How to Choose the Right Credit Card for You?

Wondering how to pick the best credit card to both complement your lifestyle and meet your financial needs? From secured cards to those offering huge cash back, there is an option for every credit score and preference. Read on to learn about the main credit card types and discover crucial tips on how to choose the right credit card for you.

What Types of Credit Cards Are Available?

How to choose a credit card that you will be satisfied with? In short, you need to take a really close look at their features, benefits, and whether you can be approved at all for getting them. Here are the main credit card types:

Cashback Credit Card

This is a self-explanatory and popular category, but note that cashback options vary depending on the card. For instance, you may receive cashback on specific spending categories (eating at restaurants, purchasing groceries, traveling, etc.), or get a flat reward rate on all purchases. In some cases, there may even be rotating cashback categories. We advise you to carefully check the cashback conditions and pick a card based on your spending habits.

Rewards Credit Cards

These are similar to cashback ones, but provide you with points based on how much you spend. The ways you can utilize these points vary wildly between reward cards, ranging from small discounts on select products to exclusive perks like free luxury hotel stays. Rewards credit cards work well if you can use their bonus points on the purchases you make regularly (groceries, gas, household items, etc.).

Student Credit Cards

Getting a good first card can be quite challenging, as banks are usually reluctant to extend decent offers to individuals with no credit record to speak of. Thankfully, there are options specifically designed for students without an extensive credit history. Cards in this category are easier to get approved for, and typically don’t have annual fees.

Secured Credit Cards

Another type you should consider is secured cards. When you sign up for such a card, you must make a deposit to secure your credit line, which will also serve as your available credit limit. The benefit is that you can get one even if your credit score is far from ideal. Usually, you must deposit at least $200, but the amount will be returned to you if you close your account or upgrade it. As an added benefit, using a secured card responsibly can eventually increase your credit score.

Balance Transfer Cards

With balance transfer cards, you can move existing debt from one or more credit cards to a new one with a lower interest rate. They often feature a 0% introductory APR for up to 18 months, which can help you save on interest while reducing your debt faster.

Travel Credit Cards

This option is ideal for frequent travelers who want to earn additional rewards. The benefits may differ, as some allow you to earn points you can redeem later, while others give you cash back on travel-related purchases. There may also be bonus programs for those who frequently fly or stay at specific hotels.

How to Select the Credit Card with Suitable Features

We reviewed the most widely used types of credit cards, but the question remains: How to find the best credit card for your needs? When choosing a credit card, it is crucial to also consider factors other than its type, as those can be just as important.

Consider What Rewards You Will Get

The way you spend your money should determine what reward programs will work best for you. There are numerous reward types, including points, miles, and cashback. Similarly, there are also quite a few ways to redeem these bonuses. For instance, you may collect points and exchange them for travel accommodation, or convert them into gift and statement cards.

Make Sure to Check Your Credit Score

How to choose the best credit card if your credit score is far from perfect? The first step is to know the exact score you’re dealing with, as this will determine your further actions. There are lots of premium cards with excellent benefits that also require you to have a great credit score, thus falling out of your reach. However, there are also cards specifically tailored for those with a score of 669 and below. The same goes for people who don’t have a significant credit history.

Secured cards are a common choice for those building credit, and it’s generally recommended to make a deposit on the lower side for credit score purposes. $400 is a good starting point that will also give you some credit limit to work with. As you improve your score, it will become possible to shift to a new card with better conditions.

Consider Fees and Interest Rates

What else do you have to know about how to choose the right credit card for you? When analyzing a card, it is vital to check its fee structure. The most common type is an annual fee, but it is also one you can often avoid. It is also important to look up whether there are any late payment fees and additional charges that apply to international transactions.

As for interest rates, many credit cards offer a zero-interest introductory period. This is a great option for people trying to get out of debt, as they will get no interest on purchases for the introductory period. In some cases, this period may last for a year or more.

It is certainly a good idea to make large purchases during your 0% APR, as it can save you quite a lot of money. However, it’s essential that you pay them off while the period lasts. You should also remember that cards with this feature generally require a credit score of 670 and above.

Final Thought

There is no single answer to what credit card is the best, as it all depends on which cards you are eligible for, your spending habits, and your financial needs. Before applying for any card, do not hesitate to check its credit score requirements, fees, and reward conditions. Also, make sure you have clear goals regarding how you plan to use it.