Several credit cards are available in the current era, so selecting one to apply for can be overwhelming. And every credit card has its benefits that others don’t have. Using rewards credit cards will enable you to accumulate points and cash-back for every purchase.
Selecting one or two credit cards you often use to achieve the best rewards based on your spending habits is the best idea. For instance, if you like shopping and traveling, you can select the right credit cards to pay for these expenditures and earn rewards. Matching a credit card to your spending is a great way to boost your rewards significantly.
Here are the steps to selecting the best credit card for your spending:
1. Check Your Credit
Check your credit score to determine what credit card offers you might be eligible for. You will have a greater chance of getting credit cards with better bonuses if you have a better credit score.
If you find the score is lower than your expectations, check the credit card reports to find out the cause of the problem. Then you can figure out how to improve it, dispute an error on the reports, or change your spending habits. Federal law allows you to obtain a copy of your report from the three major bureaus annually. Get your report from a federally authorized website.
2. Identify One or Two Types of Credit Cards You Need
There are three popular types of credit cards:
- Cards that earn rewards
- Cards that can save money on interest
- Cards that help you enhance your credit when it’s damaged or limited
The best card to select is the one that has features that can meet your specific needs. For example, the best travel card might not offer several benefits if you do not travel frequently.
If You Want To Establish or Reestablish Credit: Secured or Student Credit Card
Student credit cards are unsecured cards for people who are new to credit. You can easily qualify for this credit card more than others. Secured credit cards normally require a security deposit of about $200. The bank will refund this deposit when your account is upgraded or closed on good terms.
If You Need To Save On Interest: Very Low-Interest Rate, 0% Annual Percentage Rate (APR), or Balance Transfer Credit Card
A credit card with an initial 0% APR and low continuing interest could be best if you use the card in emergencies or if your income is irregular and you may carry balances from time to time. You can pay off a significant debt with a balance transfer offer without paying the interest. Remember that you can only obtain these offers if your credit score is average or good.
If You Want To Obtain Rewards: Rewards, Cash Back, or Travel
A reward credit card can be ideal if you pay off your total balance every month and are never liable for interest. Rewards cards have significant APRs but offer points and huge sign-up bonuses, cash back, or miles on every dollar you spend.
3. Narrow Your Options by Asking the Appropriate Questions
Search for the card you want on a respected online site. Filter the results about your score and monthly spending. Consider these questions as you go through the top choices:
For A Student or Secured Card:
Will the card help you establish your credit? Look for a credit card that sends reports about your payments to the major credit bureaus. Most secure cards do not send these reports.
What is the cost of opening an account plus the annual fee? These accounts have small rewards, so it is optional to pay the annual fee. However, you will only avoid this expense with a good credit score. The cash you remit as a security deposit for your secured account will determine your credit limit.
Can you qualify for a better card after some time? Select a card that will enable you to establish your credit score and upgrade to a better card. You can leave these cards open for longer, improving your average age of accounts.
For A Low-Interest, Balance Transfer, Or 0% APR Card:
How long does the 0% APR last, and what is the APR interest going forward? Obtain a card with enough time to pay off an interest-free debt. If you have plans to carry balances for several years, get a card with a low ongoing interest rate.
Does this card offer rewards? You can find a card offering ongoing rewards if you need 0% APR for only a few months.
For Rewards Cash-Back or Travel Cards:
How should you spend cash? Look for a card with significant rewards in the categories you spend most on. Get a card with annual fees if you are a big spender; the rewards will help you pay the fee. Find a card with no foreign transactions if you will use the card abroad.
Is this credit card complicated? If you don’t want to struggle with loyalty tiers, rotating bonus rewards, spending caps, and award seat availability, get a card with flat-rate rewards.
Will you earn rewards quickly, and what are they worth? Different credit cards have different reward rates and periods of maturity.
4. Apply For a Card with the Highest Overall Value
It may be easier to narrow your choices, but choosing between three similar cards can be difficult. Look closely to find differences. Here are some factors that will enable you to select the ideal card:
For Secured And Student Cards:
Credit limits increase routinely. These cards may let you increase your limit if you make consecutive timely payments.
For Low-Interest, Balance Transfer, Or 0% APR Cards:
Debt payoff planner. Get a card whose issuers allow you to develop your debt payoff plan; this will be valuable when you’re overburdened with debt.
For Rewards, Cash-Back, or Travel Cards:
Lower required spending. It is best if the card requires you to spend less to qualify for a sign-up reward.
The rewards do not expire. Some cards allow you to use your rewards at your convenience, given that you keep your card open.
After picking a card, it would be best to include all the income you can access on the application; some people only include their income. Student cards can include scholarships and grant money or allowances from family members. Others may include a spouse’s or partner’s income.
Final Thoughts
After finding the best credit card:
1. Use your card the right way to obtain rewards.
2. If you’re trying to develop your score, pay off your debts in full every month, and do not overuse your available credit.
3. If you’re trying to accumulate rewards, use your credit card for everyday shopping and pay your bills in full monthly.
Your choice of credit card should enable you to achieve your financial goals efficiently and cheaply, whether trying to earn rewards, borrow money, or build credit. Don’t settle for a card with which you’re not comfortable.
