How NerdWallet Rates Credit Cards

NerdWallet rates credit cards on a scale of 1 to 5 stars, with 5 being the best. The ratings are incremented in tenths of a star — 3.7, 4.3, 5.0 and so on. Information about our rating systems and the factors that go into our assessments appears on this page.

Our ratings philosophy

What's helpful to know about our ratings:
  • Ratings are based on proprietary formulas that take into account the value of a card’s benefits, the costs of carrying and using the card, the complexity of the card’s benefits structure and other factors that affect its usefulness to the consumer.
  • Different categories of cards are rated using different formulas. The factors that make something a great cash-back card, for instance, are different from the factors that make for a great balance transfer card.
  • Each card is rated according to its primary category. A cash-back card that happens to offer a balance transfer promotion as a secondary benefit, for example, would be rated as a cash-back card.
  • Ratings are directly comparable only within the same category. A 5-star airline card, for example, would generally be considered superior to a 4-star airline card, but not necessarily to a 4-star cash-back card or a 4-star balance transfer card, as those cards are designed for different consumers with different needs.
  • Cards are rated mostly on their standard, ongoing features. Temporary promotions or targeted offers not available to the general public are not considered.
  • NerdWallet rates individual card products, not issuers’ card portfolios. Some issuers offer a full suite of cards; others focus on one area of the market. Some have strong offerings across the board; others may have one outstanding card in an otherwise mediocre portfolio. Each card is rated on its own features.
  • NerdWallet’s business relationships have no effect on ratings. Many of the credit cards described on our pages are offered by NerdWallet partners, but the ratings are determined only by the features of each card.
  • Most important:
  • Star ratings are designed to help consumers in making a decision, but they’re not intended to be the only consideration in choosing a card. Cards that earn 5 stars are those that we believe will deliver the most value to the greatest number of consumers when used as intended. But a 4-star or even 3-star card might be a better fit for an individual based on that person’s specific needs.
  • The editorial team

    NerdWallet’s credit cards content, including star ratings, is overseen by a team of writers and editors who specialize in credit cards. Their work has appeared in The Associated Press, USA Today, The New York Times, MarketWatch, MSN, NBC’s “Today,” ABC’s “Good Morning America” and many other national, regional and local media outlets. Combined, the team has more than 80 years of experience covering credit cards and personal finance. Each writer and editor follows NerdWallet’s strict guidelines for editorial integrity.
    NerdWallet communicates regularly with credit card issuers to ensure that offer details are current and accurate, and editors and writers continually review the offerings on issuer websites. When details of an offer change, the editorial team audits and updates content to ensure accuracy. Ratings are also updated as necessary.

    How our ratings formulas work

    Our formulas calculate a base rating for each card, from 1.0 to 5.0 stars. This rating is based on the core features of the card — the things that matter most in the decision to apply for a card and that most directly affect the cardholder’s experience day to day.
    The base rating is then subject to standardized adjustments up or down, typically in increments of 0.1 star, to account for secondary characteristics that affect a card’s overall value or usefulness but that aren’t usually central in the decision to apply for a card. One might think of them as “tiebreakers.” (See list below.)

    Base ratings

    The factors that go into the base rating depend on the type of card being examined. The features that make something a great travel rewards card, for example, are significantly different from what makes for an excellent balance transfer card.

    Cash-back and general-purpose travel cards

    The base rating for cash-back cards and general-purpose travel credit cards — those that are not branded with an airline or hotel name — is calculated this way:
  • Cash value: 75%.
  • Simplicity: 25%.
  • Cash value is our estimate of the dollar value a typical cardholder can realize by using the card as their primary method of payment for the first three years their account is open. Factors used in the cash value formula include, but are not limited to:
  • Annual fee, if any.
  • Base rewards rate (rewards earned for spending outside any bonus categories).
  • Bonus category rewards (including the nature of the categories and the rewards rates in those categories).
  • New-cardholder bonus offers.
  • Anniversary or other bonuses (taking into account the likelihood that a typical cardholder will earn those bonuses).
  • The cash-equivalent value of perks, credits or discounts that come with the card (taking into account the likelihood that a typical cardholder will use those perks).
  • The cash value calculation incorporates federal data on consumer spending to determine the relative weight of bonus categories. For example, the typical household spends far more on groceries and at restaurants than it does on streaming media, so 3% cash back at supermarkets carries more value in our calculations than 3% cash back on streaming.
    Simplicity reflects how easy or difficult it is to use the card — both in opening and managing the account, and in understanding, earning and redeeming rewards. Factors affecting the simplicity score include, but are not limited to:
    Complexity of the rewards structure, such as:
  • Flat-rate rewards versus bonus categories.
  • Static bonus categories versus categories that change periodically.
  • Bonus categories that require active management (such as by selecting categories or by opting in or “activating” the categories).
  • Limits on how much spending is eligible for rewards in a bonus category.
  • A limit on total rewards that can be earned.
  • Rewards values that vary based on how the cardholder redeems.
  • Obstacles to getting or using the card (beyond credit score qualifications), such as:
  • Membership requirements that must be met in order to apply.
  • Requirements that purchases be made a certain way to qualify for a certain rewards rate (through a specific digital wallet, for example, or online versus in-store).
  • Burdensome restrictions on redeeming rewards.
  • NOTE: The cash-back ratings formula also applies to: store credit cards, whose rewards typically function like cash back; general-purpose "points" cards whose rewards aren't specifically earmarked for travel; and non-rewards cards that don't fall into any other category, such as student, balance transfer or secured.

