In choosing a credit card, think about how you plan to use the card. If you intend to use the card for current expenses and pay it off each month, you’ll want a card with no annual fee and a grace period. If you intend to use the card for large purchases that you over time, then you should look for a card with a low APR (annual percentage rate). No matter what your plans are, you will want the lowest cost credit card you can find, so shop around before requesting a card.
Before applying for a credit card ask yourself these questions:
- Why do you want/need a credit card? – Maybe you need one credit card with a special interest rate to transfer balances from multiple accounts or perhaps you need a card specifically for business purposes.
- How much do you need to charge at one time? – If the credit card is for business purposes, maybe you need a card with very high or no spending limits. On the other hand, if this is your first card and you are trying to build credit or just want the card for emergencies, then a more modest spending limit may be the better route to go.
- How do I want to pay back the charges? – Decide if you want to pay off the entire balance each month or just a portion over each month. Some cards offer advantages for both paying structures.
- Do special offers interest me? – Many credit cards offer special rebates, support for a specific organization or other member benefits for using their credit cards. Decide if this is important to you when choosing your card.
Credit card companies compete for your business by offering their lowest rates and fees to the best borrowers, sure, but they also offer rewards programs. Credit card shoppers can choose from rewards such as free gas, cash back, frequent flier miles and plane tickets, gift certificates to popular stores, and many more. But do your homework before you sign on for a rewards program, and make sure you know exactly what you’re getting.
A low interest rate, low fees, and a dynamite rewards package are all good ways to decide which credit card is right for you. Even discriminating credit card shoppers may have trouble narrowing down the choices to choose one perfect card. There are a few more things that savvy shoppers will consider before making their final decision.
Review all of the cards you’ve researched. Create a chart so you can see which offers the best APR, cash rebates, discounts, credit limits, or fees. You may not need some benefits, so you can ignore them. For example, if you will be using the credit card for only a few purchases and will pay off your balance every month, you might choose a card that offers rebates and other rewards for use, even though such cards usually have a high APR. Choose the card that offers the best deal for you, not the one with the biggest credit limit.
Credit card offers are a dime a dozen these days, so it’s not a matter of if you can get a credit card, but rather which card is best for your circumstances. Put yourself ahead of the game by knowing how to pick the right one for you and how best to use it.
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