Four Easy Steps to Picking the Right Credit Card for You
Depending on your spending habits and credit situation, there are a plethora of possible credit cards for you to choose from. Understanding your options and asking yourself the right questions will help you figure out what card will work best. And since no single credit card is better than all others in all categories here are four steps you can follow when deciding:
- Check Your Credit
The better your credit score, the greater you chance of getting approved for cards with the best perks. Some ways you can check your score are:
- NerdWallet offers free access to credit scores and will assist you with making a card selection using a variety of filters.
- Most credit card issuers give you free FICO scores.
- The three major credit bureaus will sell you your credit scores (Experian, Equifax and TransUnion), however, you are entitled to one free credit report annually from AnnualCreditReport.com.
2. Identify the Credit Card You Need
The best card for you is the one that meets your specific needs. For instance, if you don’t travel much don’t bother with getting a card that earns you travel miles. Generally there are three types of credit cards:
- Cards that help you improve your credit when it’s limited or damaged.
- Cards that save you money on interest.
- Cards that earn rewards.
Reward cards are great if you pay off your balance monthly and don’t incur interest. They usually have higher APRs and usually charge an annual fee but they will give you points, miles or cash back on each dollar you spend.
3. Narrow Your Choices by Asking the Right Questions
Visit NerdWallet’s credit card comparison tool and search for the best card for you by filtering the results according to your credit score and monthly spending habits. And consider these questions during the process:
- Will this card help me build my credit?
- How much is the annual fee and other costs to open an account?
- What is the interest APR? If carrying a balance look over several years, look for a card with a low ongoing APR.
- Does the card offer rewards, how quickly do you earn rewards and how much are they worth? Check NerdWallet reward valuations.
- How complicated is the card? A flat-rate cash-back reward card might suit you better if you have little patience for limited award seating availability, spending caps, rotating bonus reward and loyalty tiers.
4. Apply For the Card Offering You the Highest Overall Value
Check closely for subtle differences between cards, especially if you’ve narrowed down your choices to 2 or 3 cards. For instance some reward cards let you use your rewards for as long as you keep the card open and other cards may waive late fees or penalty APRs if you make a late payment.
Remember, the credit card you select should help you reach your financial goals efficiently and affordably whether you’re trying to build credit, borrow money or earn rewards.