Understand which credit card will offer you the best rewards and help you reach your credit goals.
The Top Line
● Know what you have to work with by checking your credit because you need different credit scores for different cards.
● Think about how you use credit. Do you pay off the balance in full each month, or do you tend to spend more than what you can pay off?
● Understand what your goals are. Do you want to build credit (a secured card may be the best)? Make a large purchase (low-interest card)? Lower debt (a balance transfer card)? Your objective will affect which card is best.
● What kind of rewards you want. Depending on what categories you tend to spend more money on, this can affect what kind of rewards you want from your credit card such as cash back, travel, gas, or store credit.
● Consider annual fees and whether it makes sense to pay an annual fee or not.
What to Know
Credit cards can be powerful financial tools when used responsibly, but if you are looking to maximize the benefits that you get out of your credit card, then you will likely need some helpful advice to put you on the right path. Choosing the best credit card is not simply a matter of picking one out based on the sign-up bonus or which one is able to send a letter to your mailbox fastest--it's a multilevel process that requires an in-depth look at a variety of factors if you are going to maximize the benefits that you can enjoy by using a credit card for everything from day-to-day purchases to large transactions. Here are some of the things that you should keep in mind if you are going to sign up for a credit card or are looking for the perfect credit card to add to your financial life.
The first step in getting a credit card that will maximize your benefits is making sure that you are qualified as a cardholder. What many people don't realize is that the process of getting a great credit card with great benefits is not always about fielding offers from dozens of amazing credit cards. In fact, the process is just as much about making yourself an attractive and trusted candidate for the best credit card offers on the market as it is about credit card companies trying to convince you to use their card. When you start the process of finding the perfect credit card for you, one of the things that you will need to do is assess what you have to work with.
This means to assess your credit score, credit history, and any other factors that might affect your suitability or qualification for a top-tier credit card. The credit card companies will take this into consideration, so you should set realistic expectations based on the merits that you have to offer from a credit and financial history standpoint.
Plan Around Your Spending Habits
The next thing to consider is how you normally utilize the credit that you do have available to you. Different cards are suited to different needs and spending habits. For instance, some cards might benefit those that prefer to pay things off over time while others incentivize fast payment. Depending on how you plan to use your credit or how your history of using credit is, you might want to take this into consideration when choosing a card. Knowing what kind of spending and payment habits your credit card incentivizes will help you to select the card that will offer maximum benefits to you and fit in with your lifestyle the best.
If you are stuck on this step, it might be helpful for you to track your spending and look ahead a few months to plan around any big transactions that you have. When you have a plan, you can be sure to utilize your card to its fullest potential to maximize your benefits.
Have a Goal
If you are having trouble picking out the right credit card for you, then a helpful exercise may be to create a goal for yourself. What this means is that you should create a vision around what you hope to achieve with the card. Depending on your unique situation, this could include things like building credit, making a large purchase, getting travel rewards, and more. When you have a goal in mind and what you want to achieve with your new card, it will help you to narrow the options to make it easier to find the one that you want. Before you start looking for your new credit card, make sure that you establish these goals to help them remain at the forefront of your mind during your search.
Define Your Ideal Rewards
Almost every credit card out there offers some sort of rewards as a bonus for signing up for or using the credit card. These come in many different forms, and if you are going to be applying for a credit card, you should know that the rewards that your card has to offer should play a very large role in which one you select. When utilized correctly, credit cards can provide substantial benefits to your lifestyle. However, this requires you to have intimate knowledge of the rewards process and what you are going to be looking for when it comes to rewards.
The possible rewards can take the form of travel points, cashback, sign-on bonuses, and other benefits that are specific to what you spend on. Different cards will suit different people well, so it's important to define what form your ideal rewards take when you are considering credit cards.
Whenever you are considering adding a new credit card to add to your wallet, one of the most important factors that you must consider is what the annual fees are. Some credit cards charge no annual fees; others charge exorbitant fees. Usually, the fees are proportional to the benefits that the card offers. Other times, the card offers ways that the fee can be waived, such as spending tiers and thresholds. If you want to get the best return on your investment of time and money, you must know the fees, whether they are able to be waived for certain activities on the card, and whether they are low enough for you to still consider getting the card. It’s important to be careful when getting a credit card that has fees, as fees carry the potential to eliminate any positive benefits that you thought you were getting originally.