Choosing the right credit card sounds like a simple task. However, there are so many things to consider. It’s crucial to be cautious since credit cards are a form of debt. You need to be careful about annual fees, late fees, APR, etc. Here are several credit card features to consider when making this important financial decision.
The Right Credit Card – Important Features to Consider
There are several important features to consider when applying for a credit card. These include but are not limited to:
- Interest Rate
- Credit Limit
- Fees (if any)
Most credit cards come with some form of a rewards program, such as miles for air travel, points towards merchandise, or cash back on your spending. There are several combinations of these features, so how do you figure out the right credit card for you?
Your choice of credit card has to work for your lifestyle. For example, if you keep a balance on your credit card from month to month, then your priority should be a low-interest rate (although this is NOT recommended). If you pay off debts in full each month, then the rate isn’t as important. Instead, you can focus on finding a card with no annual fees and the best rewards program for you.
Rewards, Rewards, Rewards!
When it comes to rewards, think about what you purchase. There are gas cards available that allow you to earn free gas by using the credit card. Similarly, there are cards that reward you with miles/points towards purchasing airfare. If you’re not a traveler, find a card that offers cash back on purchases. Many cards will give you 1% back of the amount you charge every month. They may even have monthly deals for a certain category, like groceries.
Don’t Forget the Fees!
There are other features to consider as well. Be aware of the penalty fees that a creditor will charge you for things like late/missed payments. You may also be interested in the rate that a credit card charges for balance transfers. If you’re interested in transferring the balance of one credit card to a new one, then you’ll want to find a card that offers 0% interest rate for doing so. The idea would be to lessen your debt by transferring to a low-interest card, not pick up more debt. Also, there can be a separate fee for balance transfers, which will be a percentage of the amount. This percentage will vary.
What Does the Right Credit Card Do?
You may not be able to find the “perfect” card for you. Everyone wants the low rate, high limit, no fees, high rewards card, but not everyone is eligible for that. So figure out what is important for your financial situation, and choose a card that will allow you to reap the benefits of credit and build a positive history.
Also be aware of the impact that new credit cards have on your credit score. There’s nothing wrong with obtaining new credit, just don’t pursue several new accounts in a short period. This can give the appearance of over-extension to the credit reporting agencies, and hurt your credit score.
Credit cards are great tools for building a positive credit report. Plus, the rewards you can receive are essentially free money. Just remember that these rewards programs are designed to get you to spend more. You can only reap the benefits of the reward program if you stick to your ordinary spending. Use the card for your regular purchases and pay the balance each month. This way, you’re not spending more than usual, and you’re getting something in return.
If you are looking for credit card debt advice, speak with a certified counselor at ACCC today! Call 800-769-3571.