How to choose the right credit card for you in 4 steps

Here’s how to choose a credit card in four steps:

  1. Choose the type of credit card you want.
  2. Discover the most important features.
  3. Compare your credit card options.
  4. Apply for the credit card you want.

1. Choose the type of credit card you want

There are many types of credit cards. A big part of choosing the right credit card is understanding how credit cards work and what type of credit card is best.

Once you’ve decided on the type of card you want to buy, selecting a credit card is much quicker and easier. A frequent flyer who wants to accumulate air miles will obviously need a different type of card than a student who is accumulating credits for the first time.

That’s why the first step in choosing a credit card is to figure out the main reason you’re getting a card. When I’m looking for the best credit card for me, I start by asking myself why I need it. You’ll probably find that you choose a credit card for one of the following reasons.

Improve your credit score

If you want to know how to choose a credit card because your credit score is low or you don’t yet have a credit history, credit cards for bad credit are a good place to start. Many of them are secured credit cards, which you open by paying a deposit to the credit card company. If you’re in college, student credit cards are another option.

Earn rewards on your purchases

Rewards credit cards are a popular answer when consumers ask themselves, “What’s the best credit card for me?” These cards allow you to earn rewards on your spending. If you want to earn cash rewards, you should look at cash back credit cards. For points you can redeem for travel, see travel rewards credit cards.

Pay off your purchases over time without interest

If you have one or more expenses that will take you a while to pay off, 0% intro APR credit cards are just what you need. These cards offer a 0% introductory APR (Annual Percentage Rate) on purchases.

If you’re wondering how to choose a credit card with a 0% introductory APR, look at the length of the introductory APR period. It can last a year or more, depending on the card you get. Once completed, the APR will increase, so you should aim to pay off your entire balance by then.

Save money on credit card debt

Balance transfer credit cards help you pay less interest on your debt. Like the 0% APR intro cards, these cards have 0% intro APR offers that apply to balance transfers instead of purchases. You can transfer your balance from credit cards with high interest rates to a balance transfer card with an introductory APR of 0%.

According to research by The Ascent, the average credit card balance reached $5,897 in 2020. If you have this type of debt, knowing how to choose a credit card with a balance transfer offer can lead to big savings. . Use our balance transfer calculator to see how much you could save.

2. Discover the most important features

The next step is to choose the credit card features that matter most. It will depend on the type of credit card you get. Here’s how to choose a credit card with the features you need.

Credit cards to improve credit

If you want to use a credit card for bad credit, a secured card, or a student card to improve your credit, here’s what you should prioritize:

  • No annual fee: You don’t want to incur additional costs while you work on your credit.
  • Payments reported to all three credit bureaus: The three consumer credit bureaus are Equifax, Experian and TransUnion. All three produce credit reports which are used to calculate your credit score. To boost your credit score, you need a credit card company that reports your payments to everyone.
  • Free Credit Score Monitoring: Many credit card companies include a free credit score tool which is updated monthly. It’s a simple way to see if your score is increasing.

Along with secured credit cards, also look for cards that offer the option of earning a degree. Graduation is when the card issuer upgrades your secure card and refunds your deposit. This is important because it means you can get your deposit back without having to cancel the card.

Rewards credit cards

Maybe you want to know how to choose a credit card that earns cash back or travel rewards. If you’re wondering how to choose a credit card that earns rewards, here are the features to consider:

  • Reward rate: The amount of rewards a card earns on purchases. Some cards pay a flat rate, such as 1.5%, on everything. Others earn extra in bonus categories, such as 3% on meals and 1% on everything else.
  • Sign-up Bonus/Welcome Offer: A bonus available for new cardholders. You usually get the bonus for reaching a minimum spend. For example, a card might offer a $250 bonus for spending $1,000 in the first three months. Not all rewards cards have a sign-up bonus.
  • Annual subscription : Annual fee charged for the card. This can range from $0, in the case of credit cards with no annual fee, to over $500. Part of choosing the best credit card is determining whether a card’s annual fee is worth it based on the benefits it offers.

There are also two other features to check out if you want to know how to choose a credit card for travel:

  • Ways to use travel rewards: You redeem travel rewards for travel purchases, but exactly how it works depends on the card. Make sure it will be easy to book the trip you want with the travel card you choose.
  • No foreign transaction fees: You don’t want extra charges when you use your card abroad. Most travel cards don’t have foreign transaction fees, but it’s always good to check.

0% Intro Credit Card APR

When it comes to choosing a credit card with a 0% introductory APR, pay attention to How long does the 0% APR intro last?. The introductory period should be long enough to pay off the purchases you make. If you’re not sure how much time you need, look for the longest 0% intro TAP you can find.

If multiple introductory 0% APR cards meet your needs, use sign-up bonuses and rewards as tiebreakers to decide which credit card is best.

Credit cards with balance transfer

the duration of the 0% balance transfer offer is the main feature to watch. Ideally, you should get a balance transfer card with a 0% introductory APR that will last until you can pay off your debt. If this is not possible, you should choose the card with the longest 0% balance transfer APR.

Balance transfer fees are also significant, especially if two cards are otherwise equal. If you don’t know how to select a credit card for balance transfers and one has a lower balance transfer fee, then this is the right choice.

Watch the video below for more information on choosing a credit card.

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