Ask These 7 Questions to Help Choose the Perfect Credit Card
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With hundreds of credit cards offered by dozens of banks and credit unions, it can be very difficult for you to choose which credit card to sign up for and carry. In fact, the hardest part can be figuring out where to start. Whether you are looking for your first credit card, or are just realizing that now is a good time to change cards, ask yourself these questions to help you find the product that best meets your needs.
Do you ever carry a balance on your credit cards?
All credit card users can be divided into two groups. On one hand, you have those who avoid interest charges by paying their entire statement balances in full, each month. On the other hand, there are those who pay something less than their full balance, either sometimes or every month, and wind up paying interest charges. If you are never going to incur interest charges, you should be earning some kind of rewards for your spending in the form of travel rewards or cash back. But if you plan on carrying a balance, it's best to avoid reward credit cards and focus on finding a card with the lowest possible interest rate, like the BankAmericard® Credit Card which offers a variable APR that starts at 11.74% (up to 21.74%) and has no annual fee.
Do you have credit card debt?
If you are carrying a stubborn balance on your credit cards every month, then you are struggling with credit card debt. You may be able to transfer your balance to a card with a 0% APR promotional financing offer for balance transfers. These offers allow you to avoid interest on your existing debt when you transfer it to your new account. Promotional financing offers last a minimum of six months, but the best ones will extend from 15 to 21 months. However, nearly all of these promotional financing offers for balance transfers will impose a 3%-5% balance transfer fee, which is well worth it in most cases. The exception is the Chase Slate®, which offers a 0% intro APR for 15 months on purchases and balance transfers (15.74% - 24.49% variable APR after), with no intro balance transfer fee for balances transferred within the first 60 days of opening the account. (See also: Best 0% APR Credit Cards for Balance Transfers)
Are you a frequent traveler?
If you travel more than a few times a year, you can leverage your travel purchases to receive free perks. For example, many airline credit cards offer travelers priority boarding, discounts on in-flight purchases, free checked bags, free lounge access, and more. Our favorite airline card is the Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® from our partner Citi which offers many perks, good rewards, and an affordable annual fee. When using a hotel credit card, you often receive elite status in their loyalty program, which can include room upgrades, late checkouts, and even free breakfast. We’ve picked out the credit cards with the best travel rewards.
Do you want to save up for a big vacation?
Travel rewards credit cards offer extra value for your purchases by allowing you to either get a statement credit for your travel purchases or transfer points to various airline loyalty programs to redeem for award flights and rooms. For easy travel rewards redemption, the BankAmericard Travel Rewards® credit card offers 1.5x points for each dollar spent, which you can redeem for statement credit on most travel purchases. If you want more value on your rewards, it's hard to beat the Chase Sapphire Preferred® Card which offers 1:1 point transfers to their partner programs and 20% off travel when redeemed through their Ultimate Rewards portal.
Do you make a lot of purchases on your card each month?
For those who can pay off their balances each month, there are many options to get the most value for your spending, including credit cards that offer rewards on gas, dining, groceries, and more. If your purchases vary, your best bet would be a card like the Capital One® Quicksilver® Cash Rewards card that offers 1.5% cash back every purchase.
Are you running a small business?
Small business owners will be using their credit card frequently for their company's needs, and they should be using a credit card designed specifically for this kind of use. Business credit cards come with valuable features such as receipt tracking, reports on expenditures, and additional rewards for the kind of purchases that businesses tend to make. But most of all, using a business card allows you to separate your company's expenses from your own, making your life so much easier when it comes time to compile your records and do your taxes. (See also: Best Small Business Credit Cards)
Do you have bad credit?
Most credit cards are available to people with good or excellent credit, but that leaves out a substantial number of potential new applicants. If you have bad credit, you can still qualify for a type of credit card called a secured card. Secured cards work just like standard credit cards, except applicants must submit a refundable security deposit in order to open their account. The amount of your deposit then becomes your credit limit. Nevertheless, these cards usually have all of the same protections of a standard credit card, some even offer rewards, and will help you to build or rebuild your credit. Our favorite secured credit card is the Capital One® Secured Mastercard® which has no annual fee and includes all of Capital One's standard card benefits.