Five Things to Consider In Choosing A Credit Card!
Much like your driver’s license, getting a credit card is one of the biggest milestones in your life. If used correctly, a credit card can help you build credit, pay off debt, and even earn you valuable rewards down the road. Alternatively, if used incorrectly, you might end up with more debt than you started with.
There are several types of credit cards, each one specifically designed for varying customer spending habits and goals. Choosing the right credit card protects you from making decisions that could potentially harm your credit score. While you might think you know everything about owning a credit card, the devil is often in the details.
Also Read: 10 Tips on How to Maintain a Good Credit Score
This article contains five things to consider in choosing a credit card. But before we proceed to that, let’s find out how ready you are for your first credit card.
Are You Ready for a Credit Card?
Qualifying for a credit card and being ready for one are two completely different things. It’s much like swimming: You may have everything you need to float in water but you won’t get anywhere without the right techniques. Before applying for your first credit card, ask yourself the following questions:
Do you have a consistent saving habit? Studies show that those who know how to delay gratification can avoid bad credit card debt. In other words, you’re less likely to make impulsive purchases.
Do you have an emergency fund saved up? Emergency funds can be used to pay debt or utility bills in case you lose your job or get into an accident that prevents you from working. You should save at least six months’ worth of expenses saved up before even considering a credit card.
Do you know how credit card interest rates work? Credit card interest rates can easily add up, especially if you regularly miss payments. Eventually, you’ll reach a point where you can’t get out of debt because you can no longer catch up with the interest growth on your credit bills.
Are you responsible in other areas of your life? If you can submit work or school assignments on time, it’s a good indicator that you’ll also be good at managing your credit card spending.
Once you’ve figured out your credit card preparedness, you can start looking for a suitable provider to fit your preferences and needs.
Things To Consider in Choosing a Credit Card
Credit card providers offer varying services and benefits. Choosing the right one protects you from incurring expensive fines. It might also help you stabilize your finances and, in turn, your overall credit score. Generally, a good beginner credit card has zero annual fees. It might also offer valuable perks and rewards.
Reputation
The best credit card companies protect cardholder data and prioritize helping members improve their credit usage. As a result, they also have the best customer satisfaction ratings in the industry. Run a few background checks on your prospective credit card provider. You can do this by checking their website, their social media feeds, or their Google My Business Profile. See what other people have to say about the company’s services, rates, security, and benefits.
Card Type
Generally, there are three main types of credit cards: Secured Credit Cards, Low-Interest Credit Cards, and Rewards Cards.
Secure credit cards are ideal for people who are trying to build or rebuild their credit scores. These cards typically require a $200 deposit or more — depending on your provider’s terms. The amount you deposit will be the credit limit on your card, minimizing your risk of overspending. You can reclaim this deposit once you upgrade or close your account.
Low-interest cards, as the name suggests, are credit cards with a 0% annual percentage rate (APR) or ongoing long interest. It’s perfect for people who intend to use their cards only during emergencies. You’ll need to have a healthy credit score to get this type of deal from any provider.
Rewards credit cards give you points, miles, or cash backs every time you use them. These cards typically never incur interest, as long as you pay your bills in full and on time.
Payment Plan Flexibility
Some credit card companies offer clients the freedom to set up their own pay-off calendar. This is typically a feature that people with healthy credit scores enjoy. Nevertheless, it’s good to have the option in your back pocket. Having some flexibility in your payment plan is great, as it helps ease the pressure that often comes with debt. Furthermore, it gives you time to adjust your finances, so you don’t miss your due dates.
Promotional Periods
Credit card promotions are one of the biggest traps around. Most credit cards offer an introductory rate of 0% APR to entice customers to sign up. Unfortunately, these rates only last a certain length of time. Once the promotional period is over, you could get stuck with an APR that’s higher than you anticipated. As a result, you could end up paying more in interest to your credit card provider. Before signing up, make sure to read the fine print. Find out how long the promotional period lasts, as well as how much the standard APR is for your card.
Comparison Websites
Sometimes, the best way to find the right provider is to conduct a side-by-side comparison. There are plenty of websites, such as NerdWallet, that offer free comparison tools you can use to evaluate your prospective credit card providers. Take a look around and see which company best fits your requirements.
Final Thoughts
Getting a credit card is a huge financial decision; thus, it requires careful thought and consideration. If you’re unsure which credit card is best for you, using the tips we’ve highlighted above can help you narrow down your options. Good luck with building that credit score!
Sophia Young
Sophia Young recently quit a non-writing job to finally be able to tell stories and paint the world through her words. She loves talking about fashion and weddings and travel, but she can also easily kick ass with a thousand-word article about the latest marketing and business trends and finance-related topics and can probably even whip up a nice heart-warming article about family life. She can go from fashion guru to your friendly neighborhood cat lady with mean budgeting skills and home tips.
Thanks for the info, it was helpful