The smart way to choose a new credit card.
With the huge variety of credit cards out there, picking one can be tricky. So how do you know which one is right for you? Here are a few things to keep in mind before you select your new credit card.
Choose between a rewards vs. a non-rewards card
Rewards cards are great for people who often make large purchases with their credit cards. That way, they can earn lots of points to put towards the card company’s rewards program. Many companies also offer double and even triple points at certain times throughout the year to encourage people to use their cards. Later, these points can be redeemed for big ticket items such as airline tickets, electronics, etc.
The downside? These rewards cards often have higher interest rates than non-rewards cards. Also, before applying, try to find out how easy it is to redeem your hard-earned points. Is the redeeming process user-friendly? Are there any restrictions on which rewards your points can redeem?
On the other hand, if you tend to use your credit card for smaller purchases only, look for cards that focus on reasonable interest rates.
Keep an eye out for rate information and fees
You can benefit from doing a little preliminary research to find not just where the best rates are, but how long those rates last. Almost all credit cards offer 0% for a specified period, but when the offer period ends, many will jump to a rate of 20% or more.
Someone with good credit would definitely be able to find a card elsewhere that offers a much lower rate than that. Those with excellent credit can have the pick of the litter. With all the many, many credit cards out there, there’s some stiff competition among them—so use that to your advantage!
Balance transfers are a very smart thing to consider. You could save money every month by transferring your credit card balance to a card with a lower interest rate. However, make sure that your new credit card company isn’t going to charge you an extra fee to do so.
Many credit card companies like to add in all kinds of small print with things like activation, annual, balance transfer, and cash advance fees. Be sure to keep an eye out for hidden fees!
Choose a secured credit card if you need to build your credit
Maybe you’ve never had a credit card before. Or, maybe you’ve had a few missteps in the past and need help re-establishing your credit. If you find yourself in either of these positions, it can sometimes be difficult to be approved for a typical credit card. A secured credit card is a great alternative.
The biggest difference? Opening this type of account requires money to be put down up front as collateral. Then, as long as you keep up with monthly payments, your credit score will begin to grow.
Pick a user-friendly card
Before signing up for a new card, find out how easy it is to make your payments. Here are a few questions you should ask:
- Does the company offer auto pay?
- Can I use my mobile device to pay?
- What is the grace period for making a payment?
- Does the card have any fraud protection if it’s lost or stolen?
- How does the credit card’s customer service rank against other card companies?
By doing a little research beforehand, you’re sure to find the perfect fit!
Scott Credit Union offers four different options for credit cards, including a rewards credit card and a secured credit card! Visit our Low Rate Credit Cards page for more information and to apply.