If you carry a lot of debt your only concern may be to find a credit card with a very low interest rate.. But if you are able to pay off your balances most months then choosing a good credit card can be a more complicated task.
There is no doubt about the fact that a credit card can be a very helpful little assistant. It can provide you with mileage rewards, travel insurance, identity theft protection and even cash back. But which credit card might be best for you? Here are five tips that can help you choose one.
1. Get your credit report
A good first step is to figure out how creditworthy you are. You can do this by getting your credit report free from the website, www.annualcreditreport.com. You should also get your credit score but there is no way to get it absolutely free. You can get it on the site, www.myfico.com but will have to either pay for it or sign up for a trial subscription to a service called Score Watch. Once you know your score, you will know how potential lenders will view you. If you have a good score, say, 700 or above you’ll be considered credit worthy and have more choices in credit cards.
2. Think about what you’re trying to accomplish
Do you need to carry a balance? Would you like to consolidate debts from other credit cards? In this case, you should probably be looking for a low interest credit card or a 0% interest balance transfer offer. Almost all the credit card networks are now offering this type of card. Depending on the one you choose you might be interest free for as long as 15 months, which would give you time to work on paying down your balance instead of just paying interest.
On the other hand, if you use credit cards a lot it might make sense to pay an annual fee to use one that comes with better rewards. The fact is that if you’re charging thousands of dollars a year on a card, an extra $100 or so in an annual fee probably won’t mean much. You can get all kinds of deluxe benefits from an exclusive, rewards-heavy card ranging from stays in luxury hotels to first class seating on your flights. However, finding a card that offers the best rewards requires a fair amount of work. You could create a spreadsheet with the different rewards converted into dollar amounts so that you can make a side-by-side comparison and then choose the card that offers the best reward rate.
3. Keep your options open
Credit cards come in almost a bewildering array of options. This can include cards with 0% rates, cards with travel rewards, prepaid cards, gasoline cards and on and on. It’s important to decide which categories are most important to you before you narrow down the field. When it comes to things like auto rental and limited fraud liability almost all credit cards have the same protection. Where you will start to see real differences are in return protection, purchase protection and extended warranty benefits. You need to take all of these into consideration.
4. Use the Internet
There are comparison sites such as BankRate.com, Creditcards.com and Credit.com that make it fairly easy for you to check out many different cards in just a few minutes. Of course, once you’ve restricted it down to a few cards, you should visit the sites of the card companies themselves as you may find more up-to-date information there.
5. Watch your snail mail
If you watch your mail, you may find some very attractive promotional offers. Be sure to review them before shredding. You’ll probably find that there are not as many offers as prior to the recession, but there are still some good ones available … so be alert.