How to Choose the
Right Credit Card
Before you choose a credit card, it’s important that you know your credit score. You don’t need to worry that this might hurt your credit – looking up your own credit score is an important tool for all of us to monitor, maintain and improve our credit scores. This type of credit inquiry is called a soft credit pull.
Knowing your credit score lets you know what type of credit card you may qualify for. Depending on how high or low it is, you might have higher or lower interest rates, different types of credit card fees, or better or worse credit card rewards programs or benefits.
Credit cards are great tools in lots of ways, but you need to understand what you’re signing up for. To know if a credit card will work for your spending habits and budget, make sure you know the cost of the card. All that detailed information lives in the credit card fine print – the disclosures and detailed information about the credit card program and its fees.
Another thing to keep in mind is penalties. If you don’t pay your bill or you pay your bill after its due date, credit card companies don’t always immediately cancel your card. Instead, they’ll charge different types of penalties. This can mean a one-time fee, a temporary rise in interest rate, or maybe something else – just make sure you read the fine print to know what it is.
To choose the right credit card, you first have to know what types of credit cards exist! Credit card comparison sites are a great tool to help with this, partly because there are different ways to identify the type of credit card you’re looking for. Here are some examples of ways you can categorize different cards:
- Intended User
This would include cards catered to business owners, students, etc.
- Card Feature
These are cards like no annual fee cards, cashback cards, travel rewards cards, balance transfer cards, and so on.
- Credit Score of Applicant
While credit card companies always use your credit score to determine the possible risk in loaning to applicants, there are also credit cards that are designed specifically for people with poor credit. Similarly, there are credit cards that only people with excellent credit qualify for.
- Secured, Unsecured, or Charge Cards
Some credit cards have additional fees and rules. A secured credit card means that you have to pay a deposit in order to get credit, similar to a damage deposit on an apartment. With charge cards, you have to pay the balance in full every month.
Of course, sometimes these categories overlap, so you might have a credit card that’s both unsecured and intended for students. These categories just help you search for the type of credit card that works for you.
Once you know your credit score and what types of credit card exist, you can decide what things are important to you.Maybe you want a credit card that gives you cashback rewards. Or, maybe you don’t have great credit, so you search for credit card for bad credit or credit building credit cards.
The most important thing is to make sure you take the time to understand your budget and goals, know your credit score, make sure you read the credit card fine print, and then choose the right credit card for you.
Then, all you have left to do is apply!
