No credit card is better than the best credit card for all categories or everyone. However, by understanding your choices and asking the right questions, you can find the best credit card that best suits your spending habits and credit profile.
Follow these four steps to find the credit card that works best for you.
(1) Check your Credit
Check your credit score to find out what credit card offers you might qualify for. The higher your score, the more likely you are to get a higher privilege card approval. The methods for checking the score are:
- NerdWallet provides a free credit score.
- Many credit card issuers provide cardholders with free FICO scores.
- Three major credit bureaus (Experian, Equifax, and TransUnion) sell credit scores.
If the phone number is not what you expect, check your credit report to see what caused the problem. You can then improve as needed from changing spending habits to controversial errors in reports. Federal law grants you a free copy of your credit report every 12 months from each of the three main offices.
(2) Determine which Credit Card you need
There are three types of credit cards:
- A bank card that can help you increase your credit if your credit is limited or damaged.
- A card that saves you interest.
- Earn Reward cards.
The card that works best for you is a card with features designed to meet your specific needs. For example, if you don’t travel much, the best travel cards in the world won’t give you much.
If you are creating or rebuilding a credit card: student or secured credit card
A student credit card is an unsecured card that is suitable for college students who are new to credit. It is easier to qualify than other types of credit cards. The same goes for secured credit cards, which typically require a deposit of $ 200 or more. After upgrading or closing a reputable account, your deposit will be refunded to you.
If you want to earn rewards: Rewards, travel or cashback
If you pay off your balance every month and will never accrue interest, then reward credit cards will be your best choice. These cards usually have a higher APR, but they offer larger sign-up rewards and earn points, miles or cashback for every dollar you spend.
If you want to save interest: low-interest rate, 4% annual interest rate or balance transfer card
If you plan to use a credit card in an emergency, or if your income is abnormal and you have a balance from time to time, a card with an introductory APR of 0% and a consistently low-interest rate may be suitable for you. Balance transfer benefits can help you pay off high-interest debt without interest. Keep in mind that these offers may be difficult to find if your credit level is moderate or poor.
(3) Narrow your choices by asking the right questions
Visit NerdWallet’s credit card comparison tool, search for the type of credit card you need, and filter the results based on your credit score and monthly spend. As you review your preferences, consider the following questions.
For student Cards and Security Cards:
- Can this card help me build credit? Find a card that reports your credit card payments to the three major credit bureaus. Many security cards do not do this.
- How much does it cost to open an account, including annual fees? The rewards on these cards are usually not enough to guarantee annual fees. Unless your credit is very poor, you can avoid this charge. For guarantee cards, the lower the margin, the better, although your credit limit may depend directly on the amount you deposit.
- Can I graduate to a better card in the future? Choose a card that allows you to build credit and upgrade to a card with more competitive terms. In the long run, this will allow you to open your card longer, which will increase your average account life.
- How long is the annual interest rate of 0% and what is the continuous annual interest rate? Look for a card that gives you enough time to pay off your debt without interest. If you plan to carry over your balance within a few years, consider using a credit card with a low annual interest rate.
- Does the card offer rewards? If you only need to look for 0% APR for a few months (perhaps not a sign-up bonus), then you may also find a card that delivers a large number of continuous rewards.
- What is the card balance transfer policy? If you are performing a balance transfer, please check your card’s balance transfer fee. Find out the types of debt that can be transferred, and whether the amount of debt that can be transferred is limited. Please note that the balance transfer APR on the card may be different from the APR purchased.
- How complicated is this credit card? If you don’t want to struggle with limited reward seat availability, spending caps, rotating rewards and loyalty levels, consider using a card with a fixed fee cashback reward.
- How do I spend money? Find a card that gives you the highest rewards for the category you spend the most. If you spend a lot, then if your reward income can offset the costs, consider getting a card with an annual fee. If you plan to use the card abroad, look for a card that has no foreign transaction fees and no chip and PIN code capabilities, rather than the US standard chip and signature technology. This also applies to other types of cards.
- How quickly will I get rewards and how much are they worth? Read NerdWallet’s reward assessment to find answers to these questions.
(4) Apply for a card that gives you the highest total value
Narrowing your selection is easy, but choosing between two or three similar cards can be very difficult. If you have found a clear winner after Step 3, choose that one. If not, it’s the tiebreaker.
Look for differences carefully. All other values are equal, here are some factors that may make the cards separate:
- The credit limit is automatically increased: Some cards allow you to increase the limit after several consecutive payments on time.
- Pay your deposit interest: Some secured cards deposit your margin on a profitable CD. This way you can make a small amount of money from it.
- No late fees or fines APR: Some cards are exempt from these fees. This may come in handy if you default on payment.
- Debt Repayment Planner: Some issuers can let you create your own debt repayment plan on the online portal, which is a useful tool if you are overwhelmed.
- Rewards have no validity period: On some cards, rewards can be used as long as the card is left open.
- Reduce required expenses: The less you need to spend to qualify for the sign-up bonus, the better.
When you finally choose a card, keep in mind that in the app you can include all the income you have reasonable permissions, not just your personal income. For students, this may include money from self-study and scholarships, or allowances from parents. For others, it may include the income of a partner or spouse.
Conclusion about Credit Card
Choosing the best credit card is an important decision, but don’t stop there. Use your card the right way to make the most money. If you’re setting up a credit line, pay your bill in full each month and don’t overuse the available credit line. If you reject a 0% APR transaction, stick to your debt repayment plan. If you want to accumulate rewards, use your card for daily shopping and pay your full bill every month.
Whether you’re trying to build credit, borrow money, or get rewards, the credit card of your choice should help you achieve your financial goals in the most affordable and effective way.