How to Choose the Right Credit Card for You
A credit card can open many doors. You can buy things now and pay for them on a schedule that suits you. You can establish, build, and repair your credit history. You can even keep your credit card in a drawer and use it as a financial safety net.
But credit cards can also lead to high-interest payments and ongoing debt. That’s why it’s essential to choose the right credit card for your needs and make good financial choices.
In this five-step guide, we’ll show you what to do when looking for a credit card so you can feel confident about making the best decision.
1. Find Out Your Credit Score
Your credit score and repayment history impact whether you can qualify for a particular credit card and what rate you’ll get if you do qualify. So before you apply, it’s a good idea to request your free credit report from all three credit reporting agencies.
- Compare the reports as they may show different information.
- Check for any inaccuracies and dispute errors.
- Take steps to improve your credit score, such as paying down debt to increase your available credit.
- Always make your credit card and loan payments on time—or even early.
2. Understand Rates and Fees
Before you start comparing the different credit cards, you should get a handle on the terminology you’ll likely see for any type of loan product. That way, you can easily interpret the product descriptions and note the best features for you.
- Interest rate: The amount you pay your credit card issuer to use the funds.
- Annual percentage rate (APR): Includes interest and sometimes other fees rolled into one figure, so it shows the true cost of borrowing.
- APR range: The lowest and highest rates you might get for a particular credit card, based on your credit score and financial situation.
- Introductory rate: A low APR you might be offered for a limited time before you start paying a regular APR. This is useful if you’re transferring a high-interest balance.
- Introductory period: How long do you get the intro rate? For example, 6 to 18 months. You want to try to pay down your balance transfer within this period.
- Rewards: These may come in the form of points you can redeem for merchandise and more, or cash back.
- Fees: Common fees you can try to avoid include an annual fee, a balance transfer fee, a cash advance fee, a late payment fee, and a foreign transaction fee.
- Grace period: The period you have before your purchases start incurring interest. For example, if you pay off your balance within 25 days, you won’t pay any interest.
3. Consider the Main Credit Card Types
Now it’s time to look at the four main credit card types and start thinking about which one might meet your needs the best—and cost you the least.
Rewards Credit Cards to Get Cash Back
Premium credit cards like our Visa Platinum Rewards offer a percentage of cash back on your qualifying purchases, plus a low-interest rate if you have good credit.
This card is beneficial if:
- You regularly use your card for everyday expenses like groceries, because it offers a secure way to pay and a simple way to manage your finances.
- You also use your card for major purchases like airline tickets, which means you can collect a higher amount of rewards.
- You want a low-interest rate on any balance you carry.
Secured Credit Cards to Build or Repair Credit
Most credit cards are unsecured, which means you don’t provide any collateral for using the credit funds. With a secured credit card like our Visa Classic Secured, you make a cash deposit and this serves as collateral in case you miss a payment.
You might need a secured credit card if:
- You’ve never held a credit card or loan account and you need to establish your credit.
- You’ve built up a little credit history but not enough to qualify for an unsecured card, so you need to build your credit.
- You’ve missed payments or defaulted on a loan so you have poor or bad credit and you need to repair it.
Student Credit Cards to Get Started
As a high school or college student, you’re at the start of your financial journey so you may not have much credit history. A credit card like our Visa Student Platinum Rewards offers all the benefits of a premium card but with easier qualifying because of your student status.
Apply for a student credit card if:
- You want to establish and build your credit history through timely payments.
- You want a financial safety net while you study.
4. Compare Details of Your Chosen Credit Card Type
Once you’ve identified the best credit card type for your lifestyle, you can take a look at the fine print and ask a few questions to make sure you select the best offer.
Rewards Credit Cards
Take a deep dive and ask these questions:
- Do you get rewards on all purchases—or only some?
- Do you regularly make the types of purchases that qualify for rewards?
- How do you receive the cash back and how often?
- If the card offers redeemable points, do you want the goods or services on offer?
- Is the APR competitive or do you get a higher APR in exchange for the rewards?
- Is there a high annual fee to compensate for the rewards?
Low-Interest Balance Transfer Credit Cards
Here’s what you need to check when it comes to a balance transfer:
- What is the introductory rate vs. the regular rate on new purchases?
- How long is the low or no interest introductory period?
- Can you pay off most of your debt within that period?
- Is there a balance transfer fee?
Secured Credit Cards
Make sure you ask these questions before applying:
- Does your credit card issuer report your timely payments to the credit reporting agencies? This is necessary to improve your credit score.
- Is the APR fair or are you getting a very high APR because of your credit score?
- Can you easily convert to a secured credit card once your credit score improves?
- Is your credit limit tied to your cash deposit and is it possible to increase your limit if you increase your deposit?
- Can you earn interest on your cash deposit while it’s serving as collateral?
Student Credit Cards
Find out these details before you get your first credit card:
- Is the APR competitive or are you being penalized for having limited credit history?
- Do you need to pay extra fees because you’re just starting out?
- Can you earn any rewards on your purchases?
- How long is the grace period in which you can make a purchase and pay it off, without paying any interest?
5. Consider the Credit Card Issuers
If you’re still wondering how to choose the right credit card, the final step is to take a look at any financial institutions offering you a credit card, including San Francisco Federal Credit Union, big nationwide banks, and specialist credit card companies.
- Think about the organization’s values and what you want to align yourself with.
- Check if they offer other products and services (like checking and savings accounts) you might want to access for the first time or switch over from your current provider.
- You could even visit a branch and see what impression you get.
Note that multiple applications for credit card pre-approval within about two weeks will only count as one application, so your credit score will drop only once.
Next Steps: Applying for Your Credit Card
Now you’re ready to go forward in your financial journey and apply for the right credit card for you. Remember our main tips on how to choose a credit card: Know your options and read the fine print.
Choosing the right credit card means you’ll have a great experience and keep your credit score going in the right direction so you can access more financing for the big things in life. Click below to get started!