When comparing credit cards, you should first look for the minimum credit score requirement to confirm you’re comparing cards you have a good chance of getting approved for. Then, focus on the membership fees the cards charge, as well as their rewards if you plan to pay the bill in full every month or their APRs if not. Other features should be secondary considerations.
The bottom line is that you should look for the things that will save or cost you the most money when you’re comparing credit card offers. In doing so, you should focus on the features that will affect you most often while ignoring those that will never come into play.
Credit Score Requirement
5 Things to Look for When Comparing Credit Cards
Credit Score Requirement
Most credit cards have a minimum credit score requirement, so it would be a good idea to check your credit score first to narrow down which credit cards you have the best odds of getting approved for. You can check your credit score for free on WalletHub.
If you plan on paying your bill in full every month, you should look at a credit card’s rewards program. Some rewards to look for include a sign-up bonus, which is a large sum of points, miles or cash back when you spend a certain amount of money within a few months after opening an account. You can also get ongoing rewards in return for every purchase you make. The best rewards cards can save you hundreds of dollars a year.
The APRs a card has are another important factor. If you plan on paying your bill in full every month, it won’t matter if you have a card with high rates. However, if you think you will carry a balance from month to month, every percentage point matters.
Not every credit card charges an annual fee, though the ones that do may have additional rewards that could offset the cost of the annual fee. If you are interested in rewards, a card with an annual fee may end up being the most valuable option, but if you are focusing on building credit, a credit card with no annual fee is best.
Besides the annual fee, a credit card can carry a host of other fees. Knowing all the fees a card has can help you narrow down your options. For example, if you are looking for a card to transfer an existing balance, a card with no balance transfer fee can save you money.
But you shouldn’t disregard a card just because it charges fees. If you don’t plan on transferring a balance or doing cash advances, for instance, a card with fees for these transactions could still be an option for you.
Below are some common fees a credit card may charge.
To choose a credit card for the first time, you should first decide what will you use it for. You should also check your credit score and weigh your current financial situation. This is to assess whether you can make monthly payments on time and in full. If you’re planning on carrying a balance, make sure you understand things such as … read full answerminimum payments and interest rates.
Above all, be realistic in your expectations. Your first credit card will likely have a low credit limit, a high interest rate, and an annual fee. If your most viable option is a secured card, make sure you know the difference between secured and unsecured credit cards.
Here is how to choose a credit card for the first time:
Decide if you need a credit card. If used responsibly, a credit card is a good way to start building credit. Good credit can set you up for future car loans or mortgages, and land you favorable interest rates.
Check your credit score and take a look at your finances. If you don't have a credit score, focus on cards for limited or no credit. Otherwise, narrow your search to cards that accept your level of credit. And make sure you have enough income to pay the credit card bill, preferably for the full amount. Covering just the minimum payment will end up costing you more in the long run, due to interest.
Consider a secured credit card. A secured card is also an option for establishing credit. They tend to be some of the easiest cards to get as you’ll have to put up a security deposit, which will serve as your credit limit. You’ll get a better rate, and fewer fees than with an unsecured card for bad credit.
Plus, with responsible use, you may be eligible for a credit limit increase. You could also transition to an unsecured card with much better terms in time.
Consider a student credit card, if eligible. Student credit cards are generally open to students with limited or no credit history and often have better terms than their general consumer counterparts.
Compare cards and review their terms and conditions carefully. Compare against several cards. Research a card’s interest rate, or APR. Familiarize yourself with the card’s grace period, and how you can avoid all those interest charges. Know your minimum payment and when it’s due. If a card has any fees (such as annual fees), know that those charges will impact your credit limit.
Also, having too many credit cards too soon may be an invitation to overspend and overextend all of your available credit. That will quickly damage the very credit history you’re trying to establish. Make sure you use your credit card responsibly while avoiding mistakes. This way, you'll build the credit you need for the best credit cards on the market.
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