Generally speaking, it pays to comparison shop. Credit cards are no exception to this rule. Some cards offer lower interest rates and better perks than others. And different cards are created with different types of cardholders in mind. With all of the different cards out there, finding the right one for you can be tricky. Without knowing what to look for, and how to compare the various offerings, the number of choices can seem overwhelming.
With all of the different cards out there, finding the right one for you can be tricky. Without knowing what to look for, and how to compare the various offerings, the number of choices can seem overwhelming.
Here is some advice and tips that will help you find the best card for your circumstances and spending habits.
- Review Your Credit Report. Before you even start looking at cards, get a copy of your credit report. You can get a free copy from each of the credit bureaus once a year. You’ll need to check it for inaccuracies and evidence of identity theft, even if you’ve never had any type of credit before. If everything is correct, look at the information like a credit card issuer would. If you have a history of late payments and collections, you won’t be able to get the best credit cards out there.
- Know Your Credit Score. You’ll probably have to pay for it unless you sign up for a credit monitoring service, but it’s a good thing to know. Credit scores range from 300 to 850, with the average being in the high 600s. Anything above 700 is considered good by most lenders.
- Be Selective. If you have a high credit score, you can afford to be picky. Look for a card with the lowest possible interest rate, no annual fees and a spectacular rewards program. You’ll probably have plenty of offers coming in through the mail, but check online as well to make sure you’re getting the best deal possible. If you have so-so credit, be prepared to pay higher interest and possibly an annual fee. Still, there are probably enough cards available to you that you don’t have to accept the first card offer you receive.
- Consider a Secured Card if Necessary. For those with nonexistent or damaged credit, a secured card may be your best bet. These cards are similar to debit cards in that they require a deposit that is equal to your credit limit. However, you must repay charges on schedule. If you handle the card well, you may have the opportunity to get your deposit back and perhaps receive a higher credit limit. You’ll also be able to start building up your credit so that you can get more favorable terms in the future.
- Be Wary of Limited Time Interest-Free Periods. These can save you money, but only if you pay back what you’ve charged before the interest-free period is up. They may also be used as bait to get you to accept a card with a higher regular interest rate, so be sure to read all of the fine print before you sign up.
Finding the right credit card may take some time, but it is time well spent. Getting the best possible interest rate could save you lots of money in the long run. And being realistic about your credit situation could save you from wasting time applying for cards that you are far from being qualified for.