Here are the best ways to pick your credit card

Credit cards are the most ubiquitous form of personal finance around. This, in turn, means that there is a veritable swathe of choices available, with companies offering different terms to attract their respective target markets. Not every credit card is suitable for every person, which is why some people run into difficulty with repayments.

Choosing the ideal credit card for you is slightly more involved than walking into your nearest lending institution and asking for one, but don’t worry – this article will break the decision-making process down into four simple steps.

 

1.Assess your credit score.

Nobody ever said you need a perfect credit score in order to get a credit card; after all, they are one of the most widely available forms of finance. Knowing your credit score is an important part of choosing the perfect credit card for two reasons. Firstly, a good credit score equates to a better chance of being accepted for credit cards with added bonuses, such as hotel discounts and airline miles. The second reason is that a poor credit score is a good early warning sign that you need to sort out your personal finances before a serious problem unfolds.

You are entitled to a free copy of your credit report once every 12 months. These can be obtained from one of three major information services groups – Experian, TransUnion, and Equifax.

 

You can also Click Here to obtain your free reports.

 

2.Determine the type of credit card that is appropriate for your needs.

People tend to borrow with particular credit cards for three key reasons:

They want the perks or rewards that some companies offer on their cards

They would like a card that helps save money on interest payments

They are new to credit cards and need a good starter option

The simple answer to choosing the most suitable card for you is to pick one that is appropriate for your specific needs. This means that if you never fly, there’s no point in using a travel credit card.

 

For perks and rewards:

The only scenario when borrowing on a reward-based credit card is a good idea is when you know in advance that you can pay off your balance each month without exposing yourself to interest payments. If you are confident that you can do this, then go ahead and take advantage of those perks. Air miles, cash back, and company loyalty points are some of the popular bonuses offered with these cards.

 

To save money on interest:

People tend to tremble when they hear the word ‘interest’ as it typically means large repayments. For folks who want to avoid large interest repayments at all costs, seeking out a credit card with 0% introductory APR is a good start. These credit cards typically have low-interest repayments after the introductory phase, once you shave off a minimum payment from your balance each month. If you fail to do this, your 0% APR offer is likely to be revoked.

 

For credit card newbies:

It can be difficult for students or other people new to credit with zero credit history to get accepted for credit cards because lenders have no idea if they can afford to pay back the balance. This is why student credit cards are typically offered as an alternative and easier way to get accepted. They can either be unsecured (no deposit required)or secured (you need to pay a minimum deposit).

 

3.Narrow down your options

Knowing the choices available for your needs is a good first step. But narrowing it down further is the only way to choose the ideal credit card. There are various credit card comparison tools available online and asking the right questions about each card can lead you to a more informed decision.

 

For perks and rewards:

It might seem cliché, but make sure to search for a reward card that gives you the most bang for your buck. In this case, this means that the best rewards are tied to your spending patterns.

Find out how quickly you will receive rewards. This information is available from each company and should be transparent

 

To save money on interest :

Make sure to compare the duration of the 0% APR offer on each prospective credit card because it might vary between companies

Check what the fees are for transferring balances over from different cards. Lenders typically charge a fee plus their own interest rates on these balances.

 

For credit card newbies:

Make sure that your card helps you build a positive credit rating. Some cards don’t send payment reports to the credit bureaus, so it’s best to ask first.

Ask if upgrades are available. You should be rewarded for keeping up with repayments, so ask each prospective lender whether an upgrade to a card with better terms is available after a certain period of good credit.

 

4.Always choose value

There is a good chance that after completing the third step of the decision-making process,there will be a clear outstanding card that offers the best terms. But this is not always the case. If you need to select between two or three closely matched cards, here’s what you need to know.

 

For perks and rewards:

The best value is always the card with the lower qualifying amount for rewards. If everything else is equal, this should be the deciding factor.

For further refinement of choice, you should also look at the expiration dates on each card for the rewards offered. The later the better in terms of value.

 

To save money on interest :

It can be tough to narrow down between 0% APR cards since, by their definition, they all offer the same perks. A good way to identify value is to check what late fees apply if you start to lag behind on your repayments.

Cards with a lack of late fees or penalty APR rates should always be given preference

 

For credit card newbies:

Your credit limit increases in-line with on-time payments. Consecutive on-time payments should always be rewarded. Use this when looking for value.

Another nifty perk that few lenders offer on secured cards is placing your deposit in an interest-earning account. If you see this, you should always choose it because you’re actually earning money from your deposit.

 

Once you’ve chosen a suitable card…

If you are attempting to build a stellar credit reputation, always pay on time and don’t use all of your credit limits.

Stick to your agreed payoff plan if you are availing of a 0% APR card for the purposes of saving on interest payments.

If you want good rewards, use your credit card as much as possible, even for everyday expenses.

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Mr.Saver

Mr. Saver is WalletSaver's financial expert. Mr. Saver is the collective creation of the dedicated team and contributors that have worked hard to put together helpful and insightful information for our frequent visitors and users.

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