Choosing the right credit card for your particular circumstances should be based on a combination of factors including your credit score, your tolerance for annual fees, what perks you might be seeking and how any rewards fit with your spending habits.
Annual Fee
Not all credit cards charge an annual fee but many of those that do will offer rich rewards and other perks in return.
Other Fees
Depending on your goals in acquiring a new credit card, be aware of any other fees associated with owning a particular card. For example, if you’re looking for a card to shift a balance to, be sure to factor in any balance transfer fees. Those with not-so-great credit may find that some options available to them charge account opening fees or credit limit request fees in addition to any annual fees. Steer clear of those, if possible.
Interest Rates
For those who think they might carry a balance, even if it’s just occasionally, be aware of the APR on any card you’re considering. Carrying a balance for any length of time on a credit card is expensive and you don’t want to be socked with a ballooning balance over time.
Rewards
If a card offers rewards on your spending, make sure that the areas where it offers the best rewards are a match for your spending habits. Someone without a car is unlikely to benefit from high rewards on gas, for example. While those who rarely dine out or get take-out will likely fare better with a card that offers elevated rewards on groceries rather than dining.
Perks
Many credit cards offer perks and benefits beyond the ability to earn rewards. Premium travel cards may offer exclusive airport lounge access, free checked baggage and airline incidental credits. Many cards on the market offer other perks like extended warranty protections and other travel protections and insurances. Even cards without an annual fee may offer several money-saving benefits.
Credit-Building Help
Cards aimed at helping you shore up your credit profile, like secured cards, work by reporting your on-time payment behavior to the credit bureaus so that over time, your score can improve with a record of positive payment history. There are many cards on the market aimed at those seeking to boost their profile. The best ones charge little to no annual fee and don’t carry account opening or other unnecessary fees. There are some unsecured cards available too, although these tend to be unavailable to those with a recent bankruptcy.
Credit Card Application
In general, there are several steps to applying for a credit card: First, check your credit score through a credit card issuer or by ordering it from one of the three main credit agencies. Once you know where you stand with your credit score, decide which type of card will be the best for you based on what you’re planning to use it for. Credit cards typically fall into one of three categories: rewards, low APR or credit-building.
Next, check to see if you’re pre-qualified. Many issuers, including American Express, Bank of America, Capital One, Chase, Citibank, Deserve and Discover will let you check to see if you’re pre-qualified for any of their cards. Keep in mind that pre-qualification doesn’t ensure approval.
Choosing the right card may be difficult, but applying for the card you’ve chosen is easy. Most cards can be applied for online, although you can go to the issuing bank and apply in person or call them on the phone. If you’re approved, the next step is to make sure you understand the card’s terms and conditions, listed in the fine print of the cardmember agreement.