Bankrate credit card ratings methodology

A rewards or cash back card’s overall rating is determined primarily by its value score. This score gives us a sense of how much value the average cardholder is likely to get out of a card via the rewards they earn from regular spending or annual bonuses and whether those earnings are enough to justify the card’s cost. 

Value scores are an aggregate of weighted ratings of individual card features, including each card’s average rewards rate, sign-up bonus value, annual bonus value, ongoing rewards earnings, average APR and annual fee. Each of these features is rated 1 to 5 based on how it ranks compared to the same feature on other cards in the same category. 

For example:

• If a card’s average rewards rate is in the top 20 percent among all rewards or cash back cards in our database, it receives a perfect 5 score for its rewards rate. If it ranks in the bottom 20 percent, it receives a score of 1.
  
  
• If a card’s annual fee is high enough to rank in the bottom 20 percent of rewards or cash back card fees in our database, it receives a score of 1. However, if its estimated earnings rank in the top 20 percent despite this cost, it can still get a perfect 5 score for its ongoing rewards value.

While ranking some card features like annual fee and average APR is simple, other factors require us to make additional calculations, including average rewards rate, estimated ongoing rewards earnings and sign-up bonus value.

To estimate a card’s ongoing rewards earnings, we assess whether the card earns rewards at a high rate in the most popular spending categories. To do this, we calculate its average rewards rate based on how much it earns in different bonus categories and how closely its categories align with the average person’s spending habits. 

We use consumer spending data from the Bureau of Labor Statistics (BLS) to get a reliable third-party measure of people’s spending habits. The most recent BLS data estimates average total spending in 2021 was $66,928 per consumer. 

From here, we determine a “chargeable” spend (which purchases are likely to be put on a credit card and earn rewards). After subtracting expenditures like housing, vehicle purchases, education and healthcare, we get a total “chargeable” annual spend of around $22,500.  

This includes the following spending by category:

Using this data, we assign a weighting to each of a card’s bonus categories. For example, a card’s grocery rewards rate receives a 23 percent weighting based on how much of the average person’s budget is spent on groceries ($5,200 per year out of $22,500 in total spending). We also estimate the redemption value of points or miles from various issuer, airline and hotel rewards programs by comparing the cost of a booking in rewards versus the cost in cash.

This weighting and rewards valuation allows us to estimate a card’s average annual rewards earnings — how many points, miles or cash back you’d earn with a given card if your spending was about average and you used the card for all of your purchases, as well as what those rewards are worth after factoring in annual fees. We also use these valuations to determine a card’s sign-up bonus value.

A card’s annual fee influences a card’s value score in two ways: On its own and how it impacts a card’s estimated ongoing earnings. 

Cards with an annual fee are inherently at a disadvantage in our scoring system since annual fees make it harder to come out on top when earning rewards, especially if you don’t use your card frequently. However, if a card’s ongoing earning estimate ranks highly even after the annual fee is factored in, it can still receive a terrific score.

With these calculations complete, we assign each card element a rating based on how it stacks up against those of other rewards or cash back cards, apply the weighting and determine an overall value score.

The value score makes up 65 percent of a rewards or cash back card’s overall score, but each card type weights value scoring factors slightly differently. For example, annual bonuses are much more common on rewards cards than cash back cards, so they don’t influence a cash back card’s value score in the way they do a rewards card’s value. Meanwhile, sign-up bonuses are less variable on cash back cards than on rewards cards, so they have less of an influence on a cash back card’s value score. 

For example, annual bonuses are much more common on rewards cards than cash back cards, so they don’t influence a cash back card’s value score in the way they do a rewards card’s value. Meanwhile, sign-up bonuses are less variable on cash back cards than on rewards cards, so they have less of an influence on a cash back card’s value score. 

Another example: We assign more scoring weight to a rewards card’s earning rate than a cash back card’s because a specific rewards currency may hold special value to a cardholder even if the points or miles themselves hold a low redemption value overall (perhaps you’re eager to earn a lot of points with a specific hotel, even if you could earn more valuable points with a general travel card.

