Pros and cons of credit cards for online shopping
How to choose an online shopping card
To find the right credit card for your online shopping, first consider the rewards rate and types of purchases the card earns rewards on. Unless you only shop online, it's usually better to choose a flexible card that earns reward for different types of purchase categories, like online shopping and restaurants.
If you're looking to make online purchases more secure, choose a card that offers shopping protections or extended warranties. Shopping protection covers your new purchases against damage or theft, usually for 90 to 120 days, while an extended warranty will extend a manufacturer's warranty for up to a year or more.
Virtual credit cards could also add an extra level of security to your online shopping. These unique, digital card numbers replace your physical card number to prevent the merchant from storing any of your card information when you shop online. American Express, Capital One and Citi all offer virtual credit cards, while the X1 card has one of the best virtual card capabilities.
Also, make sure the card's online shopping category includes the purchases you make regularly. For example, the Blue Cash Everyday specifies a U.S. online retailer as a purchase made online (or through an app) with a merchant that sells physical items directly to consumers. Otherwise, the purchase will earn 1% cash back.
None of the cards above charge an annual fee (the Prime Visa card does require a Prime membership, however), but if you're considering one that does, try to see if you can cover its fee through your normal spending habits. Any annual fees will essentially cut into your rewards.
How to get the most from your credit card
To maximize the value of your credit card, first, make sure you’re using it where it earns the most rewards. For the Prime Visa, that would be any of Amazon's brands, including Amazon.com and Whole Foods. Some cards may let you activate bonuses with certain online retailers too, like through American Express' Amex Offers program.
Next, review the different ways to redeem those rewards so you can get the most from them. Often, that means redeeming your rewards as statement credits to lower the overall balance on your credit card.
It’s tempting to use your rewards at checkout with your favorite retailer, but that could actually cause you to miss out on some of your rewards. Instead, make the purchase first and then redeem statement credits to cover the transaction on your bill. Or, depending on your card, you could transfer your points to the card issuer's travel partners where they could be worth much more.
Tips to avoid overspending when shopping online
If your card comes with a higher credit line -- like the X1 card -- don’t let it encourage you to buy things you normally wouldn’t. While credit card rewards can help you save money, if you can only accrue them by overspending, you could find yourself in credit card debt with hefty interest charges.
A welcome bonus could provide even greater rewards, so long as it fits into your budget. Reach it with your normal spending habits to get the greatest value from it. Or, before you apply, have the required spending saved up so you can earn the bonus easily.
If juggling multiple cards sounds like too much work, using one card for online shopping can help you track your spending and better stick to your budget. Only spend what you can afford to pay off right away.
Alternatives to online shopping credit cards
If you don't want a credit card with multiple bonus categories, consider a flat-rate credit card or a store credit card.
Flat-rate credit cards earn rewards no matter where you're using them, including for online shopping.
Store credit cards are generally easier to qualify for than standard credit cards, but they often have a high APR and less favorable features. Though there are a few exceptions, for the most part we recommend caution when applying for store credit cards.
How to apply for a credit card
Applying for a credit card is simple:
- Find a credit card that suits your needs. Make sure its rewards cover the spending categories you spend with the most, whether that's with Amazon or a broader online shopping category.
- Apply securely on the card issuer’s website. You’ll need to provide personal and financial information including your name, address, date of birth, Social Security number, income and monthly rent or mortgage payment.
- You should hear back instantly with a decision, or the card issuer may reach out for clarification or more information.
If you receive a message saying the decision is pending, don't worry. Often times your application will be automatically approved in 5-10 days. If you're denied, try not to stress. You can oftentimes get the rejection overturned by calling the credit card company's reconsideration hotline.
The bottom line
Using a credit card for your online shopping is generally safer than using a debit card, due to fraud protections, additional shopping protections and virtual card capabilities. Cards with specific online shopping rewards can also help you put more money back into your pocket each time you check out digitally. Just remember to avoid overspending, otherwise the rewards you earn may quickly get overshadowed by interest charges.
FAQs
It depends on what you’re looking for. The Blue Cash Everyday or the X1 card is likely the most rewarding, but if you shop mostly with Amazon, then the Prime Visa card will suit you best.
Besides using the right credit card for online shopping to earn rewards, there are a handful of other options you can use — often in tandem with a good credit card. Browser add-ons such as CNET shopping can help you apply promotional codes and other savings with a single click. Some brands offer a one-time discount when you sign up for a newsletter, or you can buy discounted gift cards to make a purchase.
Some credit cards with online shopping rewards allow rewards on international orders, but others do not. For example, you’ll earn 2x points per dollar spent with the X1 Card on online international purchases, but not with the Blue Cash Everyday Card from American Express, which applies only to U.S. online retail purchases. You’ll have to check the details of your credit card in your cardmember agreement.
If you’re looking to maximize your rewards specifically when shopping online at Walmart.com, you can earn 5% cash back on your Walmart.com purchases, including pickup and delivery, with Capital One Walmart Rewards® Mastercard®*.
When shopping online at Target.com, you can use the Target RedCard™ Credit Card* or Target RedCard™ debit card* to save 5% upfront on your purchases. These rewards apply to purchases you make at one of Target’s physical retail locations, as well.
Other cards we researched
Our methodology
CNET reviews credit cards by exhaustively comparing them across set criteria developed for each major category, including cash back, welcome bonus, travel rewards and balance transfer. We take into consideration the typical spending behavior of a range of consumer profiles -- with the understanding that everyone's financial situation is different -- and the designated function of a card.
For rates and fees of the Blue Cash Everyday Card from American Express, click here.
*All information about the PayPal CashBack Mastercard, Capital One Walmart Rewards Mastercard, Target RedCard Credit Card, Bank of America Customized Cash Rewards credit card and Target RedCard Debit Card has been collected independently by CNET and has not been reviewed by the issuer.
