There is an expansive list of credit cards available to consumers today. From rewards and cashback cards to store-specific credit, the options are truly endless. Despite the abundance of choices, making a decision can be pretty challenging. Is there anything you should look out for in terms of perks? Does it make sense to pay an annual fee?
To simplify your search for the best credit card, we have outlined three steps you need to take to determine the best credit card choice for you.
1. Run a Credit Check
Check your credit score before choosing a credit card. While it’s possible to get a credit card with fair credit, no credit history, or short-term credit history, many rewards cards require good or excellent credit. Understanding your credit score will help you narrow down which credit cards may be best for your financial situation.
2. Understand Your Credit Card Goals
Once you know your credit score and the types of cards you qualify for, consider what purpose you want the card to serve. Credit cards can serve a wide range of goals, from building credit to low-interest or no-interest balance transfers.
Cards that Build Credit
Using cards to build credit can be a good strategy if you have bad credit or limited credit history. Using cards appropriately (e.g. spending within your means and making on-time payments) can help boost your credit score.
Credit Cards for Balance Transfers
Some cards are ideal to make a balance transfer. Using a card for a low-APR balance transfer can help you pay off credit card debt faster.
Credit Cards with Low Interest Rates
A low-interest credit card is a good choice when you need to finance expenses over time and minimize interest charges. Some of these cards may offer a 0% introductory APR on purchases, which is lower than the average credit card APR.
3. Consider the Perks and the Value
In addition to choosing the right credit card type, select one with benefits and features relevant to your lifestyle. For example, you should look for these perks:
Secured Credit Cards
Secured credit cards are a great option for younger consumers and others trying to build good credit. Secured credit cards are backed by a cash deposit, so they may be more accessible than unsecured credit cards. Many also offer rewards for responsible usage.
Credit Cards with Low and No Interest
Some credit cards offer 0 percent interest for up to 21 months. These cards are great for people who may need to make a big purchase and don’t want to have to worry about high interest rates while carrying a balance over time.
There are a variety of rewards cards on the market today. Some may offer cash back, points, or airline miles. Many offer introductory offers and bonuses once a consumer charges a certain amount to the card.
While the perks can be tempting with rewards cards, many come with annual fees. Be sure to read the fine print about any cards you’re considering to ensure they fit within your budget.
Much like choosing anything else, your choice of a credit card depends on your needs and circumstances. Always be honest in your self-assessment to ensure the wisest possible choice.