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Do you know how to choose the best credit card for you? And looking to get some tips on how to find the best credit card? Well, you must end your search here. Picking the best credit card for yourself is not easy as manifold cards are available in the market serving customers with different purposes. But we have got you covered!
But before getting into the list to choose the best credit card, it’s equally important for you to know.
Why Use a Credit Card?
The reason for owning and using a credit card could be different and vary from person to person but we’ve penned down some of them for you that will also help you choose the best credit card:
Increase Credit Score
The primary reason or benefit of using a credit card is to increase your credit score. Your credit score tells your creditworthiness and is leveraged by lenders to examine your credit score so that they can approve your loans and provide the same.
Unfolding Various Travel Benefits
All frequent travelers or traveling freaks will be amazed to know that many credit cards provide travel advantages like airport lounge access, discounts on flights and hotels, travel insurance, concierge services, and priority boarding. Travel credit cards allow you to earn points for every single penny that you splurge and later, one can redeem these points for travel-related expenses, hotel stays, etc.
Good Source of Emergency Fund
Your credit card can greatly assist you whenever you require emergency funds. Let’s say, you’re traveling abroad and your wallet is stolen, in such a case – you can call your credit card’s customer service 24*7 and take assistance. That’s the one reason we’ll help you choose the best credit card.
Types of Credit Cards
There are many types of credit cards available in the USA according to the person’s needs and use. You need to choose the right credit card that is most suitable for you. So, let’s highlight them with their purposes and here we go:
1. Cash Back Credit Cards
Cash-back credit cards make it easy for users to earn money on your spending. Some options in the same category provide a flat price on your spending, while others provide bonus points for certain categories such as travel or dining.
2. Travel Credit Cards
Travel credit cards are reward earnings cards designed specifically for frequent travelers whether it is earning flexible credits, you can transfer to a hotel or airline program.
3. Rewards Credit Cards
Rewards credit Cards offer you points or cashback based on your spending percentage. Also, some popular categories that offer bonus points are dining out, groceries, and gas.
4. Business Credit Cards
Business Credit Cards allow users or cardholders to separately maintain their business and personal expenses while earning reward points on all their business expenditures. Additionally, these cards can be cash-back credit cards, personal reward cards, travel credit cards, general rewards credit cards or even secured credit cards.
5. Student Credit Cards
Student credit cards are designed for young brigades with no or limited credit history. There is a simple application process for these cards if you need to apply as compared to the traditional credit card. Most of the student credit cards do not charge an annual fee, and some provide rewards for every single penny you splurge or even bonus benefits for good grades.
6. Store Credit Cards
Store credit cards are provided via retail stores to allow customers to charge their purchases and clear the dues over time. These credit cards limit you to shopping at their store, although some programs extend to a network of affiliated stores.
7. Co-branded Credit Cards
Co-branded Credit cards are provided via traditional card issuers such as American Express, Chase, or Citi. These involve airline credit cards that enable you to earn huge within a particular hotel credit card that allows you to earn points within a hotel loyalty program.
8. Secured Credit Cards
Most credit cards are unsecured, meaning you don’t need a deposit upfront. However, secured credit cards require a cash deposit to establish a credit line equal to the deposit amount.
How to Choose the Best Credit Card for You? – 10 Steps
It might be a tough call for you to choose the best credit card but it’s not the same in our case. We have penned down a list of things that you need to consider while picking the right credit card.
Let’s look into those 10 factors to find how to choose the best credit card for you based on annual fees, reward rates, APR, and more.
1. Check your Credit Score
Find out the various offers and check whether you’re eligible for that offer or not. A higher credit score makes it easier to get approved for cards with better benefits.
Method to check your credit score:
- With the help of three major credit bureaus (Equifax, TransUnion, and Experian)
- Several credit card issuers offer free FICO scores to cardholders.
If the score is not up to your expectations, check your credit reports and find out the issue. Then you can find various ways to enhance it, from converting your splurging habits to rectifying an issue on your reports, if required
2. Perks and Benefits
The very first thing that a credit card holder should consider is to look to see whether the credit card is offering you various perks and benefits or not.
Benefits can vary according to the type of card, so you will see what each card is offering to ensure it matches your expectations. Some cards offer limited or even no benefits, as compared to the ones that offer huge perks.
The most common benefits include purchase protection, insurance protections, mobile phone insurance, rental car insurance, and extended warranty.
Co-branded credit cards, specifically linked to hotels or airlines, include perks such as hotel elite status or checked bags. Premium credit cards generally include a monthly or annual credit statement for lifestyle purchases and access to the airport lounge for specific travel.
