Choosing the right credit card

Choosing the right credit card can be a complicated process. According to The Wall Street Journal, finding the card that's right for you will take some research and a bit of arithmetic.

Before you start shopping for a credit card, follow CreditCards.com's advice and decide how you intend to use it. Using a card for large purchases that can be paid off little by little during the year is a good tactic. Applying for a new card to take advantage of a cash back or rewards program is a common initiative. Your payment history and habits are important to consider as well.

Low APR or high rewards
If you manage to pay your bills on time and in full each month, hunting for a card with a great rewards structure is fine. Card users with a history of missing payments should opt for a card with the lowest annual percentage rate available. Missing even one payment on a new card can affect the interest rate and credit limit on the card further down the line. Consider setting up automatic payments on your new card using an online banking account.

Choose a card with a low APR or a great rewards structure.

Choose a card with a low APR or a great rewards structure.

Money Under 30 advised to not waste energy searching for a card with both a low APR and a great rewards program. Choosing one over the other streamlines the application process. Applying for too many different cards at once can be reflected in your credit score.

Remember, if paying the monthly balance on a card isn't a problem, zero in on the plastic with the better rewards program. If you're going to need some grace and understanding when making late payments, choose a card with a low interest rate ahead of time.

Obtaining two credits cards is good strategy. CreditCard.com suggested using a card with a large spending limit and rewards program as the primary card. A card with low interest rates would work better as a secondary or emergency credit card. 

Alternatively, the primary card can have a low APR and be used for large purchases that can be managed over time. The secondary card can be used with the sole purpose of being used to accrue rewards points. As long as the same card is paid in full every month you'll be making the most of the credit card system, according to Money Under 30,.

"Find a card that earns points for items you buy often, like groceries or gasoline."

Earning rewards plan
Choosing the best rewards plan depends on your spending habits that earn the rewards, and how you intend to spend the rewards points. Getting an airline loyalty card works best if you travel frequently and want to gain free miles. However, airline-based cards tend to only reward you for dollars spent flying. If the amount spent annually on tickets and checked luggage matches or is lower than the loyalty card's annual fee, consider that the green light to apply.

Find a card that earns points for items you buy often, like groceries or gasoline. Cards with cash back rewards are common and, according to The Journal, the easiest to redeem your earnings from. Airline miles and tickets can be tricky to receive as the competition is steep for available seats. Some airline cards even charge a fee for redeeming miles. Credit cards that offer miles for any airline may be giving you miles that you cannot add to any existing frequent flyer miles already accrued directly through the airline.

When shopping for a card, pay attention to whether or not interest rates are designated as fixed or variable. Fixed-rate interest means you'll know what to expect on your bill month to month, while that can change if the interest rate is variable. However, a fixed-rate interest doesn't mean that interest will remain year over year, or even month over month. As reported by The Journal, credit card issuers can change the APR whenever they like as long as they notify the card holder first.

Be aware of how you're charged
Check the fine print before saying yes to a new credit card. According to CreditCard.com, there may be transaction fees for moving debit from an old card to a new one. Find out how much is added for a late payment. Look for cards with no transaction fees or zero percent interest for the first 12 months. Skip offers that charge for a rewards program.

Figuring out the balance computation, and thus the monthly charge and interest accrual, is vital. The average daily balance is the most common system. CreditCard.com explains it as an issuer adding together daily balances and then dividing that number by days in the billing cycle. Avoid any card issuer that uses two billing cycles in its computation.

With a little research and good understanding of your payment goals, finding the right credit card is as easy as 1-2-3.

For more information about smart ways to manage your finances, contact Landmark Bank.

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