How to Find the Best Credit Card for You in 2017 and Early 2018
Even if you have lousy credit, getting a credit card does not usually require a lot of effort. You get card offers in the mail and see card offers all over the Internet. Choosing the best credit card for you, however, requires some thought. The credit card offers that likely fill your mailbox on a weekly basis all shout that they have the best interest rates and the highest rewards. In order to find the best credit card for you, you have to compare what each card offers to how you intend to use your credit card.
How Often Will You Use Your Credit Card?
A credit card you plan to use for life’s emergencies will differ from a card that you plan to use on a daily basis. If you only plan to use the card occasionally, you do not want a card with an annual fee. Otherwise, you will be paying to keep a piece of plastic in your wallet and wasting money. However, if you plan to use your credit card a lot, you may consider a card with an annual fee. Often cards with annual fees come with bigger rewards, so by paying the annual fee, you may actually save money in the long run. Some of the best travel rewards are found with cards offering annual fees.
What Will You Buy With Your Credit Card?
Many credit cards offer cash back rewards or some form of points rewards. You can find 2% cash back cards for all purchases and some have plans that reward you even more when you use the credit card for a specific type of purchase. For example, buying a credit card that is connected to a gas station or grocery store that you frequent and using the card to make purchases there may earn you double rewards or special discounts. If your goal of the credit card is to purchase high value items and pay them down slowly, you want the lowest interest rate you can find. If you plan to buy smaller items and pay off your balance entirely every month, a card with an average interest rate and the opportunity to maximize rebates, discounts and rewards may be your best choice.
Are You Planning a Trip?
If you are planning a big trip and could use the help of some miles to offset the cost of plane tickets or hotel bills, you may want to look into an airline miles card or a hotel points card. You can find more general cards that offer points that can be used on multiple airlines, or if you have a favorite, you can choose a card specific to that airline. Hotel cards are a bit different in that many are tied into a group of hotels rather than just one individual hotel brand. A good example is the Starwood Preferred Guest® Credit Card from American Express which captures points for both Starwood Preferred Guest Hotels as well as Marriott hotels. With that card, you can use points with hotels such as Westin, The Ritz-Carleton and various Sheraton and Marriott properties as well as many others.
Do You Have a Balance to Transfer?
Most credit cards allow you to transfer the balance on an existing credit card. Some credit cards charge fees when you transfer a balance from another card or make you pay a different interest rate on the transferred balance. Look for cards that offer low or no transfer fees and 0% APR or low-interest rates on balance transfers. To attract customers, you will find cards that offer as low as zero percent interest on balance transfers for the first six months up to 21 months. Make sure to take the balance transfer fee into the equation before transferring a balance. In many instances, paying the standard 3% balance transfer fee for a card with 0% APR for 15 to 21 months will be offset by the extra interest saved. Check out your potential savings with this handy balance transfer calculator.
Will You Really Pay Your Balance in Full Every Month?
This is where you need to be really honest with yourself and spend a little time envisioning the future and what expenses may be coming down the line (be sure to plan for emergencies such as auto repairs, medical bills, etc.- life happens).
Especially if you have poor credit, it is tempting to apply for a credit card with a higher interest rate in order to build your credit. You may reason that the higher interest rate is not an issue because you plan to pay the balance in full every month. The problem with this reasoning is that life is unpredictable. After a month of charging a little too much or facing a few unexpected expenses, paying off the balance can seem daunting. It is easy to fall into the trap of paying the minimum balance “just once” and starting a pattern of regularly not paying your balance in full and allowing the interest to build.
No matter what card you choose, look for one that charges a low-interest rate and few fees to minimize the costs that can come with the benefit of carrying a credit card.
This article originally appeared on Huffington Post here: How to Pick the Best Credit Card for You
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