Choosing the right credit card depends entirely on what you are looking to accomplish. Long gone are the days where credit cards were simply for making purchases and nothing more. Nowadays, depending on the card’s features, credit cards can be another tool in your financial plan and a key factor in your monthly budget, if used responsibly.
If your aim is to improve your financial situation, the right credit card used the right way can help increase your credit score. Transferring high balance accounts to 0% APR cards, or opening new lines of credit can improve your utilization ratio, a key factor in determining your FICO score. If you want to build or repair damaged credit, student and secured (prepaid) cards are ideal.
Rewards cards are also a hot item. A given card can offer you rewards in points, miles, or cash back. Points and miles can be redeemed on online exchanges for flights, hotels, gift cards, basically every conceivable item. Some customers who use their cards for the occasional purchase redeem gifts every so often, while other cardholders use the reward card for every accepted transaction – including paying monthly bills – in order to accumulate as many rewards as possible.
An ideal 0% APR card will have little or no transfer fee, a long 0% period, and will not terminate the 0% period early because of a late or missed payment. Also, make sure to verify if there are $ limits on transfers, or restrictions on types transferrable debt. For secured or student cards, you’ll want to choose an issuer who reports to the three credit bureaus. If they don’t, you are doing nothing to improve your credit. Finally, choose a reward card that offers you the most points in the areas you typically spend. These cards usually have higher APRs and/or yearly fees, so it is highly recommended you pay them off monthly.
Picking the right card isn’t rocket science as long as you know your goals, and you know the right card to help you meet those goals.