Thinking of Opening Up a New Credit Card? 4 Tips on How to Find the Best Credit Card for You

Like buying a car, starting a new job, and buying a house, opening up a credit card is just one of the many important decisions we make in life. Whether you’ve just started college or need to build credit, it’s detrimental to find the best cash back credit card that fits your goals and lifestyles. After all, the average American adult has five cards in their wallet. Here are 4 tips on how to find the best credit card for you.

1. Check Your Credit

Find out your credit score in order to determine what credit cards you might be eligible for. Card issuers typically use your credit scores as a factor when deciding whether to offer you a card. Knowing your scores can help you apply for cards that fit your credit profile. Also, the better your score is, the greater chance you have of being approved for cards with better perks. You can pull a free credit score report from Free Score 360, Credit Karma or Credit Sesame. You’re also entitled to one free credit report from each of the major credit bureaus once every 12 months, which you can get at AnnualCreditReport.com.

Every time you apply for a credit card, a hard inquiry will be made, so you’ll want to make sure your score meets the requirement before being rejected. Multiple hard inquiries could hurt your scores. You may want to consider applying for a secured card if you are new to credit, or are working on rebuilding your credit. A secured credit card is secured by money that you deposit with the issuer. The issuer of a secured card may share your activity, such as your monthly payment history, with the major credit bureaus — Experian, Equifax and TransUnion. This can help you build a credit history, improve your credit health and eventually upgrade to an unsecured no-deposit card.

Here are a few of the top secured credit cards to choose from:

2. Consider Which Type of Credit Card You Need

 There are thousands of credit card issuers to choose from in the U.S., and although there are plenty of options, picking the one that sounds the most exciting probably won’t be very beneficial. The best card for you is one with features designed to meet your specific needs. If you don’t travel much, for example, then the best travel card in the world isn’t going to do you a lot of good. There are three general types of credit cards:

1. Cards That Help You Improve Your Credit When It’s Limited or Damaged.

 If you want to build or rebuild credit, than a student or secured credit card (as mentioned earlier) is your best option. Both types of credit cards are easier to qualify for than other credit cards. Student credit cards, or unsecured cards, are meant for college students who are new to credit. Secured credit cards generally require a security deposit of $200 or more but is returned to you when the account is closed in good standing or the account is upgraded.

 Cards to Consider: Discover it Secured Card and OpenSky Visa Secured Visa Card.
2. Cards That Save You Money on Interest.

 If you want to save on interest, than getting a low-interest, 0% APR or Balance Transfer card is your best option. A card with an introductory 0% APR and ongoing low interest might be a good fit for you if you plan to use your credit card in case of emergencies, or don’t have a fixed income and carry a balance from time to time. A balance transfer offer could help you pay off a high-interest debt without paying a dime in interest.

Cards to Consider: Citi SimplicityCiti Double Cash, and Chase Slate.
 3. Cards That Earn Rewards.

 If you want to earn rewards, such as travel or cash back, than a rewards credit card is a good match for you. These cards are typically for people who pay off their balance in full every month and never incur interest. Rewards credit cards typically have higher APRs, but offer larger sign-up bonuses and give you points, miles or cash back on every dollar you spend.

 Travel Rewards Cards to Consider: Chase Sapphire Preferred, Barclays Arrival Premier, and Capital One’s Venture.
 Cash Back Cards to Consider: Discover it Card and Blue Cash Everyday from American Express.

3. Narrow Your Choices by Asking the Right Questions

As you go through your top credit card selections, consider these questions:

For Student and Secured Cards:
  • Will this card help me build my credit?
  • How much does it cost to open an account, including the annual fee?
  • Can I upgrade to a better card later on?
For Low-Interest, 0% APR or Balance Transfer Cards:
  • How long is the 0% APR period, and what is the ongoing interest APR?
  • What is the card’s balance transfer policy?
  • Does the card offer rewards?
For Rewards, Travel or Cash-Back Cards:
  • How do I spend my money?
  • How complicated is this credit card?
  • How quickly will I earn rewards, and how much are they worth?

 4. Go With The Card That Gives You the Highest Overall Value

If you haven’t found a clear winner after Step 3, but deciding between two or three credit cards, than consider the following additional factors below.

For Student and Secured Cards:
  • Find out if the credit card limit automatically increases after making a few consecutive on-time payments.
  • Find out if the card issuer places a security deposit in an interest-earning CD so you can earn a small amount of money on it.
For Low-Interest, 0% APR or Balance Transfer Cards:
  • Find out if the card issuer lets you create your own debt payoff plan on an online portal. This allows you to track your progress if you’re overwhelmed with debt.
  • Find out if that credit card waives late fees or penalty APR. This could come in handy if you’re behind on payments.
For Rewards, Travel or Cash-Back Cards:
  • Find out if you’re eligible for a lower required spending. It’s better to spend less to qualify for a sign-up bonus.
  • Find out if there is an expiration date on rewards. Some cards allow you to use your rewards as long as the card is kept open.

Compare, Compare, Compare

When selecting a credit card, like any big decision, it’s extremely important to do your research. Take the guesswork out of choosing a card by filtering hundreds of cards by card type, rewards, perks, and their credit score requirements. Everyone spends differently, and you should start with narrowing down the credit cards that best fits your spending patterns.