Looking for the best credit card to suit your needs? Our comprehensive guide will help you choose the right credit card by checking your credit score, identifying your credit card needs, comparing fees and features, and applying and using your credit card wisely. Follow these steps to find the perfect credit card for you.
- To find out what credit card offers you might be eligible for, check your credit score.
- There are several ways to check credit scores such as some websites, many credit card issuers or the three major credit bureaus.
- If your score is lower than you expect review your credit reports to identify any issues and adjust your spending habits or dispute errors if necessary.
- There are three main types of credit cards: credit-improvement cards, low-interest cards, and rewards cards.
- The best credit card is one that addresses your specific needs.
- To improve or rebuild credit, consider a student or secured credit card.
- To save money on interest charges look for a low-interest, 0% APR or balance transfer card. -To earn rewards consider a reward, travel, or cash-back credit card.
- When choosing a card, consider factors such as if the card helps you build your credit, the costs, and the annual fee, and if the card has an upgrade option.
- For a low-interest or balance transfer card, also consider the 0% APR period and ongoing interest, the balance transfer policy and the fee charged.
Check Your Credit Score
To find out what credit card offers you might be eligible for, check your credit score. Higher scores typically give you a better chance of being approved for credit cards with better perks. There are several ways you can check your score:
- Some websites provide free access to credit scores.
- Many credit card issuers offer their cardholders free FICO scores.
- The three major credit bureaus (Experian, Credit Karma, and Credit-Nerd) sell credit scores.
If your credit score is lower than you expected, review your credit reports to identify any issues that may be causing the problem. You can then work on improving your score by adjusting your spending habits or disputing errors on your reports if necessary. Under federal law, you are entitled to one free copy of your credit report from each of the three major bureaus every 12 months. You can access your free reports at AnnualCreditReport.com, a federally authorized site.
Identify Your Credit Card Needs
There are three main types of credit cards:
- Cards that help you improve or rebuild your credit.
- Cards that save you money on interest charges.
- Cards that offer rewards for your purchases.
The best credit card for you is one that addresses your specific needs. For example, if you don’t travel frequently, travel rewards card may not be the most useful for you.
To improve or rebuild your credit, consider a student or secured credit card. Student credit cards, which are designed for college students new to credit, are often easier to qualify for than other types of credit cards. Secured credit cards also typically have more lenient requirements, but require a security deposit of $200 or more. Your deposit is returned to you when the account is upgraded or closed in good standing.
If you want to save money on interest charges, look for a low-interest, 0% APR, or balance transfer card. An introductory 0% APR and ongoing low-interest rate can be helpful if you use your credit card for emergencies or if you have an irregular income and carry a balance sometimes. A balance transfer offer can also help you pay off a high-interest debt interest-free. Keep in mind that these offers may be harder to find if you have average or poor credit.
To earn rewards, consider a reward, travel, or cash-back credit card. These cards are a good match if you pay off your balance in full each month and avoid interest charges. These cards often have higher APRs, but offer larger sign-up bonuses and give you points, miles, or cash back on every dollar you spend.
Narrow Your Choices by Asking the Right Questions
To choose the best credit card for you, consider the following factors based on the type of card you’re interested in:
For student and secured credit cards:
- Does this card help me build my credit? Look for a card that reports your credit card payments to the three major credit bureaus. Some secured cards do not do this.
- What are the costs to open an account, including the annual fee? Unless you have very poor credit, you should try to avoid cards with annual fees. For secured cards, the lower the security deposit required, the better, although your credit limit may be tied to the amount of your deposit.
- Can I upgrade to a better card later on? Choose a card that allows you to build your credit and upgrade to a card with more competitive terms. This will make it easier to keep the account open longer and increase your average age of accounts over time.
For low-interest, 0% APR, or balance transfer cards:
- How long is the 0% APR period, and what is the ongoing interest APR? Look for a card that gives you enough time to pay off your debt interest-free. If you plan to carry balances over several years, consider a card with a low ongoing APR.
- What is the card’s balance transfer policy? If you plan to do a balance transfer, find out what fees the card charges and what types of debt you can transfer. Keep in mind that the balance transfer APR may be different from the purchase APR.
- Does the card offer rewards? If you only need a few months of 0% APR, you may be able to find a card that also offers generous ongoing rewards.
For rewards, travel, or cash-back cards:
- How do I spend my money? Look for a card that offers the highest rewards in the categories you spend the most on. If you’re a big spender, consider getting a card with an annual fee if the rewards you earn will offset the cost. If you plan to use the card abroad, look for one with no foreign transaction fees.
- How complicated is this credit card? If you don’t want to deal with limited award seat availability, spending caps, rotating bonus rewards, and loyalty tiers, consider a card with flat-rate cash-back rewards.
- How quickly will I earn rewards, and how much are they worth? Look up NerdWallet’s rewards valuations to find the answers to these questions.
Compare Fees and Features
Choosing a credit card can be tough, especially when you have a few options that are similar. If you have already found a clear winner after evaluating your options, go with that one. If you are still unsure, here are some factors that may help you decide:
For student and secured cards:
- Check if the credit limit increases automatically after making a certain number of on-time payments.
- Consider whether the security deposit earns interest in a CD.
For low-interest, 0% APR or balance transfer cards:
- Look for a card that offers an online debt payoff planner.
- See if the card waives late fees or penalty APR charges.
For rewards, travel, or cash-back cards:
- Compare the required spending to earn a sign-up bonus.
- Check if the rewards have an expiration date.
When applying for a credit card, remember that you can include all income that you have reasonable access to, not just your personal income. This may include money from grants and scholarships for students, or income from a partner or spouse.
Apply for and Use Your Credit Card Wisely
After you have chosen the best credit card for you, it’s important to use it wisely to get the most value. Here are some tips on how to do that:
- If you are trying to establish credit, make sure to pay your bill in full every month and avoid using too much of your available credit.
- If you have a 0% APR deal, make sure to stick to your debt payoff plan.
- If you are trying to earn rewards, use your card for everyday purchases and pay your bill in full every month.
Remember, the credit card you choose should help you achieve your financial goals in the most affordable and efficient way possible. Don’t settle for less. Find your best credit card here.
In conclusion, choosing the best credit card for you involves identifying your specific needs and considering various factors based on the type of card you are interested in. It is important to check your credit score and review your credit reports to ensure you are in the best position to be approved for a credit card. Additionally, it is important to compare the features and fees of different credit cards to find the one that best meets your needs and goals. By considering all of these factors, you can find a credit card that helps you improve your credit, save money on interest charges, or earn rewards for your purchases.
Questions Answered in this Article
- What are some ways to check your credit score? Answer: Some websites provide free access to credit scores, many credit card issuers offer their cardholders free FICO scores, and the three major credit bureaus (Experian, Credit Karma, and Credit-Nerd) sell credit scores. Under federal law, you are also entitled to one free copy of your credit report from each of the three major bureaus every 12 months.
- What are the three main types of credit cards? Answer: Credit cards that help you improve or rebuild your credit, credit cards that save you money on interest charges, and credit cards that offer rewards for your purchases.
- What are some factors to consider when choosing a student or secured credit card? Answer: Does this card help me build my credit, what are the costs to open an account including the annual fee, and can I upgrade to a better card later on.
- What are some factors to consider when choosing a low-interest, 0% APR, or balance transfer card? Answer: How long is the 0% APR period, what is the ongoing interest APR, what is the card’s balance transfer policy, and what fees does the card charge.
- What are some factors to consider when choosing a rewards, travel, or cash-back credit card? Answer: What is the card’s rewards program, what is the card’s annual fee, and what is the card’s APR for purchases?