Credit affects every aspect of your life—where you live, what you drive, and whether you can get a loan.
Choosing the right credit card is vital to building and maintaining good credit. Maybe that’s why there are a staggering 20.48 billion credit cards in circulation around the world!
With so many options out there, knowing how to pick the right credit card for you can be a challenge.
In this post, we’ll discuss 5 steps to take when picking a credit card. Follow them closely to ensure you choose the best card for your needs!
1. Know Your Credit Score
The average American’s credit score is now 704, which falls into the “good” category. On the scale of 350 to 800, do you know where your credit score ranks?
Certain types of cards are only available to people with good or excellent credit. Others are designed to help people with fair or average credit to improve their scores.
Before you start applying, make sure the card you’re considering matches your current credit situation.
2. Know the Types of Credit Cards
Common types of credit cards include:
- Student credit cards (for young adults)
- Secured cards (to rebuild poor credit)
- Cashback cards (to reduce monthly bills)
- Balance transfer cards (to consolidate debt)
- Airline or hotel cards (to earn travel rewards)
There are others too, but this gives you an idea of credit cards that may suit your personal situation best.
3. Know What You’ll Use It For
If you want a credit card for general spending, look for a card with low-interest rates or generous rewards (or both).
Do you plan to use the card for a specific purpose, like transferring balances or starting a business? Research cards designed for those uses.
Will you be carrying a balance for a while? Go for a lower interest rate instead of tempting sign-up bonuses that could cost you more in the long run.
4. Compare Interest Rates & Terms
Your next step is to narrow your choices and perform a credit card comparison.
What’s the APR and minimum payment requirements? How are the rewards structured?
Is there a signup fee or an annual fee? What about balance transfer fees or foreign transaction fees? Make sure to read the small print so you understand exactly what you’re signing up for.
5. Compare Benefits & Rewards
You should only sign up for a rewards card if you’ll actually use those rewards points.
If you’re not much of a traveler, an airline rewards card doesn’t make sense. But if you have a long commute to work, a credit card with fuel rewards might be ideal.
Other cards offer interesting perks like roadside assistance, travel insurance, or advanced access to upcoming events. Which ones sound the most appealing or practical to you?
How to Pick the Right Credit Card: Now You Know
Choosing the right credit card is more than a matter of submitting applications.
Take the time to research your credit history and the different types of cards you might qualify for. Decide how you’ll use the card and which rewards programs would be most beneficial for your lifestyle.
With that knowledge, you’ll be ready to make a good decision and get the perfect card for you.
Now that you know how to pick the right credit card, what’s next? Check out our other recent lifestyle posts for more great advice.