The one-size-fits-all approach definitely doesn’t work in the context of choosing a credit card. Each person has a unique set of circumstances, spending habits, and needs that may make one credit card a better fit than another. By helping you to understand the differences between credit cards, Credit Card Rewards can help you find the best fit for you.
1. KNOW YOUR CREDIT SCORE
The higher your credit score, the more cards you will be eligible for. Plus, the better your score, the better the rates and rewards you’ll be offered. But even if you have less than stellar credit, there is likely a credit card that will fit your needs. The important thing is to have a good idea of which cards you can get approved for. Whether you have poor, fair, good, or excellent credit is a big factor in which credit card offers you are eligible for. So, the first step is to review your credit report and learn your credit score.
- Through the FICO Score Open Access program, as of April 2017, over 100 financial institutions now provide free credit score access to more than 200 million customer accounts. Many institutions are also offering free credit score access to their auto loan, student loan, mortgage, or online banking customers. Some institutions have begun offering free credit score access to all consumers, even those who do not have an existing relationship with the institution.
- VantageScore, another credit scoring company, also partners with third parties to provide free credit scores to those parties’ customers.
- The Consumer Financial Protection Bureau (CFPB) maintains a list of credit card issuers that self-identify to the Bureau as making free scores available to their customers here: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201702_cfpb_finding-free-access-to-credit-score_handout.pdf
- Although federal law entitles you to one free copy of your credit report per year from each of the three major credit bureaus– Experian, Equifax, and TransUnion– this report may not include your credit score. Your free credit report can be requested at AnnualCreditReport.com and you can purchase access to your credit score through any of the the major credit bureaus.
2. DETERMINE THE TYPE OF CARD YOU NEED
The best credit card for you is one that meets your specific needs. If you are just starting out, a credit-building card may be the best choice. If you tend to carry a balance, a low or no interest rate card can help save you money on interest. If you travel frequently, a card that helps you earn rewards may be the best match.
- Cards that help you build credit: Secured credit cards or unsecured credit cards are two types of cards that will help you to build your credit.
- Cards with low or no interest rates: Transferring a credit card balance to a credit card with a lower interest rate could help you save money and pay off your balance faster.
- Cards with rewards such as travel miles, hotel points, or cash back: Rewards cards usually have higher interest rates, but if you pay your balance off every month they are a good way to earn miles, points, or cash back.
3. RESEARCH YOUR OPTIONS
Once you’ve decided what type of credit card is best for you, research your options using Credit Card Rewards credit comparison tool to find specific credit cards according to your credit score. Questions to ask as you compare cards:
- Will this card help me build my credit? Some secured cards don’t report your payments to the three major credit bureaus. If you are trying to build your credit, make sure the card you chooses reports your payments to the three major credit bureaus.
- What is the ongoing APR and if there is an introductory APR how long does it last? Card that offer you a low introductory rate increase their rate after a specified period. Check the terms of the card to see whether the period is long enough for you to pay off your balance. If you’ll be carrying a balance for a long time, consider a credit card with a low ongoing APR.
- What is the annual fee? For secured cards where you are already making a deposit, the rewards usually aren’t enough to justify an annual fee. For other cards, the rewards may more than justify a higher annual fee.
- What are the Balance Transfer Policies? If you intend to transfer a balance, research what types of debt can be transferred, whether there is a limit to how much can be transferred, and whether there is a balance transfer fee. Note that the balance transfer APR may be higher than a purchase APR.
- What type of rewards or sign-up bonuses are offered? What are the rewards worth, how long will it take you to earn them, and are the rewards ones you are likely to use? CreditCardRewards tools will help you find the answers to these questions.
- What type of purchases qualify for rewards? Look for a card that gives you rewards for the types of purchases you most often make. If you make a lot of qualifying purchases, your rewards could be high enough to offset the annual fee.
- What type of security does the card offer? If you travel internationally, look for a card with chip-and-PIN technology that is standard abroad, rather than the chip-and-signature technology that is more common in the U.S.
4. USE THE FINE PRINT TO MAKE A FINAL SELECTION
When making a final selection, look closely at the fine print. For the specific type of card you are considering here are some terms to look for that might make the difference:
5. APPLY FOR THE CARD WITH THE BEST OVERALL VALUE
Using the research tools on Credit Card Rewards, you can choose the card with the best overall value for your specific needs. Once you have chosen a card, be sure that your credit score meets the card issuer’s criteria. Once you have applied for and been approved for the card, to get the best value from the card, remember your reasons for getting the card and stick to your goals.
- For example, if your goal is to build credit, be sure to pay off your balance every month.
- If your goal is to pay down a balance transfer, make yourself a plan and stick to your payment schedule.
- Or, if your goal is to accrue certain rewards towards your next vacation, be sure to use your card on all qualifying purchases so that you can earn your rewards faster.
No matter what your financial goal is, smart selection and use of your credit cards can help you get there.
Chase Sapphire Preferred® Card
With a 60,000 point new cardmember bonus when you spend $4,000 in the first 3 months of having the card, plus 2x points on travel and at U.S. restaurants — all for a $95 annual fee — this card is one of the top rewards card values available. Chase points are transferable to 9 airlines and 4 hotels, giving you the option of booking directly via these loyalty programs for some massively lucrative award redemptions in first & business class or at 5-star luxury hotels & resorts.
