Managing a credit card is a strenuous task, balancing between financing things you need with crippling debt.
Knowing what to do with a credit card is more than a simple, “Don’t go overboard.”
How to pick a credit card has a lot of details to weigh in on. What to know what to consider and what questions to ask? Let us guide you through.
How to Pick a Credit Card
A credit card is a big thing. With it comes the temptation to spend far above your means. If you can use it well, though, it can help push you into a more potent and useful financial situation.
The question then becomes, what does it take to use a credit card well? First, you need to ask yourself what you want and need out of a credit card.
The following will give you a good idea on things to consider and possibilities to look out for.
Considering Your Balance and Income
The first and most important rule to finances is to understand what your money situation is in the first place.
Having a credit card that you cannot pay off each month is dangerous. Your income should be a solid indicator of how much you can afford, so a credit limit beyond that doesn’t do much good.
You always want to pay off your balance every month. Credit increases work on good payment history. Leaving money on your balance every month is a myth.
What you Need out of a Credit Card
When determining what credit card is best for you, these are the three aspects that you will look for.
Each credit card often focuses on one of these three over the others. Few try to balance all three without a cost of some sort.
There are always other random perks that credit card companies may offer, but they are often most specific.
1. Improving Your Credit
Whether you are starting out or whether you have been dealing with credit cards for years, building credit is not an easy job.
If you are brand new to the credit game, there are a few credit card options for new credit users. They are often advertised as such as well.
For everyone looking to build up credit, a secured credit card is one of the best routes.
A secured credit card will keep up a steady flow of reports to your credit score. If your payments are on time and your balance is low or non-existent, then your credit score will grow!
Be warned with secured credit cards, as many require a security deposit up front. This deposit will be yours again if you upgrade or close the account in good standing. If all goes well, it is a good investment, but tread with caution.
Interest is the build-up fees that you must pay as you leave a balance on your credit card from month to month.
Often a card will advertise a 0% APR as well. APR is an annual percentage rate, which makes it an interest fee that occurs yearly. This doesn’t stop it from affecting your interest fee every month.
A low to non-existent APR sounds great until you realize that it is temporary. APR is a big part of credit cards, but many want to pull you in with a tantalizing lack of an APR. These cards often have the biggest APR when the first period is over.
While interest and APR are never good to have, choosing a higher interest rate for the sake of other bonuses and rewards is often the decision you will have to make.
3. Cashback and Other Rewards
There are is a massive number of different rewards that are available with each credit card.
For the frequent flyer, there are specific cards that give bonuses, savings, and even cash back for plane tickets and other travel expenses.
When you are out shopping, there are cashback bonuses on almost every major purchase. Whether you are getting gas at a gas station, the food at the supermarket, or paying bills online, there are reward options for each.
There is sometimes a reward for straight cashback reward, but the percentage for the reward is usually very small to make up for it being available for anything and everything.
The Cards to Boost Your Credit
For those digging in and trying to rebuild their credit, there are a few solid options.
The Capital One Secured Mastercard is a very solid option. With 0% annual fee and a report to all three credit bureaus, this card ticks all the major details you want for a credit building credit card.
For those who want to avoid a credit check or do not have a bank account, the Open Sky Secured Visa Credit Card is a solid deal.
For those who have ok credit, but need to sneak into good credit, the Citi Secured Mastercard is a great option. It has no hassles and will be a good and quick way to get in good standings.
The Cards Filled With Rewards
Sometimes you need some perks to your credit card purchases.
For the traveler, the Capital One Venture Rewards Credit card is a powerful tool. While it requires a very good credit rating, the rewards are superb, granting bonuses and free flights through Hotel.com
The Discover It Cash Back credit card has great all-around rewards, focusing on getting cash back. This card is also very forgiving for newcomers, with a 0% APR intro period and new-cardmember bonuses.
The Best Overall Cards
For sheer value, the current high rated pick is the Bank of America Cash Rewards. Though this card requires a high credit score, it has no annual fee and gives up to $150 in cash rewards for your initial spending.
The Blue Cash Preferred card is another high-quality card, giving an even higher boost in cash reward for your initial spending as well as a cash back on grocery purchases.
Credit to Succeed
So, you have a much better grasp on how to pick a credit card. The question becomes, which one is best for you? The answer still depends on how you need to use the card.
No matter which route you need for this time in your life, there is a good answer and an even better guide to help you. Need more of a personal guide? Let us answer your questions.