Choosing the best credit card is an important decision. You need to make sure that you are getting the best card for your needs and your lifestyle. Here are some things to consider when looking for a new credit card:
Know your credit score
The first step in choosing the best credit card for your needs is to know your credit score. Your credit score is a three-digit number that ranges from 300 to 850 and it’s used by lenders to determine whether or not you will pay back your debts. The higher your score, the better—it means you’re less likely to default on payments and more likely to be approved for new lines of credit.
The factors that affect this number include:
- How much debt you have compared with how much available credit limits you have;
- How many different types of accounts (credit cards, mortgages, etc.) are associated with your name; and
- Whether or not any late payments have been reported against previous accounts in the past six months (this also determines if any hard inquiries have been made within this time frame).
Consider the type of card you want
If you’re looking to build your credit history, the best option is a secured card. Secured cards are designed for people with limited or no credit history to help them establish a positive payment history on their credit file. They require an upfront deposit and usually have lower limits than other cards but can be used anywhere that accepts Visa or Mastercard.
For those who want rewards and perks like travel insurance, concierge services, extended warranty, and purchase protection, consider applying for a travel rewards card such as The Platinum Card® from American Express or Chase Sapphire Preferred® Card.
If you plan on making large purchases over time in order to earn cash back rewards on certain categories of purchases (such as grocery stores), look into getting an everyday spending cash back credit card like Citi Double Cash Card – 18-month BT offer or Blue Cash Preferred Card from American Express.
And if you pay off your balance every month, it makes sense to choose a low-interest rate card so that you can save money by paying less interest over time
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Consider your annual fee
An annual fee is a charge that you pay each year to keep your credit card. It’s typically charged annually and can be paid automatically if you choose. Annual fees are charged in three ways: as a flat annual fee, as a percentage of your credit limit, or both.
For example, some cards might charge $50 as an annual fee while others will charge 1% of your total balance (including purchases). The best credit cards for you will depend on how much value you get from using them — so it’s important to determine whether an annual fee makes sense for your financial situation.
If you’re looking for a credit card with an annual fee, here are some things to consider: How much is the annual fee? How can you maximize its value? Does it offer rewards that outweigh the cost of carrying this card every year? If not, find a different one.
Compare cards by their reward programs
Now that you have the basics, it’s time to compare credit cards. Weigh these factors when selecting a rewards program.
- Compare rewards rates: Look at how much you would have to spend on each card to earn one reward point or dollar of cash back. Remember, not all points are created equal—some programs award more than others for certain types of purchases (for example, airline miles or hotel points). This can be especially helpful if you travel often!
- Compare interest rates: Interest charges can add up quickly, so make sure you understand the APR rate and whether there is an introductory period with lower interest rates applied. You will also want to look at the balance transfer fee, which could range from 0%–3% depending on your credit score and other factors like whether there are any promotional offers available on another card that might be better suited to managing your debt load in other ways or make sense as a backup plan should something happen with your primary line of credit in terms of being able to pay down any balances owed without incurring additional fees or increasing monthly payments required under such circumstances where suddenly having less money coming into one’s checking account after making monthly payments meant for paying off their outstanding balance(s) may not allow enough funds left over after making those minimum payments required each month due solely because they were unable
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Read the fine print
- Read the terms and conditions. If you can’t understand how a card works, it’s probably not for you.
- Check the interest rate. You should be able to pay off your balance in full each month and avoid paying interest charges altogether, but if not, it’s good to know what that amount will be before signing up for the card.
- See if there are any fees or penalties associated with making payments on time or carrying a balance (with some cards, late fees can add up quickly). If so, they need to be worth it—and work in your favor—for the life of a credit card contract (which is usually about four years).
- Make sure that whatever rewards program is offered by your preferred credit issuer is worth your time and effort—i.e., does it offer value greater than what you would receive from another type of reward? And make sure that there aren’t additional fees related to receiving those rewards like annual membership dues or having them deposited into another account besides yours (like an investment fund).
See if there are any fees or penalties associated with making payments on time or carrying a balance (with some cards, late fees can add up quickly). If so, they need to be worth it—and work in your favor—for the life of a credit card contract (which is usually about four years).
Make sure that whatever rewards program is offered by your preferred credit issuer is worth your time and effort—i.e., does it offer value greater than what you would receive from another type of reward? And make sure that there aren’t additional fees related to receiving those rewards like annual membership dues or having them deposited into another account besides yours (like an investment fund).
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When it comes down to choosing the best credit card, it all comes down to what you want out of a credit card and how much you are willing to spend on it. If you only want a basic debit card with no annual fee and no rewards program, then there are plenty of those available. However, if you have good credit and are looking for something more comprehensive with extra benefits like concierge service or travel insurance coverage then there is no shortage of options either!
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