Choosing the Best Credit Card

Today there’s a credit card to meet everyone’s financial needs and goals. And with the number of credit card users at an all-time high according to Forbes, choosing the right one can have a significant impact on your financial picture.

So, what are the best credit cards? What should you consider when evaluating a card? And how can you choose just one with so many available options? Read on as we look at “what are the best credit cards.”

Review Your Credit Score

Your first consideration when choosing a credit card should be your credit score. There are credit card options for almost any score, so you don’t need perfect credit. Just keep in mind that your score will affect what cards are available to you.

This article will focus on FICO scores since they’re used by about 90% of lenders (a secondary scoring system called a Vantage score is less common). What are FICO credit scores? FICO scores range from 300 to 850. Any score less than 570 is considered poor; scores around 670 and above are good. Your score helps lenders evaluate how much risk is involved in lending to you. There are five main factors that affect your credit score:

• Payment History
• Amounts Owed
• Length of Credit History
• New Credit
• Your Credit Mix

Start by checking your credit score for free. There are multiple ways to do this.

• Credit app or website. There are free apps and websites where you can get your credit score for free. The Consumer Financial Protection Bureau (CFPB) recommends www.AnnualCreditReport.com. If you use a website or app, be sure to choose a reputable option with good ratings. Avoid anything that says “free trial” or looks suspicious; you should not have to pay to get your credit score.
• Credit card statement. Many major credit card companies include your credit score on your statements. If you don’t see it on yours, check your online account or call the credit card company. (Some auto loan statements may also include your credit score.)
• Non-profit counselor. A non-profit credit or housing counselor trained by the U.S. Department of Housing and Urban Development can also provide your credit score. They may also be able to go over the score with you and provide tips to improve it.
• Lender. At Check `n Go, our customers can view their credit scores for free on our customer site. Other lenders or banks may provide the same service.

It’s a good idea to monitor your score over time, not just when you’re considering applying for new credit. This gives you time to correct any issues before you apply.

Be sure you understand the factors that affect your credit score, especially if you want to improve your score and build your credit.

If you have poor credit, some experts recommend working to improve it before applying for a card. You can also apply for a card designed to build your credit – more on that below.

Assess Needs and Goals

As you consider a new credit card, it’s a good idea to examine your current spending habits as well as your financial goals.

Assess your needs first with questions like these:

• Do you need to build credit?
• Do you intend to travel a lot?
• Do you have an existing balance and want to reduce your interest costs?
• What type of expenses do you spend the most on? For example, entertainment, travel, groceries…
• Do you have business expenses you need to keep separate from your personal expenses?
• How much do you expect to put on the card each month? Will you pay the card off monthly, or carry a balance?

All these elements will affect your choice of credit card.

Research the Different Types of Credit Cards

Once you understand your financial goals, your lifestyle, and your spending habits, it’s time to familiarize yourself with the types of cards available to meet those needs. In other words, what do you want your credit card to do for you?

Most credit cards fit into one of three categories:

• Build credit. If you have no credit history, credit challenges, or “bad credit), a card that will help you build credit is a good choice. Student credit cards are designed to help those in school build credit history. They are usually easy to qualify for and are unsecured, which means they don’t require a deposit. If you have credit challenges, a secured credit card may be a good option. These typically require a deposit of $200 or more, which you can get back when you upgrade the account after building up your credit, or close it in good standing.
• Earn rewards. The best cash back credit cards, the best travel credit cards, and the best rewards credit cards all fall into this category. Rewards cards are often targeted toward those with good credit and no debt. This is because rewards cards typically have a higher APR. So if you pay off your balance fully each month and don’t pay interest, these cards may be for you, as the interest rate won’t affect you if you don’t carry a balance. Just don’t get lured in by sign-up bonuses, points, and benefits if you’re going to carry a balance, or you could end up paying more in the end.
• Save money on interest. If you’re looking for a card to help you pay off existing high-interest debt, you may want to look for a card with low interest or 0% introductory APR rate on balance transfers. Just be sure to check for balance transfer fees. A 0% introductory APR rate card can also be a good idea for a large purchase, provided you can pay it off before the introductory rate ends, since the card buys you time to pay with no interest.

Now that you know your credit score, your needs and goals, and the type of card you want, you can begin to look at credit card offers and identify some that suit your requirements.

Compare Offers

There are a variety of card search and comparison tools online that can help steer you toward credit cards that might be a good fit. Just be sure to consult more than one tool, as each may include different offers.

After you’ve identified several credit card offers that meet your criteria, it’s time to compare the details.

Fees

Lenders are required by law to disclose their fees and interest rates in advance. Be sure to include these elements in your evaluation. These are the areas where companies make money and you need to know what you’re getting into – before it’s too late. The fee and interest rate details are usually available in a link, footnote, or attachment to the offer under “More Information,” “Offer Details,” “Pricing and Terms,” or similar language.

Details about fees are also included in a card’s Terms and Conditions.

Fees can commonly include:

• Annual fees. It’s best to avoid annual fees unless you’re confident the benefits will outweigh the fee, as with certain rewards cards. If you find a card you like with an annual fee, don’t hesitate to ask if they’ll waive it.
• Foreign transaction fees. If you’re a traveler, be attentive to any foreign transaction fees, which could drive up the cost of your globetrotting endeavors.
• Balance transfer fees. If you’re planning to transfer a balance to a new card, check for any balance transfer fees.
• Late payment fees. If your finances are challenging at times, consider whether there are fees for late payments – and how much they are – before selecting a card.
• Cash advance fees. Most experts advise against taking cash advances, which can carry a host of fees and cost you money. But if you think you might use a cash advance at some point, be sure to check the associated fees as part of your evaluation.

Interest Rates

Interest rates can vary widely, and they’re currently climbing. According to Lending Tree, the average APR on a new credit card offer is currently 24.45%. Pay close attention to a card’s ongoing APR – it’s one of the most important factors in your card selection, especially if you’re considering carrying a balance.

Terms and Conditions

A credit card’s terms and conditions document the rules and guidelines of your agreement with your credit card issuer. Fees and APR are part of the terms and conditions, but there can be other elements, like the rules around payments. If you want to fully understand the card you’re getting, you’ve got to dig into this fine print.

The Consumer Financial Protection Bureau (CFPB) keeps a Credit Card Agreement Database of the terms and conditions from hundreds of different card issuers. This can be a great resource for credit card comparisons.

Issuing Banks

The name of the issuing bank should be included in the name of the card, as well as in the Terms and Conditions agreement. If you already have a good relationship with a lender, it could make sense to consider their cards, as you may be approved more easily. Some banks also offer existing clients better interest rates, lower fees, a longer promotional financing period, or even a sign-up bonus when they open a credit card.

Just be sure to compare your bank’s offer to non-bank offers, especially if you’re looking at a balance transfer or application bonuses are important to you. This will give you a full picture of the best options for you.

Consumer Reviews

As part of your comparison, be sure to look at consumer reviews of different cards and card issuers. What are others saying online? Look at the most recent reviews to be sure you’re getting the latest information, as well as a balance of the good and bad reviews.

You may want to ask around as part of this evaluation. Can a friend or family member recommend a card? If they’ve had a great experience with a card over many years, you may want to consider what’s currently available from the issuer.

Pre-Qualification

If you’ve compared offers and don’t have a clear winner, you can consider submitting a pre-qualification form for more than one card. This does not create a hard pull on your credit, so it won’t affect your score. While a pre-qualification is no guarantee you’ll be approved for a card, it gives you more information to work with. If one pre-qualification is approved and the other is not, this may tell you where to focus your efforts.

Remember, there’s no one-size-fits-all perfect credit card. By evaluating your needs, credit score, and the available card offers carefully, you can find options that are a good fit for your individual needs.

If you’re in a tight spot or struggling with emergency expenses and have bad credit, we can help. We offer personal loans for bad credit. Call or visit any Check `n Go store for more information about our installment loans, or apply online.

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