Choosing the Right Credit Card For Me
There seem to be thousands of credit cards out there, and they all want you to have their card. Not every credit card company is the same, and one card may be better for you than another. It can be hard to figure out which one is the right one for you. Take a few minutes to figure out what works best for you and your lifestyle before choosing. These are the top things to consider when looking for a new credit card.
- APR: Annual Percentage Rate, or APR, is the cost of borrowing against the card. If you didn’t pay off the entire statement one month, then you owe what’s remaining from what you purchased, as well as an interest payment (APR). Depending on your credit rate, you’ll have a different APR. The higher the number, the more money you’ll owe the credit card company for letting you pay later. Different cards have different rates, so do your research to see which card will give you the smallest number for the APR.
- Minimum Payment: There’s also a minimum payment that you must make on your credit card every month. If you don’t pay the entire balance, you must make some sort of payment to the credit card company to show that you are working on paying off what you owe. They will send you the minimum payment amount on the statement. This is also dependent on the card company that you choose, as well as your personal credit score. If you have a lower credit score, then your minimum payment will be higher. Likewise, some cards have tiered minimum payments depending on the amount that you owe. If you owe over $5,000 on a card, then in the minimum payment may increase to $55 instead of the typical $35 minimum payment that you are used to seeing.
- Spending Limit: Your spending limit, or line of credit, is directly related to your personal finances. If you have poor credit, then your spending limit will be less than someone who has a ood credit score. Each card company has their own algorithm for determining the spending limit. Your age, income, and credit score all come into play here.
- Annual Fees: Some cards give you great benefits, but they come with an annual fee you must pay to have the card. Typically if you are a student, you won’t have annual fees, but you’ll sacrifice how much you can spend and you’ll have a higher APR. Weigh out how much the fees will be and see if it outweighs the extra that you’ll pay in the APR. It may be worth it to you to be able to spend a little more and pay a little in the annual fees.
- Loyalty Points: Most cards have a loyalty program to reward you for using the card. Sometimes that comes in the form of skymiles, points to buy items off of designated sites, and gift cards to specific locations. You typically have to spend a good deal of money before you see any sort of substantial reward, so be judicious whenever you’re looking at the perks.
- Cash Back: If your card doesn’t have a loyalty program, then it most likely has a cash back program. For every dollar that you spend, you can earn money back. Typically, credit card companies give you 1% to 3% cash back from the amount that you spend. You can use these funds to pay off your card, or have it go directly into your bank account to use however you like.
There are multiple variables that go into a new credit card, so you want to choose wisely. Something that can help you find the perfect card for you is a website that compares the different cards so you can visually see the pros and cons. You should also check your credit score so you have an idea of where you stand. Then, go through the application process and wait to get approved!