3 How To Choose A Credit Card (Wit 10 Steps)

doylc.com - How To Choose A Credit Card - While you may be bombarded with credit card offers in the mail or through your local bank, there's no point in simply accepting the first "pre-approved" offer you get. Instead, you must take your time and evaluate a variety of factors that will help you find the best card for your specific needs. Having a credit card can be a huge help in your day-to-day life, but getting the right one and using it responsibly can be the key to a healthy financial future.

Evaluate what you want and need from a credit card

1. Decide what credit limit you need. It's important to have a credit limit that meets your needs but doesn't allow you to build up so much debt that you would have trouble paying it back. Are you applying for a credit card because you need to make a specific purchase? Are you just trying to build up your credit history? These two situations will likely require different credit limits.

In some cases, you have little control over the credit limit you receive. Banks and credit card companies typically determine this by analyzing your credit history and financial situation. However, if you want a higher credit limit than what is offered to you, there is no harm in asking for an increase.

Keep in mind that it's generally a good idea to keep your balance under 10% of your credit limit to improve your credit score.

2. Consider what type of credit card customer you are. You should be honest with yourself about your strengths and weaknesses when it comes to your personal finances. Once you realize what type of customer you are, you can prioritize credit card features that will benefit you.

Do you often have a credit card balance? Then you should focus on cards with low interest rates.

Do you always pay out your card balance monthly? Then choose credit cards with free rewards and no annual fees.

3. Think about what type of company you would like to do business with. Although it doesn't always feel like it, getting a credit card means you're doing business with the company that issues it. Keep in mind that you will have to deal with them to pay your bills and if there are any issues, so choose a company that you consider reliable and trustworthy at the very least.

Look for offers

1. Research credit cards that are offered to you in the mail. Keep in mind which features are most important to your needs, e.g. B. Interest rate, premium formula, etc., and be sure to read the fine print.

There are websites and magazines that rate the best credit cards or otherwise compare their features. These can help you know where to look for the best deal.

2. Go to your bank and ask about the credit cards they offer. Keeping your bank accounts and your credit card accounts with the same institution can be convenient and simplify your monthly bills.

3. Look for special offers. There are many credit cards that cater to a certain type of customer, and they sometimes get a really good deal on that demographic. For example, many unions, fraternities and employers have such agreements.

Are you a student? There are maps designed and aligned just for you.

Do you run a small business? Maybe you want a card that makes it easy to separate business expenses from personal expenses. There are cards for exactly this situation.

Find out if companies you shop from often offer a credit card. You may benefit from getting a department store credit card if the rewards are big enough and you spend money there regularly anyway.

Some credit cards offer cashback, free airline miles, or other reward schemes.

Compare fees, charges and interest rates

1. Compare the interest rates of the different cards you are interested in. Credit card companies make most of their money by charging interest on the balances you don't pay out. These interest rates can be huge and in turn cost you a lot of money in the long run if you don't pay your balance every month. It's really important to try to get the lowest interest rate possible knowing that you will normally have a balance on your card.

Interest is usually calculated based on the average daily balance on your card. However, most cards have a grace period that allows you to avoid interest if you pay the balance in full within a certain period of time. Make sure the cards you want to apply for have these grace periods.

Many cards offer a special introductory interest rate. Be sure to find out how long this will take and what the interest rate will be when the special arrangement ends.

Unfortunately, if you have a history of bad credit handling, you may be forced to look for cards with higher interest rates that accept those with bad credit.

2. Compare the annual fees of the different cards you are interested in. Many cards, especially those that give you rewards like miles for free flights, charge you an annual fee for owning the card. Decide if the cost is worth the benefit in the long run.

3. Compare the fees that different cards might charge you. What does the company charge for a late payment or if you go over your credit limit? While you'll hopefully never have to pay those fines, it's important to know what you're getting yourself into, especially if you tend to forget your bills or miscalculate your remaining balance.

4. Select and apply for a card. You can apply online, submit a "pre-approved" application received in the mail, or you can visit your local bank or credit union to apply in person.

Double-check the fine print before applying for a credit card. Make sure you are aware of any terms you agree to.

Only apply for one credit card at a time. Applying for (and owning) too many credit cards can hurt your credit score.

As a rule, you will receive your card within one to two weeks.

In most cases, you'll also get a notification if you've been declined for the card. In this case, you will have to start your search for a credit card again.