If you’re drowning in credit card offers and starting to take the bait, there are a few things you should know first. Choosing a credit card should be more about you, not about the company that contacted you most recently. To make sure that you’ll pick the right card, here are some tips and tricks to commit to memory.
Affirm your financial goals. There are many kinds of credit card consumers, and you have to first determine which kind you are to pick the best card for you. Are you a student applying for your first card? Or are you searching for a low-interest card that you can transfer an existing balance to? Even still, there are those consumers with great credit who just aren’t satisfied with the card they have. These questions will likely help you answer the most important one of all: will you be a transactor who pays the bill in full each month or a revolver who carries a balance on the card?
Learn the lingo. There is an information chart on the back of every credit card offer that you receive in the mail that can teach you most of the information that you need to know to be an informed credit card holder. This will explain the terms of your annual percentage rate (APR) as well as how much interest you will be charged for balance transfers and cash advances. You can find clear and concise definitions of these terms at the FederalReserve web site.
Decide between prepaid and non-prepaid. Prepaid credit cards are meant for a very specific demographic of consumers. If you have experienced financial hardships that lead to a low credit score, a prepaid card can help you improve your financial rating. However, if this isn’t you, the fees that you would pay to use a prepaid credit card are not worthwhile.
Search actively. You have probably been receiving credit card offers in the mail since you were 18, but just because they are easy to come by doesn’t mean they’re the best ones for you. Reviewing these offers is a great place to start shopping for your credit card, but you should also actively search for a card that matches your financial goals. If you live, work, or attend religious services in a city or a county with a credit union, you should look into joining; these institutions often offer cards with lower rates and fewer (if any) fees.
Ask questions. Credit card companies are sneaky. They often include key information in fine print that would affect your decision of whether to sign up. If you’re not so good at reading that fine print (or even if you are), there are some key questions that you can ask a representative from that card company to give you a better understanding of how this card will benefit you (or not). Among them, you will want to ask what happens if you exceed your credit limit, how you will be contacted if your agreement changes, and how they help consumers who are struggle to pay their bills in a financially binding situation.
Make your card work for you. If you are an avid traveller, a card that offers rewards such as airline miles or points toward a hotel stay could be useful for you. However, if you’re not a traveller, you may want to look for a card that gives cash back rewards. Keep these potential perks in mind as you choose a card because they could end up saving you money in the long run.