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Finding the best credit card is not an exact science. It is part science and part art. No credit card is the best for everyone across all categories. The best credit card is one that fits your credit situation and spending habits, which might vary from mine. The steps below will help you get the right credit card.
Assess Your Credit Score
My credit score will determine the kind of card I am eligible for. The higher my score, the higher the odds of getting a credit card with many benefits. I always use any free online credit score service. If your credit score is not good, you might need to analyze your credit reports and see where the problem is coming from. You can always get a free credit report once a year from any of the major bureaus.
Select the Right Credit Card
With the right credit card, you can save money on interest rates and fees, as well as gain rewards and other benefits. Research and compare different cards so that you can choose the one that is right for you. Furthermore, you can consult a personal finance expert, such as Money With Mark, for advice regarding the choice of credit cards.
Categories of Credit Cards
Credit cards fall into three categories:
- Cards that aid you improve a damaged or limited credit score
- Cards that save you interest charges
- Cards that give you rewards
The best credit card depends on your needs. For instance, I like traveling thus, I chose a card that offers travel points. Here are some pointers on how to select a card.
Building or Rebuilding Credit
When I wanted to build my credit during college, I went for a student credit card because I was new to credit and it was the only card I could get. However, if I want to rebuild my credit post-college, I can use a secured credit card, which will require a deposit of at least $200. The deposit is returned after I upgrade the account or close it after making all my payments on time.
Saving on Credit Card Interest Charges
I have a credit card for emergencies only, and I chose a card with an introductory 0% Annual Percentage Rate (APR) and a low interest. This keeps my card payments low. Apart from emergencies, if you have irregular income and sometimes have to carry a balance, then I would suggest that you get this card too.
You can also choose a card that offers a balance transfer offer that enables you to pay off a high-interest debt minus the interest charges. However, you need to have a high credit score to qualify for these two offers.
Reward Cards
A reward credit card is the best if you intend to pay off the credit card balance in full each month. Most of these cards have a high APR, but they offer sign-up bonuses and reward you with miles, points, or cash-back based on a particular spending threshold.
Ask the Right Questions
The easiest way to get the right credit card is to ask the right questions from the onset, and here are some questions that you might need to ask.
Questions for Secure and Student Credit Cards
Does the card help me build credit?
When I used a student card, I made sure that the card reported my payments to the three major credit bureaus. A majority of secured cards do not report, but you can get a few that do.
Account opening fees and annual charges
In my experience, most rewards are not high enough to justify having an annual fee. Try and avoid this expense unless you have an awful credit score. If you want a secured card, get the one with the least security deposit.
Getting a Better Card
I will not always have a bad credit score. Therefore I chose a card that enabled me to build credit towards a better score, which increased my eligibility for a better card.
Low-Interest or Zero Interest Card Questions
When I got a 0% APR card, I wanted to determine how long I would have to pay off a debt interest-free. I also asked about the interest to ensure that if I carried a balance over several years, it was at a low APR.
Rewards, Cash-back or Travel Cards
When it comes to reward cards, I wanted to find out how I needed to spend my money to get the rewards and which card offered the highest rewards for categories I spend a lot on. I also chose a card with a simple flat-rate cash-back reward system that I understood.
I hope these tips will help you narrow down to the right kind of credit card for your needs.
