If you are just stepping into the world of credit cards, you might be puzzled at the plethora of offers. Why does everything seem so tangled and complicated? Well, choosing a credit card can feel overwhelming, as it means diving into a seemingly endless sea of options.
Luckily, that sea of options provides a variety of benefits grouped according to the needs and requirements of the clients. Now, let’s see how to choose the best credit card for you.
1. Define your purpose for using a credit card
Even before starting the search, write down the main reasons for getting a credit card in the first place. Why do you need it? What are your spending and financial priorities? Are you looking at a big purchase? Do you shop online? These are just some of the questions you need to ask yourself.
Studies show that the credit card market owes its incredibly fast growth to the endless range of services and combinations of offers. Why? Because being able to satisfy a variety of customers with their own needs and interests allows credit card companies to cater to practically everyone at the same time.
For instance, if you aim at getting more out of everyday purchases instead of traveling, getting a credit card with good cash back value for shopping might be a good choice for you. If you spend a lot on groceries and makeup, choose a credit card that offers bonuses in those categories.
2. Get in touch with your spending activity
All the ways and places you spend your money will determine the right credit card choice for you. Does your money go into clothes, or food, or traveling, or buying real estate?
Credit card companies also have to be informed about the nature of your earning and spending in order to confirm your credit card profile.
Another thing to have in mind (and this especially goes for heavy spenders) is to get familiar with your credit card limit. Getting your first credit card is the first step towards building your credit, but using it carelessly can have an opposite effect and get you into debt. The best way to avoid problems with your credit card limit is to always keep your balance under 30% of your available credit.
3. Explore credit card offers
Whether you’re a student or a passionate antique collector, there’s a credit card match just for you. Before you make a decision, make sure you get familiar with all the available options, so you don’t overpay on your annual fee or miss out on getting useful travel or cash rewards.
Tip: the objectively best deal out there isn’t necessarily the best option for you right now. If you’re a student, you are probably not yet interested in building credit, so you might want to exclude that as a factor from your choosing.
4. Compare the offers with your needs, habits, and priorities
Once you’ve explored all the available options, the only thing left is to find the best one for you. The final decision will ultimately depend on your spending needs, habits, and priorities.
Let’s say you want a credit card for poor credit – it’s best to choose a card that reports your monthly payments, which will help you make your payments on time, and therefore increase your credit rating.
Make sure to check the rates and fees, including the annual fee, the annual percentage rates (APR), foreign transaction fees, and late fees before applying.
Have in mind that paying the minimum doesn’t necessarily mean making a profit. By finding a good deal, you can avoid fees and interest:
- If you don’t travel a lot, the foreign transaction is not a weighty category.
- There are credit cards that free you from paying an annual fee (for example, Capital One® SavorOne® Cash Rewards Credit Card doesn’t require annual or foreign transaction fee).
And, finally, make your own choice. Remember that your friend’s positive experience with a certain credit card doesn’t mean it will be the best choice for you. The fact that there isn’t a universal recipe for choosing a credit card can be tiring, but the truth is that only you know what you need.