With so many credit card offers available, choosing the right one can be difficult. Rewards, no-interest periods, fees, and credit-building opportunities vary among cards. Everyone has specific and unique needs, and what works for one person may not work for another.
Why Choosing the Right Card Matters
Owning the right credit card can help you save money and earn rewards.
Things to consider before you apply:
- rewards, fees, and interest rates
- your unique needs
- your personal finance goals
- your credit score
For instance, if you are looking at rewards, choosing one with a low-interest rate is key. Interest charges can quickly eliminate any benefit from cash-back or travel rewards.
Check Your Credit Score
Check your credit score. Issuers are more likely to offer you credit if it is in good standing.
How to improve your credit score:
- check your credit report for errors
- credit builder loans
- credit builder cards
- become an authorized user
Mistakes in your credit report can seriously hurt your credit score. Credit bureaus will correct any errors you find for free.
Credit builder loans help people build their credit. The loan amount is typically small, and the interest rate is usually higher than other types of loans. If you make your payments on time though, it can help improve your credit score.
Becoming an authorized user on someone’s account can also help improve your credit score. If the owner of the account has a good payment history and low balances, it can positively impact your credit score.
Why Do You Need One?
You should consider the primary use of a credit card before getting one. They can offer several benefits, like:
- cheap or interest-free borrowing
- improving credit score and history
- earning cash or other rewards
The catch is, these benefits depend on using credit cards responsibly. That means making at least the minimum payment on time and avoiding debt. Always pay off your credit card balance as soon as possible.
You should compare interest rates when looking for the best credit card. Even the tiniest difference in interest rates can impact your finances over time. Watch out for promotional rates. These are often used to lure customers in and only last a certain amount of time.
Typically, the better your credit score is, the better rate you’ll be eligible to receive. The issuer will consider you less of a risk when compared to someone with a lower score.
Reward and Benefit Programs
A reward program is an incentive that offers value to cardholders. They often involve cash-back, discounts, or points.
Some cards offer:
- travel insurance
- purchase insurance coverage
- welcome bonuses
- Microsoft Rewards
- airport lounge access
When looking for a reward program that fits you best, consider:
- how you’ll use the rewards
- fees and interest
- how long it takes to earn rewards
- rules or limitations
Different credit cards have different fees such as.
- foreign currency charge
- annual fee
- cash advance fee
- over-the-limit fee
There are some without an annual fee. Some no-fee credit cards have similar rewards and benefits to cards with an annual fee.
A specialized credit card may be an option depending on your credit history and spending habits.
- Student credit cards often have lower credit limits than standard ones. Low-interest rate student cards are also available.
- A U.S. dollar credit card may be right for you if you often buy goods or services in U.S. dollars. With this type of card, you may avoid foreign currency conversion rates.
- Retail credit cards let you earn rewards, like gift cards, at a specific retailer. Some retailers offer buy now, pay later plans with extended interest-free periods. These often apply only to purchases made at the same store.
- If you shop at one place enough, you may benefit from its rewards programs.
- A travel card offers many benefits for frequent travellers.
Secured Credit Cards
A secured credit card is backed by a cash deposit from you. The cash deposit acts as collateral on the account. This provides the card issuer security in case you can’t make payments.
Things to Remember
The rewards card, prepaid travel card, and lounge access all come with a cost. Don’t let clever marketing trick you into a high-interest rate card.
Balance transfers can have positive credit score effects. When you open a new card to transfer a balance, you increase the amount of available credit. This will lower your credit utilization ratio. Just be sure to read the fine print so you’re clear on what you’re signing up for and that it’s actually worthwhile.
Customer service is also an important factor to consider when choosing a credit card. That is who will help you do things like:
- adjust your payment or billing cycle
- apply online
- get a copy of your credit card statement
- navigate the new mobile device app
- assist you in a banking emergency
- discover new tools and offers
Consider carefully before you apply for a credit card online. Remember, you don’t have to get a credit card or open a bank account with the same institution. You can shop around to find the best card for your needs.
Still have questions about finding the right card? Drowning in credit card debt? Contact us today. Our certified credit counsellors are ready to help.