If you’re in the market for a credit card, you’re not alone. Roughly 70 percent of Americans have at least one credit card, and the average person has 2.6 cards.
Let’s face it: Sifting through credit card offers can be stressful. There are hundreds of available options, and each one offers different rates, terms, perks, and rewards. It’s overwhelming.
Sadly, there is no single card that fits every consumer's potential use. As with all things in life, there are trade-offs associated with every offer. Depending on your personal needs, there are numerous potential options. Whether you’re looking to build your credit, take advantage of reward programs, or find the lowest interest rate possible, there’s a credit card for you.
Here are a few things to consider before you try to sign up for a card:
Assess Your Needs
Before you start your search, think about what you want from a credit card. Cards typically fall into one of three categories: credit builders, low interest rates, or big rewards.
· Credit builders: These cards help people repair damaged credit or build credit histories if they’re new to the credit world. Student credit cards are designed to help college students build their credit. Secured credit cards are available to people who have less-than-stellar credit histories, but are willing to pay security deposits.
· Low interest rates: Whether you need a credit card to bail yourself out of a financial emergency or carry a balance, cards with low interest rates or zero percent APR can be a perfect fit.
· Big rewards: If you typically pay your full balance each month and don’t worry about interest, cards that offer cash back, travel rewards, or points can be incredibly lucrative. These cards have higher APRs, but you can reap incredible rewards by using them responsibly.
Check Your Credit Score
Reputable credit card companies and banks require a credit check before they’ll issue a card. If a bank or a company doesn’t seem to care about your credit score, you should really look elsewhere. Cards with better perks tend to require higher credit scores, so it’s important to know where you stand before you apply.
Pull your free credit score to know whether you’re in good shape, or if your credit needs a little TLC. Applying for a new credit card generally lowers your score by a few points, so only apply for cards you’re likely to get. If your score is lower than you expected, examine your credit report to see what might be holding you back.
Narrow Your Choices
Once you’ve determined your credit needs and know what sort of cards mesh with your credit score, it’s time to start narrowing your choices.
If you’re interested in a credit builder, dig into the facts to figure out which option will actually improve your credit most efficiently. If your preferred card includes a mandatory deposit or annual fee, consider whether you’re willing and able to afford it. Always check to see whether a credit builder gives you the option to switch to a better alternative once your credit score improves.
When considering low-interest cards, read the fine print to ensure you know exactly what you’re getting into. Figure out the card’s ongoing interest APR, and be mindful of any potential rewards. If you’re able to transfer your card balance, know whether any hidden fees exist for doing so.
The biggest factor to consider with rewards cards is your spending habits. If you predominantly shop from one retailer, it might make sense to sign up for a card that rewards your loyalty. Would you benefit more from travel or hotel points? Perhaps you’d prefer cash back on all purchases or a card with no foreign transaction fees. Go with the rewards that match your tendencies.
Make an Educated Decision
After you’ve homed in on your top two or three choices, choose the card that adds the most overall value to your wallet. It might feel like splitting hairs, but you want to be certain your new card jives with your spending habits. Whether you’re interested in no late fees, a higher credit limit, or rewards that never expire, think about how you’ll use the card (as well as how you won’t).
Choosing a credit card can be an overwhelming process, but it doesn’t have to be. Start by deciding what you want and what your credit score will allow, and then narrow down your choices by considering the options that best fit your lifestyle. If a card doesn’t match your financial goals in the best way possible, keep looking. The right card is out there — you simply have to find it.
On the hunt for a new credit card? Cut out the guesswork — and hours of research — by using our Credit Card Match service to find one that fits your spending habits and financial situation.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.