Credit cards are important. They help people build up their credit score, make it easy to make purchases and often come with some serious rewards and benefits. However, there are many cards from which to choose. Understanding different companies’ and types’ fees, terms, benefits and focus makes it easier for people to select the right credit card for their lifestyle. The following includes some tips for how to select the right credit card.
How Will This Card Be Used?
Different people have different needs for a credit card. It is important to understand one’s goals before going into this comparison shopping process. For example, some people want to build up their credit score and want a low balance for this whereas others want to use the card for debt consolidation and balance transfers. Other individuals may want to rack up frequent flier miles or gain gift cards and loyalty points with a credit card company.
Look at the Annual Percentage Rate (APR)
The APR is one of the most important things to consider when shopping around for a credit card. This number relates to how much interest is paid on purchases. One’s balance, date of payment and usage will also affect this. It doesn’t take a brain surgeon to understand that the lower the annual percentage rate, the better off a cardholder is. An applicants’ credit score will affect the offered rates. People should check if this APR is fixed or if it will change. For example, some companies offer 0% interest for the first year and then increase the APR.
Any Annual Fees?
It is important to look and see if there is an annual fee for using a card. Some credit cards have benefits that come with the annual fee, so it is important to really read the fine print. A company could offer no annual fee only to instate one six months later. Understanding what is included in an annual fee is important. For example, some cards offer gift cards and travel miles in exchange for such a fee.
Some people use credit cards to work on debt consolidation. They pay off old debts by transferring an existing credit card balance to this new card or by paying off a debt with the new line of credit. Some companies offer 0% transfer fees or low interest rates to lure people into such credit cards. This is a chance to lower one’s APR or work on getting debt collectors off one’s back.
Acceptance of Different Cards
Different cards are accepted by different merchants state-side and abroad. For example, overseas, Visa is more popular than Discover. In the US, Visa and MasterCard are the most popular but many merchants are also investing in American Express and Discover. Understanding which cards are accepted where is important, especially if people travel abroad and want to use their cards.
Benefits of the Credit Card
Many cards today come with rewards and benefits. Some types have cash back options whereas others allow people to earn frequent flier miles, gift cards to popular stores and more. One’s lifestyle, career and interests will dictate which type of card they want to invest in. This is a chance to invest in a card that complements one’s life. For example, people who travel will want the airline discounts and miles, some might want gas card rewards if they have a long commute to work and others may want the cash back option if they are saving for specific purchases or trying to maintain a tight budget.
Poor Credit Options
Today, there are also secured credit cards for people who have a low credit score. By placing down a deposit, individuals can open a credit line. This is a great option for people who have non-existent credit or those who have had some road bumps in the past. For example, one can deposit $50 and receive a credit line of $200.
There are many credit cards out there. People just need to understand their needs and goals before comparing rates and terms. By reading up on different options and understanding the different types of cards, it is possible to select the right card.