How to Choose the Best Credit Card: A Comprehensive Guide

How to Choose the Best Credit Card: A Comprehensive Guide

When it comes to choosing a credit card, it's important to pick one that fits your needs and lifestyle. With so many options available, it can be overwhelming to decide which one is right for you. In this article, we'll walk you through the process of how to choose a credit card that suits your specific situation.

How Do I Choose the Right Credit Card for Me?

Choosing the right credit card starts with understanding your spending habits and financial goals. Here are some factors to consider:

1. Your Credit Score

Your credit score plays a big role in determining which credit cards you qualify for. If you have a low credit score, you may not be eligible for certain cards or may have to pay higher interest rates. On the other hand, if you have a high credit score, you may be able to qualify for cards with better rewards and perks. You can check your credit in a few places:

Annual Credit Report

Experian

Equifax

2. Your Spending Habits

Take a look at your monthly budget and see where you're spending the most money. If you spend a lot on groceries, for example, you may want a card that offers cash back on grocery purchases. If you travel frequently, a travel rewards card may be a better fit for you.

3. Annual Fees

Some credit cards charge an annual fee, which can range from $50 to $500 or more. While cards with annual fees may offer more rewards and perks, you'll want to make sure that the benefits outweigh the cost.

4. Interest Rates

If you plan on carrying a balance on your credit card, it's important to choose one with a low interest rate. This can save you a significant amount of money in interest charges over time.

5. Rewards and Perks

Credit cards often offer rewards and perks such as cash back, travel points, and discounts on purchases. Make sure to choose a card that offers rewards and perks that align with your spending habits and financial goals.

What is the Most Important Factor When Choosing a Credit Card?

The most important factor when choosing a credit card is finding one that fits your financial situation and lifestyle. While rewards and perks can be enticing, they shouldn't be the sole focus of your decision. Make sure to consider factors such as interest rates, annual fees, and your spending habits before making a decision.

Should I Have More Than One Credit Card?

Having multiple credit cards can be beneficial in some cases. For example, if you have a rewards card for groceries and a travel rewards card for flights, you can maximize your rewards and perks. However, it's important to be responsible with your credit and not take on more debt than you can handle.

There are a ton of "gurus" you can find on YouTube that will walk you through all the credit card "hacks" you can imagine. If you really want to focus your time and attention and feel confident that you can manage a variety of credit cards, then I fully support you and that decision. It is not for everyone, but it might be for you!

What is a Good APR for a Credit Card?

A good APR for a credit card is generally around 13-15%. However, the actual APR you qualify for will depend on your credit score and financial situation. It's important to compare APRs when choosing a credit card and to choose one with a low rate if you plan on carrying a balance.

What are Some Common Credit Card Perks?

Credit cards often offer perks such as:

• Cash back on purchases

• Travel rewards points - my favorite

• Discounts on purchases

• Extended warranties on purchases

• Rental car insurance

• Fraud protection

Make sure to choose a card that offers perks that align with your spending habits and financial goals.

Here are a couple of articles that further breakdown credit card perks:

CNBC - rewards programs and how they work

Nerdwallet - best rewards credit cards of November 2020

Investopedia - best rewards credit cards

Money - best cashback credit cards

Conclusion

Choosing the best credit card for your needs can be a daunting task. Take time to consider the perk/rewards you will receive if you have the credit card, how you intend to use the card, and whether or not you believe you will be financially responsible with the card.