    Branded airline and hotel credit cards

    The base rating for “co-branded” airline and hotel credit cards — that is, cards that carry the name of an airline or hotel group along with that of the issuing bank — is:
  • Cash value: 75%.
  • Scope: 25%.
  • Cash value on these cards is calculated the same way as with other rewards cards (see “Cash-back and general-purpose travel credit cards,” above). However, it also takes into account NerdWallet’s assessment of the value of points and miles in airline and hotel loyalty programs. So a benefit like “3x miles on travel purchases” will be more valuable when the miles are valued at 1.4 cents apiece than when they’re worth 0.5 cent.
    Scope takes into account the number of destinations an airline offers or the number of properties available in a hotel group. Airline cards and hotel cards all have a similar rewards structure, so simplicity is not a differentiating factor. Instead, the key question is: “How much flexibility will I have in using my rewards?” That’s addressed by scope.

    College student credit cards

    The base rating for credit cards for college students reflects the fact that these cards are effectively “starter” credit cards, designed for people new to credit:
  • Cash value: 50%.
  • Simplicity: 40%.
  • Availability: 10%.
  • Cash value is calculated the same way as with other rewards cards (see “Cash-back and general-purpose travel credit cards,” above), but it accounts for a smaller share of the base rating. Students on the whole spend less money than other consumers, and the most important use of a credit card for a student is in building credit rather than amassing rewards.
    Simplicity accounts for a larger share of the base; the easier a card’s rewards structure is to understand, the better it is for a beginner.
    Availability is included in the base rating to recognize what a hurdle just getting a card can be for a student. Cards that applicants can get approved for with no existing credit history score high on availability; those that require applicants to have already established credit will score lower.

    Balance transfer credit cards

    The base rating for balance transfer credit cards is determined entirely by cash value. However, unlike with rewards cards, where cash value is a measure of how much money you would earn by carrying and using the card, the cash value of balance transfer cards measures how much you would save in interest by moving debt to the card and paying it down.
    Factors in the cash value calculation for balance transfer cards include:
  • The annual fee on the card, if any (although balance transfer cards typically do not charge annual fees).
  • The introductory annual percentage rate, or APR, on balance transfers — usually 0% but in some cases a rate such as 1.99% or the current prime rate.
  • The length of the introductory APR period.
  • The balance transfer fee.
  • The savings calculation also takes into account how the card performs in multiple common balance transfer scenarios, ranging from transferring and aggressively paying down debt to simply “parking” debt on the card for a period of time.
    NOTE: Some balance transfer credit cards offer rewards, perks and bonuses, but these are not included in the savings calculation. A balance transfer card is a tool for paying down debt, after all, not for adding to it with new spending. Any benefits tied to spending are treated as standardized adjustments, as noted above. For example, a rewards program might give a card ongoing value and therefore make it more desirable than a card without rewards, but it doesn’t affect the card’s utility as a balance transfer tool.

    Secured credit cards

    Secured credit cards have one purpose: to help build credit. Ideally, a cardholder won’t carry one for very long. Instead, they’ll use it long enough to strengthen their credit to the degree that they can qualify for a regular unsecured card. At that point, they can upgrade or close the account and get their security deposit back. So our ratings primarily reflect a card’s value toward that end. The base rating is:
  • Required cash outlay: 50%.
  • Credit builder features: 35%.
  • Upgrade potential: 15%.
  • Required cash outlay is the out-of-pocket amount the cardholder will have to provide in the first two years their account is open — two years being enough time for the typical cardholder to build credit and move on to an unsecured card. Required cash outlay takes into account:
  • Annual fees, if any.
  • Any other required fees, such as application fees or monthly maintenance charges.
  • Deposit requirements. Although the security deposit is refundable — meaning the cardholder can eventually get the money back — it still involves tying up hundreds of dollars for a considerable period of time.
  • Credit builder features include, but are not necessarily limited to:
  • Whether the card reports account activity to credit bureaus.
  • How many credit bureaus it reports to.
  • Free access to a credit score.
  • Upgrade potential gauges how smoothly a cardholder can move up to a regular credit card from the same issuer or at least get greater use out of their secured card. Factors include, but are not limited to:
  • Whether the card issuer has unsecured cards available to upgrade to.
  • Automatic reviews of accounts for possible upgrade.
  • A clear process in place for requesting an upgrade.
  • The ability to get a higher credit limit without depositing additional money.
  • The ability to deposit more money at any time to get a higher credit limit.
  • Standardized adjustments

    Like the base rating, standardized adjustments can vary depending on the card category. They include, but are not limited to, the items below:
  • The relative ease or difficulty of earning a new-cardholder bonus.
  • A 0% introductory APR period for purchases (and the length of any such introductory period).
  • The customer service record of the issuer.
  • A missing feature that should be expected on cards in the category.
  • The ability to apply, or at least pre-qualify, without a hard credit inquiry.
  • Alternative underwriting criteria that make it possible to qualify with a thin credit history or no credit history.
  • For balance transfer cards: Rewards or other benefits that give the card ongoing value beyond the introductory 0% APR period.
  • For secured credit cards: The presence of a rewards program or new-cardholder bonus. (Credit limits on secured cards are low, and good credit-building practices include keeping balances low, so rewards are not considered a primary feature of secured cards.)
  • Any other especially beneficial feature that materially increases the value or usefulness of the card but can’t be quantified as a cash equivalent.
  • Any other feature that materially reduces the value or usefulness of the card but can’t be quantified as a cash equivalent.