With so many options in the market, it is often confusing to choose a Credit card. However, there is that one credit card that is perfect for you. It will be easier for you to choose your perfect credit card if you know your top priority, which can be improving the credit, transferring the balance, low-interest rates, reward points, cash-backs, travel points, etc. We have tried offering you insights that should make the process of choosing your perfect credit card easy.
What will you use your perfect credit card for?
Firstly, you should decide the purpose for getting the credit card, as this will help you in finding the perfect credit card for your financial situation. If you are looking for a credit card for general spending, you will be looking for a credit card with the most generous rewards or the lowest interest rate, depending on whether you will carry a balance or not. If you want to get a credit card for other purposes like consolidation of debt or for the purpose of your business, you need to research for various card options. Creditors generally market different credit cards for different consumers. It makes sense to opt for a credit card, which has been tailored as per your need.
Will you carry the balance?
If your plan is to carry a balance on your credit card, a lower rate of interest should be your priority as compared to big sign up bonuses and reward programs. The annual interest on your credit card is generally in two digits, while you earn around 1% to 2% in rewards for most of your purchases. This should be an eye-opener to why prioritizing a lower rate of interest is better. If a credit card offers a 0% annual percentage rate on purchases and you can repay what you borrowed before the promotional rate expires or can transfer the balance, you don’t end up paying high interest.
Monitor spending habits
If you don’t want to carry a balance on your credit card, opting for a credit card that offers maximum rewards is a smart choice. There are various cards that offer bonus reward points for a specific kind of purchase. They have even tied up with various companies. Some of the examples –
⇒ Travel
⇒ Groceries
⇒ Shopping
⇒ Restaurants
⇒ Movie tickets
Based on your spending, you can choose a card that offers maximum reward points. You should choose the perfect credit card that fits your lifestyle, so it is better to go through the credit card statement of past few months, identify the trend and then choose the card that will be best for you.
Type of reward
When you shop for a rewards card, it is important to spend to a certain limit. It is also equally important to make sure that you will use the rewards earned. No good comes from the fact that you have a bunch of airline miles but you are do not travel anymore. It is also a bad choice to opt for a credit card that makes you redeem your reward points at times that are not suitable for you. You should make sure that a credit card should offer reward points that do not expire early. You should think what could offer the most valuable thing to your life. A credit card offering cash back being deposited in your account is the choice to go for when you are trying to save money. If you are going on a big road trip, a card that offers bonus reward points on fuel is the one to go for. You can also choose a credit card that lets you use the cash back in paying the credit card bill.
Research
Once you zero in on what you are looking for, you should start researching for that specific type of credit card. As per your situation, you may be looking for:
⇒ A credit card to consolidate your credit card debt or reduce the interest that you are paying on existing debt.
⇒ One that offers a 0% annual percentage rate, if you are planning to make a big purchase that you won’t be able to repay immediately and you do not want to pay the high interest.
⇒ A credit card that offers cash back. Especially if you want to use it to pay off a certain portion of your credit card bill.
⇒ One that offers airline miles or discounts on hotels.
⇒ A credit card that has tied up with a specific airline or hotel where you get miles, discount, freebies, and upgrades.
⇒ A secured credit card if you want to rebuild your credit report after an unfortunate event like bankruptcy.
Based on the information about what type of credit card you are looking for, you can go ahead and research offers on the specific credit cards.
Compare
You can see that there are different credit cards within each category of the card. So it will be better if you compare the options carefully. Some of the things you should look for:
⇒ Low rate of interest
⇒ Rewards and bonus reward points
⇒ Minimum payments
⇒ Sign-up bonus
⇒ Annual fee
⇒ Other Fees
⇒ Other perks like airline miles, discounts, freebies, and complimentary gifts.
You should also read a review of a specific credit card based on the experience of other consumers.
Do you want to pay the annual fee?
It is a big dilemma, whether to pay an annual fee or not when it comes to a credit card. Most of the credit cards that offer no annual fee are based on minimum spend. You should think about whether you should or you will be able to spend that much amount before choosing such a credit card. Sometimes, paying a nominal annual fee can save you from high expenditure, which might push you into more debt. It might also get you a low rate of interest. The sign-up bonus, interest on late fee payments should also be kept in mind while choosing a credit card.
Requirement to qualify
A credit score is an important factor when applying for a credit card. What if you choose your perfect credit card but cannot qualify for it because you have a low credit score. You can easily find out the minimum requirement to qualify for a type of credit card. These days, creditors offer a variety of credit cards that covers almost all the consumers looking for a credit card. It just that the credit limit will vary and so will the rate of interest for late repayments.
Checking your credit score is a pre-requisite step in the process of applying for a credit card. Once you have your credit card, it is not mandatory to use the same card forever. Based on your requirement, you can always opt for a new credit card or an add-on card.
Previous Article: Tips For Using Your Credit Card Responsibly
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