Choosing the best credit card for you means considering the many options that are available and how to best apply the benefits and availability to your needs.
You will need to understand how a credit card actually works before you jump into any agreements. When you are certain you can be financially responsible enough to get and use a credit card appropriately, you should consider the options available to get the best overall deal.
Credit cards can offer great rewards and benefits, but they can also cause trouble for those who do not use them responsibly. You need to know how to appropriately use these financial options to make sure you meet the requirements and do not incur additional, unnecessary fees. From annual fees to late fees and interest rates, there are plenty of considerations before you sign-up for any credit card. Knowing the types that are available and how you can best use them will grant you a better understanding of the options.
Popular Types of Credit Cards
Credit cards can vary greatly in their costs and benefits, so it is very important that you understand the many options available and how they might suit your needs. There are options no matter what your credit history might be, as well as options varying in the level of benefits offered to cardholders. Review the popular options below so you know what types of cards might work for you.
Rewards Credit Cards
Rewards credit cards are specifically designed for cardholders to benefit from using the card, usually through cash back programs or through discounts on purchases. Some cards offer rewards for every dollar spent on the card, while others will offer rewards for specific types of purchases.
If your card offers rewards, always check to see if there are specific time periods with bonus rewards offered. For example, some cards will offer more rewards per dollar spent at gas stations or at grocery stores during certain months of the year. Knowing when these bonus offers are available can help you to take advantage, especially if you have multiple credit cards offering various rewards programs.
These cards are best for those who will pay back their borrowed credit in full every month. This helps you to avoid typically higher interest rates while benefiting from rewards options.
Low-Interest Credit Cards
Low-interest credit cards are specifically designed so that those who cannot pay their balance in full every month also will not face high fees. Sometimes, a card will offer a low-interest introductory offer for the first six months or the first year. Other cards will maintain this lower interest rate level for the duration of your card membership.
Choosing a credit card with a low interest rate is a good idea for everyone, but especially if you foresee large payments coming on a card that you cannot repay immediately.
Most low-interest cards do not offer great benefits or rewards programs, but you can still benefit from lower rates if you need additional time to pay.
Secured Credit Cards
Secured credit cards are good options for those with no or poor credit history who would not otherwise qualify for a rewards or low-interest card. Secured cards function more like debit cards, where you must deposit money into the account in order to then use the card. This offers a safe way to build your credit and to show lenders that you can safely borrow.
Considerations Before Getting a Credit Card
When getting a credit card, you need to consider the many aspects of card use that will impact you. This ranges from any annual fees you must pay to the interest rate you might face if you do not pay your balance in full. It also includes considering the benefits available, so be sure to review all of the options and choose the right credit card for you. The following list can help you to think about each aspect:
- Credit Score: Your credit score will be an important factor in determining the type of card you will qualify for and what your interest rate might be.
- Financial Habits: If you can responsibly use a credit card, using it only for necessities that you will immediately repay, then your financial habits would suit a credit card long-term. If, however, you cannot carefully use a credit card and will not be able to repay what you purchase, then you need to be honest about those habits and try to stay as financially healthy as possible.
- Rewards Options: If you will use your credit card responsibly, then you can look into the best rewards program for you, based on how and where you spend your money. If you often use a certain brand, then looking into a credit card with that company can be beneficial. If you are not brand-specific, then a general cash back program might be best for you.
Before getting a credit card, you must be sure you understand all of the pros and cons so you can choose the best financial course for you. Knowing how a credit works, what types of credit cards are available and what to consider before applying can help you to narrow down all of the options into a short list to potentially apply for when you are ready.
Applying for the Right Credit Card
Choosing the best credit card for you requires an honest look at your financial history and credit score, plus an understanding of how you can use that credit in the future. If you are prepared to apply for a credit card, then you need to compare a few options based on your qualifications and the benefits and costs of each. Comparing your top two or three choices can help you to narrow down the options to find the best decision.
Before applying for a credit card, be sure to read the fine print so you understand all of the potential costs and benefits of each option. Know the fees and any potential penalties you might incur, and then be sure to choose based on a logical comparison, rather than any excitement over potential travel offers or other initial bonuses.
Applying for a credit card and being denied can have a negative impact on your credit score. This is why you should only apply for a card once you are sure it is the right choice for you and that you are fully qualified for that particular card.