The right credit card can be a financial tool that allows you to make the most of your money. Whether you are trying to pay down debt, build up rewards, or improve your credit score, there is likely a credit card that can help you reach your goals.
Before you apply for your next credit card, use the following steps to help you determine what credit card is best for you.
What are you trying to accomplish?
Your first step is to figure out what you are trying to accomplish with your credit card. There are three main reasons that people get new credit cards:
- Consolidate debt as part of a repayment plan.
- Earn rewards that can be used for cash back or free travel and merchandise.
- Establish credit history, or rebuild credit after mistakes.
You might have other reasons for applying for a credit card, but these are some of the most common situations for consumers. You need to figure out which situation best reflects your financial goals.
“A credit card, if used correctly, is a great way for someone to help improve their credit score,” says Matthew Coan, a financial expert with Casavvy.com. He points out, though, that a card account opened with the intention of improving a credit score is going have different features than an account opened with the goal of earning rewards.
Each card has different features. “Research different options to determine which card is best on need,” suggests Thomas Nitzsche with ClearPoint Credit Counseling Solutions. “One card might offer 0% interest for 15 months with a $0 balance transfer fee, but no rewards.”
For someone looking to consolidate high-rate balances onto a lower-rate card to accelerate a debt payoff, that 0% interest rate is very tempting, even though the consumer would earn no rewards. If your priority is debt pay down, the rewards are of little importance; instead, you want to get the lowest possible interest rate, with the longest possible introductory period.
If you are trying to establish your credit history, you might not care if there is a high interest rate on the card. You can get a secured credit card, or a student credit card, and charge one or two items each month, careful to pay off the balance every billing period.
Which card is best for you depends on your goals. Before you start looking for a new credit card, make sure that you have a clear idea of what you are trying to accomplish.
Just as you would shop around for any other product or service, you should also shop around for the best credit card for you. Once you know what you are trying to accomplish, you can begin comparing credit cards in that area.
A website like Quizzle can help you find the right card. Quizzle has access to a number of credit card offers. You can use the site to quickly and easily compare terms and rates so that you get the best credit card for your needs.
You should also check your credit situation so that you know what you qualify for you. If a card requires that you have excellent credit to qualify, it doesn’t make sense to apply if your credit is only fair. A good consumer credit site, like Quizzle, can help you look at your credit situation, and identify what is holding you back so that you can improve your situation, or find a credit card that more likely fits the realities of where you are at.
Know how you spend your money
Finally, make sure you understand your own habits. You should apply for a card that matches your preferences. “Many consumers never track their expenses,” says Nitzsche. “It is a good idea to use tracking software, pen and paper, or even your current statements to determine your spending habits.”
Understanding your habits can help you choose a card that makes sense for you. This is especially important if you are applying for a rewards card. “If you have a family, and you spend a lot of money on groceries, it makes sense to look for a rewards card that offers bonus rewards for money spent at supermarkets,” says Coan.
There are cards that offer extra rewards on gas and dining out. You can also find cards with rotating categories, so that a different amount category earns more points each quarter. The key is understanding how you use money so that you can choose a card that fits into your current financial plan.
In fact, no matter the reason you are getting a new credit card, it is vital that you use the card in conjunction with your current plan. The reality is that any card, when not used within the confines of your already-established financial plan and habits, can quickly overwhelm you and cause problems. Carefully consider your options, and then choose the card that best reflects your needs.