With hundreds of credit card options, it’s important to pick the right one for your needs. So, how do you choose? There are several items to consider.
One of the main factors in getting approved for a credit card is the current condition of your credit. Lenders typically look at your credit score to determine how likely you are to repay any purchases you make or debt you rack up with the card. The higher your score, the better.
There are several items to consider when looking for a credit card. These include the APR, fees, and benefits. You’ll also want to consider what you’re planning to do with the card.
APR is the rate at which interest will accrue on any purchases you make with your credit card that you don’t pay off in full.
One of your first questions should be what type of APR a credit card has: fixed or variable. A fixed APR means that the interest rate remains the same during the fixed rate period of the loan.
A variable APR means that the interest rate can change over time.
Some credit card companies will offer new customers a low introductory APR. You often see this when you receive a credit card offer in the mail. For example: “0% interest for the first 12 months!”
These low rates can be tempting; however, after the introductory period – often six or 12 months – the APR will go back to the regular rate, which is typically much higher.
Some credit cards will offer a special low interest rate for balance transfers. A balance transfer involves moving debt from one credit card to another to take advantage of a lower interest rate.
Typically, balance transfers will offer a lower interest rate on debt transferred over during an initial period of time. Transferring your balance to a lower interest card can save money in the long run.
Before transferring it, you’ll want to make sure that you won’t lose money once the interest rate on the transferred money goes back up to the regular rate. You’ll also want to make sure there aren’t high balance transfer fees that cancel out your savings.
We mentioned balance transfer fees, which may be charged when you move the balance of one credit card to another. However, there are many other fees you’ll want to be aware of, too.
Whenever you’re considering a credit card, make sure you read through the terms and conditions carefully to understand what fees you could be charged and how you can avoid them.
What you’ll use a credit card for can also help determine which card is best for you.
No matter which credit card you choose, make sure the costs associated with the card (such as the APR and fees) don’t outweigh the rewards and any other benefits you may receive as a cardholder.
Aim to pay off the whole balance of the card each month to avoid racking up interest charges and be sure to pay on time so you don’t get hit with late fees or hurt your credit.