Let’s face it – searching for the right credit card can be intimidating. There are so many different card providers, each with a different APR; Fees; and Rewards program. How can you know which one will be right for you?
Fortunately, there are a lot of resources available to help you get started. The first step would be to decide what type of card do you need. Generally, you can break the card types down into three categories: Low Interest Rates; Rewards; Building Your Credit.
Get Your Free Credit Report
The rates and/or offers associated with these cards will be dependent on your credit score. This is something you should research before you start shopping for the right credit card for you. Federal law entitles you to one free copy of your credit report each year from each of the three main credit reporting companies: Equifax; Experian; and Trans Union.
Choosing Your Card Type: Low Interest Rates
The APR (Annual Percentage Rate) will make a big difference in the amount of interest you pay on any balances you keep on the card each month. Over an extended period of time, this can really add up. If you are planning to transfer a balance from another card or if you plan to make a large purchase and use the card to spread the payments over an extended period, you may want a card that offers a low interest rate.
Be careful – sometimes the low interest rate is only an introductory offer or it comes with an annual fee. Make sure to look at how much the card will cost you over an extended period and take into account all fees and charges.
Choosing Your Card Type: Rewards Program
If you pay off your balance each month, a low APR might not mean much to you. You might be more interested in a card that has a Rewards Program. These cards typically have a higher APR so you will want to make sure that you make your payments on time and that the reward program is something you would benefit from. Typical rewards programs will offer you cash back on your purchases (check to see if there are any restrictions around the typical purchases you make each month) or specific Travel bonuses such as priority boarding, free checked bags or no foreign transaction fees.
Be careful – you will want to check on how the rewards can be redeemed, if and/or when they expire, and if there is an annual fee. It could be that the overall cost of the card is greater than the benefits you will get from a particular rewards program. Fortunately, there are a number of different rewards programs so it is important to shop around and find the one that is best for you.
Choosing Your Card Type: Building Your Credit
If your credit score is too low or you simply don’t have enough credit history (such as being a student or not applying previously for credit), you may need to look for a Student Credit Card or Unsecured Credit card. These cards may be easier to obtain but they could come with a security deposit or higher APR. If this is the type of card you need, it is important to focus on building a strong(er) credit history and making your monthly payments on time. As you build a stronger credit score, you will be able to qualify for other, more favorable credit card offers.
When it comes time to shop for a new credit card it can be intimidating. However, if you know your credit score and you know the type of card you are searching for, there are a number of websites that can help you compare the various offers. Take your time and look at what the current offers are now, plus at what the offers will cost you over an extended period:
- How long with the introductory APR last?
- Are you able to transfer a balance from another card?
- What is the annual fee for having the card?
- Does the rewards program offer something you want and would use?
Getting a credit card and managing it properly will make a dramatic difference in your credit score. Having a strong credit score could make a big difference in a number of different areas such as how much interest you pay each month to what type of car loan you qualify for. Therefore, it is important to take the time and do the research needed to get the right credit card for you. With a little bit of research, you will be able to do the comparison and make an informed decision.