Written By: Olivia Forgete
Credit cards are not a one-size-fits-all product. Depending on your needs, be it travel this summer or maybe you’re trying to improve your credit score to buy your dream home, we want to teach you how to choose the right credit card to benefit you the most. Learn how to analyze your spending habits, goals, and credit score to select the best card for you.
First things first, you need to know how to be knowledgeable and wise about your credit card use, no matter the card you decide to use. Using a credit card with care is the number one issue individuals have and why they end up in dreaded credit card debt. Check out our top tips on how to use your card wisely.
1) Make payments on time
Did you know, 35-percent of your credit score is determined by if you make your credit card payments on time? That’s a large chunk of your credit! Simply by making the minimum payment on time can help improve your score dramatically. Making late payments can also make your insurance premium increase; and if you miss a payment, it will nearly double the minimum due the next month.
2) Pay more than the minimum
This one may seem obvious but paying only the minimum due on your credit card of choice will mean you are carrying a balance from month-to-month. If you carry a balance each month you will pay interest on that balance.
3) Pick a due date that works for you
To help you make timely payments, select a due date that works best for you. Try thinking about your pay day and what day all your other bills are due. Spreading out the days of the month your bills are due is a great way to ensure you will have the funds to pay, and also will help you remember to pay.
4) Utilize the card perks and rewards
Our last tip for using your card wisely is to utilize the perks that come with the card you end up choosing. Many cards offer benefits. Familiarize yourself with the offered benefits so you can be sure to use them when the opportunity presents itself!
Before You Pick a Card
Now that you know how to use a credit card wisely, there are a few things to consider before choosing the credit card that is right for you.
You should know and understand your current credit score. Why does your credit score matter?
- A good score can turn into good deals (on loans, insurance premiums, apartment rentals, and cell phone bills)
- The lifetime cost of higher interest rates due to poor or mediocre credit can exceed six figures (good credit means you end up paying less in the long run!)
Many credit card issuers offer cardholders free FICO scores! This a great way to keep an eye on your credit score once you select a card that benefits you. You can also buy your credit score from Experian, Equifax, and TransUnion. Federal law allows for one free copy of your credit report from each of these three bureaus every 12 months.
Choose The Best Credit Card
Deciding what credit card is best for you depends on your goals. Many fall into one of three categories. You want to improve your credit score, you want to earn credit rewards, or you want to save money on credit card interest.
If you want to improve your credit score, consider a credit-building card. This is a secure credit card that you open by paying a deposit. These types of cards are easier to qualify for, and they can help you responsibly build and repair your credit.
If you are someone who pays off the entire balance in full every month a card that offers credit rewards is the best choice for you. By never accruing interest on the card, you can take advantage of all the benefits the card has to offer.
Reward cards offer points, miles, or cash back on every dollar you spend on the card. These are great for frequent travelers as well!
Finally, if you are looking to save money on credit card interest (meaning you plan to use the card to pay off a major expense over time), a card with 0-percent intro APR and ongoing interest rate is ideal for you.
Narrow Your Choices
Once you decide what kind of credit card will benefit you the most and help you reach your goals, it’s time to narrow your choices even further.
1) Looking to build credit
If you’re looking to build credit, be sure to select a credit card that offers no annual fees, a card that reports your payments to all three major credit bureaus, and one that offers a free credit score tool.
2) Wanting extra rewards
When you are choosing a credit card for extra rewards, but sure to select one that delivers the highest rewards for the category you spend the most on. Also pick one that offers low required spending, and the annual fee is worth it based on the perks offered to you.
3) Searching for low interest
Selecting a card that offers you low interest means you need to look for a card that offers a good period of 0-percent APR, low (or no) late fees or penalty APR, and offers a sign-up bonus or ongoing rewards you can take advantage of.
Apply for the best card for you
Once you’ve chosen the right credit card to benefit your needs best, it’s time to apply!
- Go to the credit card’s website and click on the “Apply Now” option
- Enter any required information the application requests (this is usually personal information such as mailing information, and financial information)
- Submit your application and wait for a response
Many credit cards offer instant approval. In this case you will receive your card in the mail usually within seven-to-10 business days. Sometimes the card issuer may require more time to review your application. Be patient until you hear if you’ve been accepted or not.
If your application is denied, you can call the credit card’s reconciliation line to see if the decision can be changed. Or you can of course apply for another card that also fits your needs.
We wish you the best of luck in choosing the best credit card for you and your needs!