Choosing the right credit card can be daunting with so many options. With different benefits, fees, and eligibility requirements, finding the best match for your needs requires research and consideration.
This post will walk you through the steps you need to pick a new credit card so that you can find the one that is best for your financial situation.
5 Steps to Pick the Best Credit Card for You
Selecting the right credit card involves both artistry and analytical skills.
No one card’s the best for everyone. The perfect card depends on your financial situation and how you spend it. A card that’s great for your friend might need to be corrected for you.
But to pick a credit card, it doesn’t have to be a random guess by learning about different card types and asking yourself key questions.
You can just focus on options that match your needs. It takes some research, self-awareness, and a systematic approach.
Check Your Credit Score
The first step is checking your credit score, as this determines which credit cards you may qualify for. Those with excellent credit (scores around 800) will qualify for the best rewards cards with premium perks. If your score is fair or poor (under 600), you’ll likely need to opt for a secured card to build credit.
You can get your credit score for free from many sources:
- Credit card companies and banks frequently provide free scores for their customers.
- Personal finance websites like NerdWallet offer free score access.
- The three credit bureaus – Experian, Equifax, and TransUnion – provide scores for a fee.
Review your full credit reports from AnnualCreditReport.com to understand what’s impacting your score. Then you can work to improve it over time.
Identify Your Credit Card Needs
Next, think about how you plan to use the card and what features would be most valuable to you. This will help narrow your search. Common credit card types include:
Building Credit
If you have little credit history, look for student credit cards or secured cards that are easier to qualify for. These can help build your credit from the ground up.
Saving on Interest
Cards with 0% intro APRs on purchases and balance transfers can save you money on interest, especially if you carry balances month-to-month. Ongoing low interest rates are ideal for those who occasionally revolve balances.
Earning Rewards
Rewards cards offer points, miles, or cash back on your spending. This works well if you pay balances in full each month and want to maximize rewards. Cards vary significantly in categories and redemption value.
Compare Card Features and Benefits
Once you’ve identified your credit card goals, use online comparison tools to view cards that fit those needs. Compare factors like:
- Fees – The annual fee, balance transfer fee, foreign transaction fee, etc.
- Introductory APR – 0% term length for purchases and balance transfers.
- Ongoing APR – The regular interest rate after the intro period.
- Rewards value – How much points or cash back is earned per dollar spent.
- Benefits – Travel insurance, purchase protections, airport lounge access.
- Eligibility – The credit score or income required for approval.
Focus on the perks that provide the highest value based on your spending habits and financial situation. Don’t pay for benefits you won’t use.
Read the Fine Print
Before applying, read the card’s terms and conditions closely. Important details to review include:
- Introductory offer terms – When do special rates expire? How can you qualify?
- Rewards program rules – Are points capped? Do they expire? What are redemption options?
- Credit requirements – Will you need a security deposit for a secured card? Is income verification required?
- Penalty APR – Under what circumstances could your interest rate spike?
- Billing cycle date – What day of the month is your statement generated?
Understanding these policies upfront prevents surprises down the road. Make sure you can adhere to all requirements.
Compare Top Contenders
Once you’ve researched multiple cards in-depth, compare your top choices side-by-side. Key factors to weigh:
- Costs – Balance annual fees with the value of perks and rewards you’ll realistically use.
- Credit impact – Will the card help build your score? Avoid unnecessary hard inquiries if your credit is poor.
- Convenience – Consider the issuer’s reputation, account management tools, and payment due date.
- Customer service – Check reviews and compare benefits like extended warranty protection.
- Acceptance – Some luxury cards get preferential treatment. Visa and Mastercard have the widest acceptance.
Select the card that best aligns with your spending habits and financial priorities.
Submit Your Application
The final step is completing an application for your top pick. Preparation tips:
- Have your Social Security Number, income details, and employment info handy.
- Review cardholder agreements and make sure you meet all requirements.
- Consider including household income from a spouse or partner if applicable.
- Apply for only one or two new cards within a few months to minimize credit score impact.
- Use pre-qualification tools to check if you may be approved without a hard credit check first.
Once approved, activate your new card when it arrives and add it to your budget. Enjoy the perks and benefits your new credit card has to offer!
Conclusion on How to Pick the Best Credit Card for You
Finding the ideal credit card involves research, comparison, and aligning rewards and features with your financial situation.
By checking your credit, identifying your needs, comparing costs and perks, reading the fine print, and weighing top contenders, you can select a card that maximizes value.
Use your new card responsibly by paying balances off each month and reaping the benefits. With this comprehensive guide, picking the best credit card for your needs is achievable.
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