What’s most important for you and your financial happiness? Is it to build credit, to earn flight miles, to qualify for cash rewards?
No need to feel overwhelmed trying to choose a credit card that works best for you. If you know which of these reasons or others is your top priority, the task can be quite simple.
Here are 7 tips for how to choose a credit card will work best for you.
How to Choose a Credit Card That’s Best for You
Before you can really narrow down your credit card choices to what suits you and your needs best, you must determine which of the following perks are your highest priority in a card.
Below are 5 of the main credit card benefits to consider before you move on to choosing a card:
- Travel rewards
- Transferring a balance
- Paying the least interest
- Building your credit
- Earning cash back
Once you’ve chosen your top card characteristic, consider the following tips.
1. How Good is My Current Credit Score?
Before you can even gain access to a credit card (even if you’re hoping to use it to build credit), issuers are going to take a look at your existing credit score.
It’s best for you to be aware of what your credit score is before you spend time and energy applying for a card you may not even qualify for. This doesn’t necessarily mean you need a score that’s out of this world, but knowing your current credit will help you understand what your options are.
If you’ve never had a credit card, it may be best to try a secured card to start with.
A secured card helps you build up and establish good credit. This is doable as long as you don’t spend more than 30% of the credit you’re allowed. You also must be certain to always be prompt with paying your bills.
2. Avoid Hard Credit Inquiries
Tip #2 relates to #1 in that if you know your credit score already, you can avoid credit-hurting hard credit inquiries.
You can avoid these if you already know your credit score and then only apply for cards you know you can qualify for. It doesn’t look good to other card issuers if you’ve already applied for one credit card and been rejected.
So be wise, when it comes to credit cards, shooting for the moon isn’t always a great idea. Avoid rejections and apply well.
3. Choose When to Pay Your Bill
Before ever making a credit purchase, or even applying for a credit card, choose when you plan to make your payments.
Will you be able to pay your bill off promptly each month? Or, will your situation entail carrying a balance.
If you anticipate using your card to make large purchases that you may not be able to pay off in one amount when your bill comes, then your credit card’s interest rate should probably be your highest priority when choosing a card.
Consider this, if you choose not to pay your credit card bills on time, but to carry a balance, even a tiny percentage difference in APR can result in hundreds or thousands of dollars in interest you will end up paying.
This brings us to tip #4…
4. Consider APR
Even with the best of intentions, you may sometimes find yourself missing payment on a bill, forgetting, or needing more time to pay off a balance.
Again, this is why it’s vital before ever choosing a card to look at the APR of all your considered choices.
While some cards may seem to have a higher interest rate, others may get you with super high late fees. An APR will give you the bottom line for all potential fees so you know exactly how much you’ll be responsible for.
5. Think About Existing Card Balances
Do you already have an existing credit card balance? If so, tip #5 is to review what different credit cards offer in the way of balance transfer fees.
If you do choose a balance transfer card, it’s also important to look at what your current card rate is. What rate will the new card have you pay after the initial APR runs out?
Does your new card even have an initial APR rate?
When transferring balances, compare cards to see which will save you the most to move a balance over.
6. Do You Travel Often?
Whether you travel for fun in 2019 or for work, traveling often may play a big role in what credit card you should choose for yourself.
Choosing a rewards credit card can pay big dividends in saving you in travel expenses if you are prompt with credit card payments.
Every single dollar you spend (and repay on time), brings rewards. Some cards will provide these in the way of cash back, flight miles, card “points,” or big bonuses.
Be aware, however, with cards like this, because the benefits are large for travelers, the APRs are among the highest. Make sure you can pay your bills before signing up.
7. How to End a Tie-Breaker
Once you’ve narrowed your choices to one or two cards that are about equal, how do you decide?
Here are some further points to compare:
- Which has a debt pay-off plan?
- Which offers 0% APR or the lowest APR?
- Do any offer no late fees?
- Are there expiration dates on reward miles or other benefits?
- Does your credit limit increase with any?
- Which one has the lowest required spending limit?
When the available options you qualify for are all quite similar, get nit-picky. Look at every detail and potential fee.
Learn More About Credit Cards
Follow these 7 tips for how to choose a credit card, and get started today. You’ll never regret paying off your credit card bills quickly or choosing a card with a low APR.
For more ideas on how to wisely manage your credit and credit cards, take a look at our blog section dedicated completely to credit card help. You’ll find everything you need. From ideas for building credit to finding the best card rates, we’ve got your back.