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How to choose a credit card

Not every credit card is suitable for every person. It depends on your creditworthiness and what you expect from a credit card, such as cashback premiums, interest-free financing or other benefits. Sometimes you may need a card to build up your balance.

If you are looking for credit cards, ask yourself the right questions to find the best one for you.

Related Topics: These Credit Cards Pay for Your TSA Pre / Global Entry

1. What is the purpose of this credit card?

Credit cards are multifunctional. You may need a credit card to:

  • build credit. When you're building credit, secured credit cards do not have many advantages, but they will meet your needs. These are cards that you deposit as a repayable deposit and serve as a credit limit, such as the Capital One Secured Mastercard. Then spend up to that limit and pay for what you spent. Your goal is to increase your credit so you can qualify for other types of credit, such as: For other cards and loans. If you have high credit utilization ̵
    1; or use a lot of available credit – your credit rating may decline. By adding another form of credit, e.g. For example, a credit card, your available balance will be increased. This can lower your credit usage (and increase your score).
  • Harvest rewards. From cashback to travel benefits, there is no shortage of credit card rewards. You may want to limit your selection to certain rewards (and sign-up bonuses) for the best benefits.
  • debt consolidation. If you carry high-yield debt, whether through loans or other credit cards, you can get a low-interest or 0% APR credit card to ease your debt.

] 2. Do I have the credit to qualify?

The better the benefits, the more tires you have to jump through to be eligible for certain credit cards. Credit cards with attractive rewards programs or cashback rewards require a higher credit balance than the most common credit cards.

If you have a bad or fair credit, you may only qualify for Credit Builder or secured credit cards. If you have a good to very good credit rating, you can easily qualify for any credit card you want. But if you do not have the right score, you may not be suitable for the card you desire.

. 3 Do I have a balance?

Even if the balance is not necessarily a bad thing, the monthly repayment of your credit cards shows that you only spend what you can afford.

There are some cases where you have to keep your balance. For example, if you make a big purchase, you may need extra time to pay the purchase price (but be wary of high interest rates). In that case, you might want to use a 0% APR introductory offer instead of purchasing a travel or cashback rewards card.

Remember, even with a 0% introductory offer, you are responsible for the punctual minimum payments per month.

. 4 Where will I use it most often?

Think about using your credit card daily, weekly, and monthly. For example, cashback rewards for credit cards (such as Chase Freedom Unlimited) will reward you by transferring cash directly to your bank account or by crediting you with a bank statement.

Cashback cards are a good idea if you use them frequently in restaurants, grocery stores and petrol stations. But the cards themselves vary greatly in how much they reward you for where you shop. Some have higher bonuses and rewards for eating while others give you a better price when shopping in wholesale clubs. (This is where some people deal with gambling credit cards and use different cards for different purchases, which is only appropriate for prudent budgeters.)

If you are traveling, you can purchase a general travel reward card or one view for a specific map airline or hotel. Many of these cards issue bonuses in the form of points or miles that you can redeem on future trips (though sometimes with restrictions or blackout dates). How to use the card determines the card you should get. Also consider whether the annual fee outweighs the perks.

. 5 Is there an annual fee?

The annual fees for cards can vary greatly, especially as credit card offers change frequently. There may be annual fees of only $ 35 or hundreds of dollars.

An annual fee is not a bad thing if you think that the benefits outweigh the costs. For example, if your rewards or perks exceed the fee, you are in the lead. Many cards also offer sign-up bonuses that quickly lower the annual fee. Make sure you find out how to use the card and estimate if the annual fee is worth it. Then you can decide if the card is right for you.

Some secured credit cards are charged an annual usage fee. So, if you plan to use one to build up your balance, you may have to pay for that luxury. The goal would be to build up credits and then switch to an unsecured credit card with perks that offset an annual fee (or no annual fee).

. 6 Does it increase my creditworthiness?

Credit cards are a good way to give your credit worthiness a boost. But not all credit cards contact the credit bureaus.

If you want to build a credit, a card that is not reported to the credit bureaus means your score will not be increased for responsible use. For example, Apple Card does not contact credit bureaus. While this card and others who like it are convenient to use, they will not help your credit growth. This may not be a bad thing if you have an excellent credit rating. However, if you do not, this can prevent you from building your own.

Disclaimer: The information contained in this article, including program features, pertains to the program. Fees and credits collected on credit cards for such programs may change from time to time and are provided without warranty. When evaluating offers, review the credit card company website and read the terms and conditions for the latest offers and information.

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