How to Choose the Right Credit Card
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Once upon a time, the only way I purchased anything was with cold hard cash or a debit card. With bi-weekly paychecks and my mother’s voice warning me against credit card debt in the back of my mind, I just never applied for one. Looking back, I’d say that I was missing out on an opportunity at greater financial stability, not debt.
Inevitably, we will all run into a time when funds are tight but the bills still need the be paid. Maybe there’s a sale on something you’ve been wanting or groceries that need bought but wouldn’t be able to afford until next payday. That’s where credit comes in handy, but any old credit card isn’t going to help alleviate your monthly budgeting.
Choosing the right credit card for your situation is essential if you want greater financial freedom. Here’s what to look for and what to avoid from the mind of a college student with sporadic income.
Credit Makes a Difference
Unfortunately, not every card is available to everyone. The ones with the best perks tend to be reserved for those with excellent credit. I had built my credit through a series of car payments on two separate vehicles, which came in handy even though I only fell in the middle range with a score just over 650.
If you found yourself in a similar position, thankfully, there are tools that can help you with this. Head over to a site like Credit Karma where you can check your score for free to see where you stand and get a better idea of what might be available to you.
If you would like to give your score a little boost before applying try paying off any loans or debts and disputing any errors you find on your report.
Choosing What You Need
There are typically three types of cards. Some save money with lower interest rates, some offer rewards like cash back opportunities or travel points, and others work to improve your credit through limitations or positive payment habits.
If you found yourself on the lower end of the credit spectrum or simply haven’t built much credit up yet, opt for the latter of the three. They are easier to apply for and can give your score the boost it needs to help finance a future car or mortgage.
If you’re like me and simply need a card for emergencies or rough months, opt for one with a lower APR percentage. This is perfect for anyone who has irregular income. All you have to do is pay your bills with the card then pay the card off at the end of each month after you’ve been paid.
If you are simply looking for a way to increase the already above average score then opt for a rewards card with several sign-up bonuses. The APR is going to be drastically higher than the other options, so make sure to pay off your balance in full each month. On the bright side, every dollar you spend with the card equates to cash back, airline miles, or points.
Making the Final Decision
Once you’ve narrowed down the cards that are available to you and chosen which benefit best suits your needs, all that’s left to do is select the best card. A few words of advice:
- Avoid cards with annual fees whenever possible
- Look for a card that reports your score to three credit bureaus
- 0% APR periods are wonderful
- Ask about the balance transfer policy
- Ask about any opening or associated fees
- Do not pick a higher APR for additional perks, you may end up regretting it
Knowing what to look for, what is available to you, and what to avoid can help you choose the best credit card for your situation and start enjoying greater financial ability.
Photo courtesy: stevepb