The most important things to look for in a credit card are meetable approval requirements, a low annual fee and either generous rewards or a low introductory interest rate. But what exactly you’ll need to look for in a credit card depends on both your credit standing and personal preferences. Step one is getting approved, so you’ll want to look for a card that requires a credit score equal to or lower than yours. If you have bad credit, your best bet is a secured credit card. Otherwise, you need to decide whether to focus on rewards or low interest rates because most credit cards are better in one category or the other. You should go for rewards if you plan to pay your bill in full each month and low rates if not.
Those are the most important factors to consider when shopping for a credit card, as they’ll help you get approved for a great deal. But there are other aspects worth evaluating, too, including merchant acceptance, regular APRs, benefits like rental car insurance and more.
Here’s what to look for in a credit card:
Approval Odds. Check your credit score, then compare it to a card’s approval requirements. If a card asks for good credit, you’re unlikely to get approved with fair or bad credit, for example. And if you have excellent credit, just about any card on the market is within your reach.
Rewards. You can focus on rewards if you plan to pay your bill in full each month, as interest won’t be a concern. There are several types of rewards to choose from: cash back, points and miles.
Introductory Purchase Interest Rates. You might want to make a big-ticket purchase that will take a while to pay off. In that case, a 0% APR credit card is best because you’ll owe no interest for a certain number of months after account opening. But such cards usually don’t have rewards, so they aren’t good for everyday spending.
Introductory Balance Transfer Interest Rates. If you already have high-interest debt, you’ll want a 0% balance transfer credit card. Just don’t forget to consider balance transfer fees when comparing offers. Make sure not to overlook the regular APR, either. It will apply to any balance remaining when the low-interest intro period ends.
Regular Interest Rates. A card’s regular APR only matters if you carry a balance from month to month. And it’s best not to do so without a low intro APR because regular rates are very expensive.
Annual Fee. This is the most important credit card fee to watch out for. Some credit cards are worth paying an annual fee to use. Others aren’t. And there are lots of really good credit cards with no annual fee, too.
Foreign Transaction Fee. If you plan to travel internationally or make online purchases through merchants based abroad, you’ll want to avoid these fees. A no foreign transaction fee credit card can save you up to 9% on international transactions, thanks in part to low credit card currency conversion rates.
Other Fees. Credit cards charge fees for things like late payments and cash advances. But you shouldn’t seek out cards that lack such fees because it’s best to just avoid the transactions that trigger them.
Usability. Mastercard and Visa are accepted by more merchants than Discover and American Express, both in the U.S. and abroad. The gap is bigger internationally, though. On the other hand, store credit cards only work at certain retailers, rather than wherever one of the four major card networks is accepted.
Secondary Benefits. Rewards aren’t the only thing you can get out of your card. There are plenty of extra perks offered by issuers and their networks, including purchase protection, extended warranties and travel insurance. These benefits matter, but you should look at them as secondary to other categories.
Reviews: You don’t need to base your evaluation entirely on what other people say, but it’s good to consider the opinions of both experts and people who own various cards. On most card pages on WalletHub, you’ll see a rating and a review by our editors. You can also check out what other users have to say about each card, along with an average user rating.
The fastest ways to improve your credit score are to pay down your balances, dispute incorrect information on your credit report, make more frequent payments, and reduce credit utilization. Credit utilization (how much of your credit limits you use each month) contributes to a portion of your credit score that accounts for 20% - 30% of your overall score. So, an adjustment there can result in a big credit boost pretty quickly. Similarly, you can dispute incorrect information with a quick online request or phone call. You won’t always get an immediate credit score increase, but correcting errors on your credit report is a great place to start.… read full answer
There are a few other ways to increase your credit score quickly, from becoming an authorized user to increasing your credit limit. They may not all be equally effective for everyone, as it can take years to build a consistently good or excellent credit score. In fact, some strategies could send your credit score in the wrong direction before leading to an increase. For example, requesting a credit limit increase can result in a hard inquiry that damages your credit a bit in the short-term, but having more credit available could produce long-term gains if used responsibly.
Here’s how to improve your credit score fast:
Pay down your balances. If you aren’t eligible for a credit limit increase, focus on paying down existing debt. Paying down a large chunk of debt at once will help your credit utilization ratio and bump up your score. If you can’t make a large payment all at once, try to pay more than just the minimum monthly amount. If you have multiple debts, start by making payments on the debt that has the highest interest rate so you can limit interest charges.
Dispute incorrect information on your credit report. You should file a dispute for any incorrect negative info on your report. Once the dispute goes through, incorrect items will drop off your file, and your score should improve. You may have to wait 30 days for the credit bureau to review your dispute before you see any changes.
Make more frequent payments. Credit utilization is calculated based on the statement balance on each of your credit cards. You can reduce these balances, thus decreasing your credit utilization and increasing your credit score, by making payments before the end of each billing period. Then, pay off the remaining balance by the due date to avoid interest charges and credit-score damage.
Become an authorized user. If you’re just starting out, or your credit report has a string of negative marks, a good move would be to become an authorized user on someone else’s credit card and build your credit over time. Just make sure the primary holder is responsible and pays their bills on time.
Add new payments to your credit file. There are new services that can add positive information, like on-time utility payments, rent payments, and positive bank balances to your credit report. Not all of these programs apply to all credit bureaus, and some cost money to utilize, but they could boost your credit score over a few months.
Increase your credit limit. A higher credit limit can reduce your credit utilization ratio, assuming your spending does not increase. The only potential problem is that asking for a credit limit increase usually results in a hard credit inquiry, which would temporarily hurt your credit score a bit. But if you get a credit limit increase without asking, or you have a few months before you need the highest credit score possible, a higher limit could definitely help.
Everyone’s credit situation is different, so not every option will be relevant or available to you. The best way to find out exactly what you can do to quickly improve your score is to check out the personalized advice in the Credit Analysis section of your WalletHub dashboard.
To choose a credit card for the first time, first ask yourself if you really need a credit card. If so, decide what will you use the credit card for. You should also check your credit score and weigh your current financial situation to assess whether you can make monthly payments on time, and for the full amount. If you’re planning on carrying a balance, make sure you understand things such as … read full answerminimum payments and interest.
Above all, be realistic in your expectations. Your first credit card will likely have a low credit limit, a high interest rates, 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 you 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 also be 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, or a transition to an unsecured card with much better terms.
Consider a student credit card, if eligible. Student credit cardsare generally open to students with limited or no credit and often have better terms than their general consumer counterparts.
Compare Cards and review 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 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.
Don’t feel like you have to accept the first credit card that’s offered to you. Or every offer. And don't apply for more than one card at the same time. Too many credit card applications can damage your credit score. 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, and you'll build the credit you need for the best credit cards on the market.
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