Experts rate the best credit cards

Since the credit crisis and this economic downturn took hold, most credit card companies are reevaluating risk and changing the terms -- even for their best customers. A week doesn't go by without a reader sharing a nightmarish story about a closed card, a lowered credit limit or jacked-up interest rates and higher fees.

I always appreciate feedback from readers. But there's something more they should do about their lousy credit card than complain to me about it: Shop around.

Yes, it's harder to be approved for credit these days, and who knows if the good-looking cards of today will keep their attractive terms tomorrow. Many American Express cardholders, for example, received letters about rising fees and interest rates right before rules about giving customers 45 days notice of such changes went into effect Thursday. With more credit card reform on the way, banks are experimenting with ways to keep their credit card business highly profitable.

But it's worth trying to find a needle in the plastic haystack, right?

Unfortunately, finding a great card among the thousands out there is no fun. So I enlisted the help of four credit card experts who have made it their business to recommend cards to customers: Curtis Arnold of CardRatings.com, Bill Hardekopf of lowcards.com, Adam Jusko of indexcreditcards.com and Schwark Satyavolu of Billshrink.com. You can also do your own research for free on their sites.

Carry a balance?

Focus on finding the lowest interest rate. Period.

If your credit is less than stellar, Jusko of indexcreditcards.com says to try the Citi Forward Card. Pay your bill on time and stay below your credit limit and you can reduce your rate (advertised as 14.25 percent) and earn bonus points towards rewards.

Satyavolu, co-founder and president of Billshrink.com, likes the U.S. Bank Visa Signature card with its 9.99 percent variable rate. It does have a $75 annual fee, but Satyavolu says "annual fees typically are worth it for people that carry an average balance of $10,000 or more."

If you're looking to transfer that balance, it's not as easy to find a 0 percent interest offer with no balance-transfer fees. Arnold of CardRatings.com directs all balance-transfer seekers with good credit to the Pentagon Federal Credit Union. Its Pentagon Federal Platinum Rewards card offers a 2.99 percent fixed annual percentage rate (APR) for life (there is a one-time 2.5 percent balance transfer fee). As at many credit unions these days, the eligibility requirements for membership are easier to meet than you'd think. If you don't fit into one of six categories listed at www.penfed.org/howToJoin/overview.asp, for $20 you can join the National Military Family Association as a "concerned citizen." Two other military-related financial services organizations -- First Command and USAA -- also get high marks for credit cards with reasonable terms.

New to credit? Poor credit?

All of the experts think that for most folks in this category, a secured card -- a card you guarantee with a savings deposit -- is the best option. Stick with a major issuer such as Bank of America, Citi, U.S. Bank or Wells Fargo. Arnold says to try and keep the annual fee, common with secured cards, below $40.

If you're in college, there's a whole category of so-called student cards geared toward you; you're not expected to have a credit history. Interest rates in this category are typically higher. But you weren't planning to carry a balance anyway, right?

Love credit card rewards?

Cash is king among this credit-loving gang. Jusko, Arnold and Hardekopf of lowcards.com give high marks to the relatively new Schwab Bank Invest First Visa and Fidelity Retirement Rewards American Express cards. Both pay 2 percent cash back into an investment account. Although Blue Cash from American Express scaled back its rewards recently, it also was a unanimous pick. After you spend $6,500, you'll earn 5 percent cash back on groceries, gas and drugstore purchases and 1.25 percent everywhere else. It's great for the person who charges at least $1,000 a month.

Finally, another pick of the bunch is the True Earnings American Express card. It's only available to Costco members and offers 3 percent cash back on gas and restaurant purchases, 2 percent on travel and 1 percent everywhere else. This is my family's primary card.

What's in your wallet?

Love your credit card? Or hate credit cards altogether? Tell Kara McGuire • 612-673-7293 or kmcguire@startribune.com. Follow her on Twitter: www.twitter.com/kablog.