A credit card is an excellent tool to give you access to more money than you currently have. If you have a large expense and don’t have time to raise funds, the card can help you make the purchase in a single transaction that can then be paid off over time at a later date (or paid off all at once when the bill comes due). While helpful, credit cards can be used incorrectly, which can do insurmountable damage. Therefore, it is best to find the best credit cards for your needs with a few helpful tips.
Before selecting a credit card, it is best to know how you plan to use it. Do you want to pay it off completely each month or do you want to carry a balance? Do you want it for emergencies or want to use it for all purchases?
If you plan to pay the card off each month, you aren’t likely to worry about interest rates. Make sure the card you choose doesn’t have an annual fee and includes an extended grace period to avoid finance charges.
If you do plan to carry a balance, you should look for the card with a low introductory rate and lowest interest rate possible from then on.
You may also want to consider a card with a rewards program, which can help you get cash back or other perks if you plan to use it all the time.
The interest rate is shown on credit card offers as the APR, which is the annual percentage rate. Many cards use a fixed rate, but some use a variable rate, usually tied to the prime rate. With fixed-rate cards, you know the interest rates are the same each month. Variable-rate cards fluctuate with the rates. However, fixed-rate cards can change interest rates based on many factors, such as paying late or going over the credit limit.
Consider a Secured Card
Many people have gotten into debt before and may have used bankruptcy to get out of debt. If you have done that and now want another credit card, you may want to consider a secured card. These cards usually require you to deposit some of your own money to the card and then it adds money to the card based on how much you have deposited. These cards work well for people who have no established credit history or have bad credit because of past unsecured debt.
Best Credit Cards and Your Credit Report
If you do plan to get a credit card, it is helpful to request your credit report, which you can do for free. You learn what your credit score is and how that might affect your interest rates and ability to get high-end or luxury cards. You can also learn ways to improve your credit score over time. That way, you can fix any issues, boost your score, and be eligible for better interest rates and better perks.
When you first get a new credit card, you may notice that the credit limit (how much you can spend) is low. That is normal because the lender isn’t sure if it can trust you yet. Therefore, you may have to use some of the credit and pay it off as quickly as possible for a few months (or years) before the lender approves an increase in credit.
The best credit cards are those that have sufficient limits to use for emergencies. Otherwise, you run the risk of maxing out the card, which hurts your credit score and can cost you penalty fees, as well.