How to Select the Right Credit Card
Sometimes it is looks best if you don't have choice – you accept the only available offer and that's it! No sleepless nights, no chaotic thinking, no regrets that you didn't make the best choice. But actually having the choice is great and even if you don't make the absolutely perfect decision, you can feel a winner if your choice is good enough. It seems that this rule is valid for many things in life. Well, for credit cards it certainly is! So, when shopping for a credit card, don't look for the perfect one. Instead, look for a credit card that is good enough for you. This is achievable, though it can also be a bit difficult. If you know what to look for, then your task becomes much easier.
There are several important criteria to consider when shopping for a credit card. But before we start dealing with them in detail, it is important to note that choosing the right credit card is a personal decision and that borrowing ideas is not always feasible because what is good for your neighbor is not necessarily good for you. So, you will have to use your own head in order to select the best credit card for you.
Before you start looking at the abundant offers for credit cards, you need to ask yourself a couple questions, like:
All these questions are important because they affect what you are looking for. For instance, if you need to borrow a lot of money ($10,000+) and your annual income is $200,000 you need a credit card with a higher credit limit. With income that high, unless you don't have other debts as well, you will generally be able to repay the loan quickly, so you can go even for a higher interest rate card because hopefully you will be able to repay your balance even before the end of the grace period.
But if you need $10,000 and your annual income is $35,000, then you will most certainly go for a low-interest rate card, preferably with a long grace period because if you select a higher interest rate you will have to pay quite a lot of interest. If your credit score is good or excellent, you still have many options, even when you need a lot of money and your income is not very high. However, in this case, you'd better consider another kind of credit – a loan or a mortgage because their interest rates can be times less than the interest rates of credit cards.
Your income is very important but your credit score is even more important. If you have a bad credit score, this narrows your possible choice incredibly. Also, if you don't have any credit history because you are too young, this also limits your choices and in some cases the only alternatives you have are a secured card or a student card with not-so-favorable conditions.
After the general brainstorming about how much you need, how fast you can repay it back, what cards you are eligible for etc., your choices have become limited to a more reasonable number. The next stage is to compare the choices in terms of:
The criteria are not arranged in order of importance, though generally the interest rate is the most important one, especially if you plan to have a balance. But beware, a lower interest rate is nice but there are many other traps to watch for. Credit limits and grace period are also important and all equal, the longer they are, the better. Sometimes the fees and penalties clauses are the dominant factor because if penalties for minor errors on your side are severe, for instance the low interest rate soars after a single late payment, or the cash advances are charged at an extremely high interest rate and with no grace period but you will need cash advances frequently, this minor details become major disadvantages.
Finally, look at the rewards the card offers you. It is nice, if there are useful rewards, for instance cash backs for frequent shopping. But never forget that it is actually you – the customer – who pays for all these frills. Also, don't get lured by awards for frequent shopping because this will trick you in buying more than you need. And when looking for the right credit card, never forget that you need something that will make your life easier and not an instrument to bury you in debts!