The variety of credit cards available to consumers today can be daunting. The overwhelming number of options might make selecting the right card for you seem like a difficult decision. Don't despair, though, because there is an ideal credit card out there for everyone, and you can find it by following a few simple guidelines. By asking yourself some basic questions and doing a little research, you can discover the perfect card for your unique lifestyle.
Crunch the Numbers (and Read the Fine Print!)
Before searching for your ideal card, you will want to familiarize yourself with the difference between fixed-rate and variable-rate cards. Generally, financial experts recommend low, fixed-rate cards over low, variable-rate cards because variable-rate cards can change your rate regularly without prior notification. To find out when and if your rate may be changed, read the fine print that is usually buried in the mail credit card companies send you. Companies sometimes include loopholes whereby they may drastically raise your rate if you are late on a payment, for example. Also be aware of a card's APR, annual fee, grace period, penalties, late payment charges, over-the-limit fees, and cash advance interest rates before you sign. Knowing this information will serve you well both before and after you've found your perfect card.
Know Yourself
A large part of knowing what card is right for you involves knowing yourself and your individual needs. Several factors might influence which credit program is right for you, including credit score, income, age, current number of credit cards, spending needs, payment preferences, and special interests. Take a quick inventory of these factors to determine exactly what you want and need from a credit card. For instance, someone who pays a balance off in full every month will be shopping for a card much different from someone who tends to carry a balance month-to-month. You'll also want to consider any special interests you may have in getting a credit card. Would you like to earn frequent flier miles or cash back? Do you intend to use the card for business purposes or personal uses? Ask yourself these questions before embarking upon your search.
Don't Overvalue the APR in Your Decision
To ensure you are getting the best deal, you'll want to look at more than just the APR to decide on a card. Opting for the card with the lowest interest rate, or APR, doesn't necessarily guarantee that you are getting the card that will take the least amount of money out of your pocket. Other charges, such as late fees or annual fees, should also inform your decision. If, for example, after honestly reviewing your credit history you realize you probably will be late on a few payments, a higher interest rate card with lower late fees might be a better fit for you. In general, lower APRs mean you will spend less in finance charges, so look for a card with a low introductory rate. However, make sure you know how long this intro rate lasts, what the new rate will be, and whether anything else in your agreement will change at that point.
What About Pre-Approval and Card Perks?
Don't let pre-approval and/or special perks unduly influence your final decision. Pre-approval does not mean much; in fact, it usually just means the credit company has researched your credit history. Pre-approval does not mean that you will automatically get any special rates or deals by signing up.
Similarly, card perks can lure customers to credit cards for good reasons, but they can also be deceptive and costly. Some perks are worth slightly higher interest rates, some aren't. Be sure to weigh any special perks with your need to save money in finance charges. Often, perks that seem so attractive come with higher APRs, so try to find a balance between the two.
Additional Resources: