Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

How to Choose the Right Credit Card

Written by Erik Larson, Community Blogger | Jan 6, 2018 2:12 AM

Very few parts of our lives do not require credit cards particularly with so many people using online shopping. With credit credits so easily obtained, it's often difficult to avoid getting too many cards. The secret to using as few cards as possible is knowing how to choose the right credit cards. Get some tips below.

What Type of Credit Cards are Available?

Although there are various types of credit cards available, many of them fall into the following categories.

Rewards points - These cards give you rewards points for each dollar spent using the credit card. The points can used to make purchases; credited back to your card or redeemed for cash.

Low interest - These cards are just what their name implies. They offer low interest rates often for a limited time.

Cash back - These cards give a certain amount of cash back based on what you spend. Consumers who pay off their balances each month typically find cash back cards the most beneficial.

Balance transfer - These cards allow you to transfer balances from other cards onto this card, which offers lower interest rates.

Secured - Secured credit cards require you to deposit cash onto the card. Your credit limit is based on the amount you have on deposit.

Gas points - These cards give you points at a gas station. The points can be used at the gas station, redeemed for cash or used for travel expenses.

Airline miles - These cards allow you to rack up points in the way of airline miles to be used when you travel.

Hotel and travel points - These cards give you points to be redeemed in airline miles, hotel stays or similar travel-related benefits.

Prepaid - These cards require you to put in money before the card can be used. The credit limit is only as much as the money you have on the card.

Business - These cards, which are typically used by businesses, may offer introductory low interest rates, cash back or airline rewards.

Student - Student credit cards are issued to college students and are a good way to help students build their credit.

Most of the major department stores, retail stores and gas stations offer their own credit cards, but most of them fall into one of the above categories. Many stores offer credit cards that charge a high rate of interest yet they offer rewards, balance transfer options or other benefits.

Know your Spending Habits

With so many credit cards out there today, it's easy to find yourself with a wallet full of credit cards. Keeping credit card debt to a minimum is usually easiest when you have fewer credit cards rather than more. When choosing credit cards, it can be beneficial to know your spending habits and current lifestyle.

For instance, an airline miles credit card might not be the best card for you if you seldom travel. Likewise, a gas station card for a specific gas station might not be beneficial if that particular gas station is 100 miles away. A retail credit card might not work well if you seldom frequent that store. Retail credit cards typically charge very high interest rates. A regular low-interest MasterCard or Visa can just as easily be used in these retail stores but at a lot lower interest.

Choosing the Right Credit Card

If you're new to the world of credit cards and want to ensure you get the right credit card, research what are considered the top credit cards and acknowledge how each one fits into your spending habits and lifestyle. Below are some helpful tips on how to choose the right credit card.

  • Be sure to read the fine print before applying for the card to avoid unnecessary hard hits on your credit, which can lower your scores. A card may advertise 0 percent interest in big print without telling you it turns to a high interest card after a few months.

  • If you plan to pay your balance off each month, get a cash back or rewards credit card.

  • If you're trying to rebuild your credit, apply for a secured credit card.

  • If you're planning to fly a lot, consider an airline card a good investment.

  • If you're currently paying high interest, you may benefit from a balance transfer card that offers a low interest rate. You'll save a lot of money just in interest alone.

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