3. Consider Interest Rates
Ideally one should pay off the balance each month on time. If you plan to carry a balance or transfer an existing balance, prioritize cards with lower interest rates.
Some cards with introductory promotional rates can be beneficial if you know you will pay off the balance within a specific time frame.
4. Welcome Bonuses
Some credit cards come with welcome bonuses to entice new customers. To qualify for the bonus, you need to spend a certain amount of money within a limited timeframe. These bonuses can be in different forms: travel rewards (such as miles or points) or cash back. You need to compare the existing welcome bonus and target the highest and best bonus when picking right credit card.
5. Look for the Card’s Annual Fees
The annual fee is a great consideration if you want to find the right credit card. It is the fee charged on a card usage every year. There are some cards that have minimal or no annual fees and some have high annual fees.
The higher annual fee means more benefits and perks that you receive to justify the higher amount that you have paid for the card. No or low annual fee cards offer less or fewer perks.
If a card offers a high annual fee but offers great perks or a welcome bonus, it is worth it to go for these types of cards at least for the first year. This will allow you to decide if you should continue with the existing card and pay the annual charges.
6. Zero Percent APR and Low-Interest Credit Cards
No penalty or late fees: If you fall behind with your payments, some credit card companies charge costly fees or a penalty APR. If you don’t want to pay any charges to pay for late payments, consider 0% APR credit cards without these fees.
Introductory 0 Percent APR Offer: No credit card provides zero percent interest, but you can look for some of the best cards that offer zero percent introductory periods that usually last up to 21 months.
7. Identify the Type of Credit Card you Require
There are three types of credit cards:
- Cards that earn rewards.
- Cards that benefit you increase your credit when it is limited or damaged.
- Cards that save you money on interest.
The perfect credit card is the one with the traits designed to meet certain needs. If you’re not a traveling person, then you should avoid going for the best travel card.
Student or secured credit card: student credit cards are for college-going students who are new to credit and are easier to apply and qualify for. Similarly, secured credit cards are cards that require a security deposit of $200 or more. The deposited amount will be returned to you when your account is updated.
8. Apply for the Card that Provides you with the Highest Value
Widening your preferred things is the easiest job, but to find between the three or four similar cards can be too tricky. Keenly looking for the disparities between various cards can confuse you. Various things can lower your burden while applying for cards with high value, consider these factors:
For Rewards, Cash-back or Travel cards:
Lower required spending: The less you require to splurge to qualify for a sign-up bonus, the better the situation will be.
No expiration date on rewards: You can leverage your rewards or points as long as you keep the card open (on some cards only).
For 0 Percent APR, Balance Transfer, or Low Interest Cards:
Debt payoff planner: Some issuers allow you to create your debt payoff strategy on an online portal, which is a valuable tool if you are overwhelmed with debt.
No late fees or penalty APR: Some cards waive these charges. If you’re falling behind on payments, this could be amazing for you.
For Student and Secured Cards:
Credit limit automatically escalates: Some specific cards allow you to increase your limit after a few consecutive timely payments.
Interest paid on your deposit: Some secured cards count your security deposit in an interest-earning CD. This way, you can earn a small amount on it.
9. Building Credit
For those who have a less stellar score than 669 or do not have much credit history, your topmost priority should be – to make building credit over rewards or special offers. Having a good credit score is a key factor in uncovering good interest rates and raising approval odds for loans, mortgages, and credit cards.
There are some credit cards designed specifically for building credit or for individuals with average or good credit that benefit in improving their score. Secured cards are a popular choice for those who have bad credit and for the newbies.
10. Shop Around for the Best Offers in Credit Card
After deciding the type of credit card that fulfills your needs, now is time to shop around for the best offers in credit cards to choose right credit card. Look for bonus categories for the length of the intro period for 0 percent APR cards, rewards cards, and credit tools for cards that will benefit in building the credit.
Moreover, do not forget to add interest rates and fees factor in your decision to choose right credit card. This involves foreign transaction fees, annual fees, late payment fees, and APRs.
If you have difficulty choosing the right credit card, submit an online pre-qualification form to see whether you have qualified.
Closing Words
It’s a vital decision to choose the right credit card, but there are some other factors that you should consider. Always ensure that the credit card you choose should aid in achieving your financial goals efficiently and affordably and meet all your financial needs. Therefore, use your credit card wisely to get the most out of it.
We hope this guide to choosing the right credit card will help you choose the right credit card for your needs.
