With all the credit card options available, choosing one can be a daunting task. Answer these questions and you’ll be ready to select the credit card that is best for you!
Do you pay off your credit card bill each month?
If you carry a significant balance on a regular basis, choose a card with a low APR (annual percentage rate). Also consider taking advantage of the ìbalance transferî option. Most cards offer an introductory balance transfer rate as motivation for you to use that card as your primary card. Check to see what the offer is and compare it to your other credit card(s) rates; it’s likely a much more favorable rate and you should transfer your existing balances to the new credit card. If you cannot pay off that entire balance during the introductory period, look at the APR of the new card versus your existing cards. If it is higher, be sure to transfer only the amount you can pay off during the introductory period, or you’ll be locked into a higher interest rate.
If you tend to pay all or most of your balance each month, a rewards card is the right choice for you: rewards are not a free perk if you make large interest payments each month. Look at your billing statements for your current credit card(s) and see what you spent last year on interest. Assess how much you need to spend on interest to acquire a reward.
Compare perk values. Don’t just look at how many points or miles you receive; assess how many it takes to convert into an item. Two points per dollar instead of one isn’t a good deal if it takes three times as many for your perk. If the credit card site doesn’t show you their perks and their ‘points value’ prior to signing up, find one that will. Beware airline cards: they may not offer service to your preferred destination, not show a flight for your preferred date/time, or it might cost more points/miles. With rewards systems that offer multiple airline options, you’re less likely to encounter this issue. Points systems are generally ideal, as you can choose from a range of perks, usually including cash, merchandise, and travel.
Do you pay on time each month?
If not, evaluate the late fees prior to picking a card. There are many card options out there and this could be a good way of narrowing down the finalists.
Do you travel outside America?
Cards have differing ‘foreign conversion’ charges, which is a fee for making purchases that aren’t in U.S. dollars. So any time you make a purchase outside of the states, you could be slapped with a 3% surcharge. If you can’t find an exact fee in the disclosures, call the company and have them send it so you have it on paper. Also ask where they get their currency conversion rate because this can be more or less favorable, depending on the bank.
How is your credit?
If your credit is poor, consider a secured credit card. You have to make an initial payment that they’ll retain, but it should help keep your APR lower, and you’ll improve your credit over time — which improves your future card options.
The card you applied for may not the one you receive, which means the terms will likely differ, so look through them closely before activating your new card.
Spend some time on the search for the ideal credit card for your circumstances! You’ll probably have the card for years and even a difference of a single percentage point or a minor difference in the rewards program can have a huge impact on the benefits you reap over the years.