable with the proper know-how.

Let’s say you have a 29.99% penalty APR and a statement balance of $500 on your card. To figure out how much interest you’d have to pay, divide 29.99 by 12 (representing each month of the year). You would get 2.499, which you can then divide by 100 to get 0.02499. Multiply your $500 balance by 0.02499, and you would owe $12.49 in interest for the month. 

Some issuers base things on a daily periodic rate, so you’d divide the APR by 365 instead of 12, then follow the remaining steps.

How to Avoid Paying the Penalty Rate

Remember that you only have to pay interest on a card if you have an outstanding balance by the end of the statement period. If you manage to completely pay off your balance, your 29.99% penalty APR won’t generate any interest. 

How Long Will a Penalty Rate Last?

According to the Consumer Financial Protection Bureau, credit card issuers must reconsider a cardholder’s penalty interest rates after six months. So, as long as you make the minimum payment amount six consecutive times, your interest rate will likely return to normal on existing balances.

These rules apply to consumer credit cards, not those issued to small businesses. With a small business card, several infractions can lead to a penalty interest rate. These can include missing a single payment, spending over the credit limit, or having payment returned for insufficient funds. 

Business credit cards are largely exempted from the CARD Act, so each issuer may have different rules about how and when cardholders may have their penalty interest rates cleared. Small business credit cardholders facing penalty interest rates should contact their card issuer for more information.

Steps to Take If You’re Paying Penalty APR

While it may be disheartening to receive a penalty APR, it’s entirely possible to manage this change. Here are several actionable steps you can take when you’re dealing with a penalty APR:

  • Make your minimum payments: Consistently making your minimum payments will keep your credit score from dropping and display financial responsibility to your card lender.
  • Limit your credit card usage: Only use your credit card for essentials when managing a penalty APR. If your penalized card is linked to any subscriptions, consider canceling them for now. 
  • Use autopay: Use autopay to ensure that you don’t accidentally miss your minimum payments. 
  • Meet with a financial advisor: Financial advisors can offer tailor-made personal finance advice to help you with your unique circumstances.

Do All Credit Cards Have a Penalty APR?

While there’s no such thing as a good credit penalty APR, some cards have much more manageable interest rates than others. Moreover, some cards never impose higher rates on delinquent cardholders.

Examples of cards without a penalty interest rate include the PenFed Promise, the Discover it®, and the Citi Simplicity®. There are no annual fees for these cards. On the other hand, the PenFed Promise and Citi Simplicity® have no . However, Discover it® does have a competitive cashback program.

Does Penalty APR Affect Credit Score?

A penalty APR won’t affect your credit score in and of itself. However, payment history makes up the largest portion of your credit scores, so the fact that you’ve missed multiple payment dates could significantly decrease your credit standing. 

Exceeding your credit limit can incur a penalty APR and increase your credit utilization ratio—which compares your current account balances with your total credit limit. Professionals urge cardholders to stay below a 30% utilization rate, which would be $300 out of a $1,000 credit limit. 

Learn More About Personal Finance at Credit.com

Penalty APRs are just one aspect of credit card usage and personal finance management that consumers should know about. Visit Credit.com today to learn more about other financial topics that may be relevant to you, now or in the future.

Source: credit.com

Citi Easy Deals: Save Up To 50% On Giftcards For Walmart, Kroger & More (Citi Simplicity & Diamond Preferred Only)

Citi Simplicity and Diamond Preferred members can get the following discounts on gift cards: $60 Best Buy gift card for $30 $25 Walmart gift card for $15 $25 Kroger gift card for $15 $25 Walgreens gift card for $15 $25 Costco gift card for $20 $25 Bed Bath & Beyond gift card for $20 $15 Kohl’s gift card for $10

Citi Easy Deals: Save Up To 50% On Giftcards For BestBuy, Walmart, Costco, Kroger & More (Citi Simplicity & Diamond Preferred Only)

Citi Simplicity and Diamond Preferred members can get the following discounts on gift cards: $60 Best Buy gift card for $30 $25 Walmart gift card for $15 $25 Kroger gift card for $15 $25 Walgreens gift card for $15 $25 Costco gift card for $20 $25 Bed Bath & Beyond gift card for $20 $15 Kohl’s gift card for $10

13 Best 0% APR No-Interest Credit Cards – Reviews & Comparison

Looking for a credit card with a great introductory 0% APR promotion? See these cards to find the one that works best for you.

2 Credit Cards That’ll Cut You Some Slack

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