Here’s a deeper look at the factors considered as part of a cash back or rewards card’s “Value” rating:

We score each card’s perks and benefits against five tiers of features. These break down as follows:

• Tier 1 includes fewer features than even standard credit cards (for example, an ultra-streamlined card that offers basic utility and next to nothing in the way of ancillary benefits). 
• Tier 2 includes standard Visa or Mastercard benefits, such as free credit score access, car rental insurance and fraud protection. 
• Tier 3 includes “prime card” features like cellphone insurance, travel insurance and purchase and return protections. 
• Tier 4 includes luxury perks like TSA Precheck credits, airport lounge access and elite status with an airline or hotel. 
• Tier 5 includes the highest-tier benefits available on luxury cards, such as valuable travel and shopping credits, unique member benefits and more.

The perks score makes up 15 percent of a rewards card’s overall score and 10 percent of a cash back card’s score, since perks tend to be more generous on rewards cards (like travel, airline and hotel cards) than on cash back cards.

We also score cards based on how each issuer ranks in J.D. Power’s annual Credit Card Satisfaction Study. If the issuer doesn’t participate in this survey, we consider its relative Consumer Reports ratings and/or Better Business Bureau rankings to assign a score for customer service. 

This is only a small factor in our scoring system, making up 5 percent of a rewards or cash back card’s overall score, but it’s worth considering since it could influence a cardholder to choose one card over another if they’re otherwise of similar quality.

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.

Here’s a closer look at how a card’s overall Rates and fees score is calculated on a balance transfer card and a low-interest card:

As with rewards cards, we rate the perks included on low-interest and balance transfer cards based on where they fall in our benefits tier list. We also give points to balance transfer or low-interest cards that include a rewards program. 

Instead of ranking these cards’ rewards value based on spending categories, we simply assign a 1 or 5 rating based on the presence of a rewards program. This is because rewards programs can give a balance transfer or low-interest card better long-term value, but likely won’t be the primary feature at play when you’re choosing a card.

As with rewards and cash back cards, we consider how each balance transfer or low-interest card issuer ranks in J.D. Power’s annual Credit Card Satisfaction Study. If the issuer doesn’t participate in this survey, we consider its relative Consumer Reports ratings and/or Better Business Bureau rankings to assign a score for customer service. 

While customer experience still has a relatively low influence on a balance transfer or low-interest card’s overall score, it has slightly more influence on scores in these categories than in the rewards and cash back card categories. This is because customer service could influence factors like how long your balance transfer takes and whether you’re assessed late fees or penalty APRs, which can make getting out of debt all the more difficult.

Customer experience makes up 10 percent of a balance transfer card’s overall score and 15 percent of a low-interest card’s overall score.

We consider how each credit-building card’s issuer ranks in J.D. Power’s annual Credit Card Satisfaction Study. If the issuer doesn’t participate in this survey, we consider its relative Consumer Reports ratings and/or Better Business Bureau rankings to assign a score for customer service. 

While customer experience still has a relatively low influence on a credit-building card’s overall score, it has slightly more influence on scores in these categories than in the rewards and cash back card categories. This is because people new to credit or rebuilding credit may need more assistance managing their accounts and also may be at more risk from predatory lenders.

Customer experience makes up 10 percent of a credit-building card’s overall score.

We score a business card’s perks on a scale of 1 to 5 based on our benefits tier list, giving extra weight to perks especially useful or valuable for small-business owners, like being able to qualify with no personal guarantee, digital advertising credits, free employee cards and accounting perks.

As in other card categories, we rate business 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.

As with credit-building cards, customer experience makes up a larger part of a business credit card’s score than it does a rewards or cash back card’s score since small-business owners may need more assistance managing their accounts or help with payment flexibility and employee cards.

Customer experience makes up 20 percent of a business card’s overall score.