Which credit card is best for you?
Your credit card can be an essential part of your household spending plan. But it is important you carry the right card for the way you transact.
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In today's world, you're likely being inundated with credit advertisements every day. Billboards boasting low interest rates while you’re driving. Envelopes covered with promises of preapproval in your mailbox. Ads asking you to apply while you’re on the internet. There truly are a lot of options out there, and sometimes it can be difficult to know which one is best for you.
The first step is to figure out which bank or credit union is best for you. Some people feel safest sticking with their current financial institution—and that's a great place to start! But don't be afraid of branching out and looking at all your options. Credit unions, for example, often offer competitive interest rates, low fees and good rewards. Obviously we would like your choice to be Rio Grande Credit Union.
Once you have an idea of where you'd like to apply for your credit card, you can start looking at which cards they offer. Here are some questions you should ask:
What are your spending habits?
It’s difficult to find the right card for your lifestyle if you have no idea how you prefer to spend. Are you looking for something that will earn rewards points so you can take a free vacation? Maybe you’d prefer a card that pays you back in cash. Will you pay your bill off in full every month or will you carry a balance? Do you want to use it for everyday purchases or just as a safety net?
There’s a card out there that will benefit your lifestyle. But deciding how you will use the credit card will help you create a reasonable budget, track your spending and choose the right benefits for your needs.
Would the lowest interest rate benefit you?
It’s important to know how much interest you’ll be paying. Why? If you don’t (or can’t) pay off your credit card bill in full every month, this is how much extra you’ll be spending for the things you’ve purchased. Knowing this may make you think twice about charging unnecessary items to your credit card.
If you plan to carry a balance each month, use your card for occasional larger purchases, or have it in the event of an emergency, a low rate card without rewards may be your best bet.
Would rewards be beneficial to you?
One of the biggest perks of getting a credit card is that you can earn rewards for making your everyday purchases. Those rewards vary from card to card, but can include cash back, purchase and travel rebates, merchandise and points for gift cards.
If you plan to use your card and pay it off every month, a card that earns rewards is likely for you.
What are the fees and penalties?
This is a big one when it comes to comparing cards. You’ll want to find a card with as few fees as possible. Whether for specific types of transactions—balance transfers, cash advances or for simply asking for a credit increase over the phone—be aware of the fees and penalties your card charges.
Is there an introductory period?
If your new credit card comes with a low, introductory interest rate, make sure you know when that period ends—typically 3–12 months. These offers include low interest on purchases that are paid in full during this period. Any outstanding balances, as well as any future purchases, will be assessed at a higher interest rate after that time. Keep more of your money by making note of this deadline and paying your bill in full.
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What about other benefits?
As you figure out which card features are best for you, it is also important to take a look at the often overlooked benefits that come with some cards. Does the card offer things like price protection, travel-related insurance, extended warranty services, cell phone protection or identity theft resolution services?
These types of benefits are generally paid for by the issuer to make their cards more attractive and are free to the user.
Asking yourself these questions—and answering them—will set you on the right track to getting the best possible credit card for you.