Today’s consumers are presented with a wide array of credit card choices: low APR credit cards, reward and rebate offers, cards with no annual fees, gold cards, platinum cards, secured and unsecured offers – the list seems endless! So how do you choose the right credit card with so many options? Here’s what you should consider when searching for the best credit card offers:
Factors To Consider:
1.) Your Credit History
Your credit history is the most important factor in determining whether or not you’ll be approved for a credit card. If you have good to excellent credit, it’s likely you’ll be approved for any credit card you choose. But if you have no credit, or your credit is poor, you need to be more careful when selecting an offer.
Good to Excellent Credit
As a rule of thumb, Platinum and Titanium cards are normally reserved for people with excellent credit. If you have good credit, you may be able to qualify for these offers as well, but you’re more likely to be approved for a Gold or Classic card. With increasing levels of credit, individuals receive increased benefits such as higher credit limits, lower APR’s and more rewards.
Poor Credit or No Credit
For individuals with poor or no credit, several types of credit card offers are available. Although they tend to have higher interest rates and additional fees when compared to ‘standard’ credit cards – these offers may be an effective tool for building or improving your credit score:
- Unsecured credit cards: Unsecured cards do not require a security deposit. These ‘traditional’ credit cards are normally reserved for people with good / excellent credit, but there are a few exceptions available →
- Secured credit cards: Secured credit cards are available to most individuals. Unlike unsecured offers, they require a security deposit (normally between $150 and $300) to receive approval. Your credit limit is based upon, and normally equal to the amount of your deposit. See a list of secured credit cards →
- Prepaid credit cards: Prepaid cards are also available as an alternative for those with poor credit. They operate on a ‘pay as you go’ basis and are accepted anywhere traditional credit cards are accepted. Although most prepaid cards won’t help you build your credit history, some companies report your activity to the credit bureaus to assist in the process. See a list of prepaid credit cards →
* Our Suggestion: If you have poor / no credit, apply for an unsecured credit card first since no security deposit is required. This will help you avoid funding the card with your own money. If you aren’t approved, you can try a secured or prepaid card instead.
2.) Your Spending Habits
When choosing a credit card, you should also consider how you’ll use it from day-to-day. How often will you use the card and for what type of purchases? Will you pay off the balance in full each month, or will you carry a balance?
If you plan on making long-term purchases and carrying a balance from month to month, you should probably consider a low interest or 0% APR credit card. This will help you save money on interest charges and reduce the overall cost of using the card.
But if you use your card for daily purchases and plan on paying the bill if full each month, you might be more interested in a reward credit card. Reward credit cards tend to have higher interest rates than standard low APR credit cards – but you’ll avoid the higher charges altogether if you pay your bill in full before the grace period ends. This will allow you to earn extra bonuses and perks from daily purchases you’d normally pay for with cash.
3.) Your Specific Interests
Do you do significant amounts of traveling, use a specific brand / service, or shop at a specific chain of retail stores? Many credit card issuers will allow you to earn special rewards for your loyalty and devoted service. Here’s a few options to choose from:
If you fly or travel often, you might be interested in earning extra perks like free dining, rental cars, hotel stays, airline tickets and more. An airline mile credit card will provide many useful benefits if you travel frequently.
Do you drive long distances to work or make regular trips in your car? Then you could benefit greatly by using a gasoline credit card. Earn cash rebates from all your gasoline purchases or earn points for merchandise, gift cards and more.
If you’re a frequent shopper, or prefer a certain retail store or brand of products, many companies will allow you to earn extra rewards. Cash back credit cards allow individuals to earn cash back, rebates and other bonuses. In some cases, they offer increased incentives for purchases on certain brands or products.
Before You Choose:
Before you choose a credit card, make sure understand all ‘terms and conditions’ associated with the offer. Consider the annual fee, finance charges, balance computation method, and whether or not there is a grace period for purchases. To learn more, see our article on Important Credit Card Terms for more information on these and other important credit card terms.