Finding The Best Credit Card For Your Needs
Getting a new credit card—whether it’s your first one, or an addition to your current collection—is always very exciting. The moment it arrives and you hold it in your hand, you feel a little power buzz run through your body. If you wanted to, you could—right this second—go purchase something that costs whatever your limit is, and bring it home with you. This little card opened that door for you. It doesn’t matter whether or not that amount is in your checking account. You have this little magic card that doesn’t care about that—until it’s time to pay the bill. We all get that little rush knowing that a new line of credit is available to us, even if we know we won’t use it all (and shouldn’t, if we want to use our card responsibly). But, not all credit cards are created even close to equally, and though all the terms like APRs and balance transfers can seem overwhelming, they are important to understand. Here are tips for choosing the right credit card for your needs.
You’re a frequent traveler
Maybe you must travel often for work. Your company asks that you put all the purchases, from plane flights to hotel rooms and Lyft rides on your card, show them the receipts, and they’ll pay you back.
Get a great travel card
A great travel card will likely have a high annual fee but the points you earn on it will probably count for so much towards travel, that they pay for the fee, and then some. For example, the annual fee may be $300. However, your points count for five times as much when you spend them on travel. So, while 30,000 points may be just $300 cash back, they count for $1,500 if you use them on travel—which you will, because you’re a frequent traveler. These cards will often have other perks like no foreign transaction fees, free checked luggage, and access to VIP travel lounges.
You’ll use it modestly and pay it on time
You’d just like to boost your credit or earn some points. You feel that it’s silly to put your regular expenses on your debit card, since that earns you absolutely nothing, but you also don’t plan on making any massive purchases.
You can afford high APRs
APR just stands for annual percentage rate and it just means the interest you’ll pay on your card if you don’t pay it on time and in full. So, here’s the deal: don’t be frightened off by a card with high APRs if you know you’re going to pay your card each month, in full. Those APRs will never affect you then. Furthermore, cards with high APRs often compensate by offering things like no annual fees or bonus points for spending X amount of money in the first few months or year. If you truly will pay your card off in full each month, you never need to worry about those high APRs and just get to enjoy the perks that come with that card.
You need a life loan
So you’re in a bit of a bind. You’ve been unemployed for a while, and even though you’ve been searching for work aggressively, nothing has come through. You’ve burned through your emergency fund. You know you will get a job by next year. You’ll make sure of it. But, it’s not here yet, and you have bills to pay.
Get a zero APR card
For the record, no credit card will offer zero APRs forever. But many offer zero APRs for the first year or even longer, as a way of attracting new card members. That means that you don’t need to pay a credit card bill for an entire year, and you won’t be charged any interest until that zero APR period is up. You, however, know you’ll have a job by then and the means to pay off those bills. So you’ll pay the bill before the APRs kick in. It’s obviously a slight gamble, because what if the money isn’t there in time? But if you’re doing all you can to make sure it is there, then you almost have no choice but to get this card, because somebody has to pay that gas bill and buy groceries.
You need a business loan
You want to start a business. You know your business will not be profitable for quite some time, and you’ll need to spend a lot of money before you can make any. A restaurant is a great example of this type of business—you have to pay monthly rent on the space, buy equipment, buy the food, and pay a staff for potentially a year before you turn a profit.
You need a high limit and no APRs
You’ll need a card with a very high limit—potentially $50,000—and a long zero-APR period, or at least very low APRs when they do kick in. Naturally, you’ll need excellent credit to get approved for such a high limit. Maybe you won’t need to use that limit but when you do, you’ll be glad to have it. Using the restaurant example again, if your oven breaks and you need a new one, there’s no getting around it. You can’t run your business without it, and it can cost several thousand dollars.
It’s your first credit card
So it’s your first credit card. You’re not entirely sure yet how cards work. Your biggest fear is forgetting to do something or pay something, and suddenly facing massive fees.
Get a no or low-fee, user-friendly card
Ideally, you’re best off getting a card that doesn’t charge you overdraft or late fees, or at least doesn’t charge very big ones. This is important since you’re still getting used to setting your clock to paying that credit card bill on time each month, and you’re still learning exactly how much you can afford to put on your card each month. Make sure your card has an option that allows you to set up monthly automatic emails that will remind you to pay your bill.
You need to fix your credit
Your credit has seen better days. It was all due to things rather out of your control and you know that, given the opportunity, you could fix it. As for now, most cards turn you down due to your poor credit.
Get a secured card
Secured cards are excellent options for individuals with poor credit that they need to repair. A secured card will require you to put down a deposit. In some cases, that deposit will be put into an interest-earning fund, and sometimes it won’t be. Either way, because you can prove, upfront, that you have cash to back up this card, you can get a credit card with bad credit. Secured cards also have permission to share your usage habits and history with the credit bureau. Once you’ve used it responsibly for some time, you can be upgraded to an unsecured credit card (one that doesn’t require a deposit).
You’re ready for a second card
You’ve had one card for a while, and it’s a fine card. You’ve used it responsibly for years, but you got it for the new member bonus (maybe new members automatically earned $500 cash back if they spent at least $3,000 on the card in the first three months) and that’s long come and gone. So, you’re feeling ready for a second card.
Make sure the rewards are versatile
Let’s say your first card earns you excellent rewards on dining and entertainment—perhaps it gives you three times the points when you eat at restaurants or go to the movies. Alright, so you’ve covered that category. In which areas does that card fall behind? Maybe that card company only issues low limits—perhaps you want one with a higher limit this time. If you keep your usage the same, that usage to limit ratio will boost your credit score tremendously. Maybe you’ve gotten more into travel lately, and want a card that gets you better travel points. Don’t necessarily just be wooed by the card-opening bonus. Think about how this card will pay you back, long-term.
You want great cash back
You don’t plan on using your points to make luxury purchases that automatically increase the value of those points. So, what I mean is, when you have 30,000 points and you can either get $300 cash back or have it count as $600 towards travel, you’d simply take the $300 cask back. You want that money right now.
Get a good cash back card on regular purchases
While some fancy travel cards give you five times the points when you travel or dine out, some do that on just regular, every day purchases. For example, some cards have rotating increased points categories throughout the year, that are pretty standard. In January through March, for example, you may get five times the points when you buy groceries. In April through June, you may get five times the points on gasoline. You get rewarded for buying the things you’d normally buy just to live, rather than buying luxury items.