Best Credit Cards – Find The Best Credit Card For Your Needs


by

23 May,2011

When choosing a credit card, you want to make sure that you are getting the best card for your needs. Because personal finance is so personal, it is important that you consider your own individual needs when choosing a credit card. You will want to consider the credit limit, of course. But there are other considerations that should matter as you choose a credit card. You can pick a credit card that is likely to work for you: As you compare the credit card possibilities, keep the following things in mind.

How is Your Credit?

The first thing you have to understand is that your personal credit history will matter as you look for a credit card. If you have bad credit, you might need a credit card that will help you rebuild your financial reputation. This means that you might be required to look for a secured credit card, or resign yourself to paying a higher interest rate for some time.

If you have good credit, you can be choosier about your credit card. You can qualify for credit cards with attractive interest rates, and with good rewards programs. Once you know what sort of credit you need to qualify for certain offers, you can begin narrowing your search.

Interest Charges

No matter your credit situation, you should look for the credit card that offers the lowest interest rate and fees that you can qualify for. Interest charges can start to add up, and they are added to the principal if you carry a balance. Consider getting a low interest credit card if you can qualify. In many cases, if you already have credit card debt but reasonably good credit, you can get a 0% balance transfer card that can help you save money as you pay down your debt.

Low interest is especially important if you occasionally carry a balance. Some business owners find that carrying a balance is necessary some months, or you might make a large purchase, and find it easier to pay off over the course of three or four months. If this is the case, low interest credit cards are especially important. However, if you always pay off your balance each month, it might suit your needs to get a card with a great rewards program – even if the interest rate is a little higher.

Another consideration is the default interest rate. This is the interest rate you are charged if you miss too many payments, or habitually go over the credit limit. Most default rates are comparable across credit cards, though. Also, make sure you know when the introductory rate for a credit card expires. The longer the introductory rate, the longer you have to pay off credit card debt you might have accumulated. Be aware of the cash advance interest rate as well. In many cases, the interest rate charged on cash advances is much higher than the interest rate charged when you make purchases with your credit card.

Fees

In addition to thinking about the interest rate attached to the credit card, you also need to consider the fees charged. If you always pay your bill on time, and if you do not go over the credit limit, these late fees and over the limit fees are not that important. However, there are other fees associated with credit cards as well. Some of the fees to consider, depending on your situation, include:

  • Cash advance fees: In addition to paying a higher interest rate, you might be charged a transaction fee amounting to a percentage of the amount you have received as an advance. Most cards charge either 3% or 5%. If you regularly get cash advances, you might consider a card with a lower advance fee.
  • Balance transfer fees: You might be getting a great interest rate on your balance transfer, but make sure you aren’t paying for it in fees. A flat fee, based on the amount of the transfer, might be charged. Choose a credit card that helps you minimize this fee when possible.
  • Annual fees: Annual fees are making a comeback. Consider whether or not the perks and rewards you receive outweigh what you would pay in an annual fee. In many cases, though, you are often better off looking for a card that does not charge an annual fee.
  • Foreign transaction fees: If you travel abroad a lot, it is a good idea to look for a credit card with lower foreign transaction fees. Even if you don’t travel, consider whether or not you sometimes do business in other currencies. If you have to use a credit card to buy something in another currency, you will be charged. These fees may not matter if you deal only in one currency, or if you rarely go beyond your borders.
  • Reward redemption fees: Some cards might charge you to redeem your rewards. This fee may come in the form of a reduced ability to redeem your points, or it might be a fee charged to your credit card. If you use credit card rewards frequently, you want to be on the alert for these fees.

Be sure to check for other fees as well. Extra fees can cut into your wealth, and reduce the effectiveness of your credit card finances. Choose a card that helps you pay smaller fees for the services you are likely to use the most.

Rewards Programs

It’s also important to choose a rewards program that fits your needs. Consider how points are earned. Do you use a credit card for gas quite a bit? If so, look for a credit card that gives you a higher percentage of cash back, or more points, when you make gas purchases. Many credit cards also offer more points if you shop at certain grocery stores. If you use a specific store, it might be worth it (if other features of the card meet your needs) to get a card that provides extra rewards at that store. Look for a rewards program that will help you maximize the purchases you already make.

You should also choose a credit card that offers a rewards program that you will actually use. If you don’t travel very much, a miles rewards program won’t be of much. If you like getting discount merchandise, a program that offers you points you can redeem for gift cards at your favorite stores might be worth it. In many instances, it might be preferable just to earn cash back. There are also rewards program that are flexible, allowing you to redeem your rewards for whatever you choose. The key is to make sure that you are getting the most out of your rewards program. Remember to pay off your balance each month so that the interest you pay doesn’t destroy the value of your rewards.

Bottom Line

You are an individual, and your credit card should reflect your individual preferences and needs. Carefully think about what would serve your needs best, and help you reach your financial goals. Then, apply for the best credit card you qualify for.