How To Pick The Right Credit Card For You

There are so many credit cards on the market today that it can sometimes be a rather daunting task to choose the one that best suits your financial needs. This article shows the 4 most popular scenarios by which businesses and consumers base their choice of credit card. The four points are a broad overview and are intended to offer guidance in choosing the right type of credit card for you.

If You Pay Your Card In Full Every Month

If you are one of the few American’s that pay their card in full every month and never carry a balance, then interest rates mean nothing to you. What a great position to be in. The type of credit card that best serves you is one with no annual fee. In addition, you will want to compare rewards credit cards that offer beneficial programs such as cash back or airline miles, but be careful, many rewards cards carry fees. Remember, you want a card with no annual fee.

If You Want A Rewards Program

There are some really great rewards programs to choose from. However, when choosing a rewards program be aware that if you carry a monthly balance, many times a rewards program will charge one or two interest points more. What this means, in effect, is that the rewards you gain will be wiped out by the extra interest you pay. The best way to take advantage of a rewards program is to not carry a balance.

If You Carry A Balance

If you carry a monthly balance then you will want to find the credit cards that charge the lowest interest rates. Seems like a no-brainer doesn’t it? Still and all it is important to point out as a reminder. Did you know that the average American card holder carries $9200 in credit card debt and pays $1300 per year in interest. Saving just a point or two on credit card interest can add up to substantial savings.

If You Want To Transfer A Balance

Transferring a balance from one or more credit cards that you pay high interest rates on is an excellent financial strategy. Make sure you choose one with a 0% APR balance transfer offer. There are plenty of them to choose from, but you will have to have good credit to be eligible. Do NOT transfer balances if you will not be able to pay the balance off in full before the introductory period expires.

As soon as the introductory period ends you will be paying the current rates outlined by that issuer. Also note that you will be charged a balance transfer fee which is usually 3% of the total. The transfer fee is usually capped at $50 or $75 but be sure to factor that cost into your decision.

Conclusion

The above situations, while broad in scope, encapsulates the needs of the vast majority of credit card holders. By first focusing on what type of credit card best serves your needs, you will then be able to compare the cards within that category to find which ones are right for you. Using this approach can be quite an effective time saver. There are, after all, over 300 credit cards on the market today.