Choosing the right credit card can be difficult. With a lot of choices out there, how do I know which is right for me? Different factors like rewards, annual fees, and other kinds of bonuses are things you should consider. Should you get a credit card with a company like Southwest or with a traditional bank like Chase? The number of choices are overwhelming, but here are some helpful tips.
Cash Back
Who doesn't love getting money back for their everyday spending? Most credit cards these days will give you cashback just for spending like you regularly do. This can be a good way to save up money for a vacation or a purchase you want to make.
Look at your budget and see where most of your money goes. Find credit cards that match your spending habits. Many offer 1 or 1.5% on all categories, but others will give you 3% in select categories like restaurants. If you eat out a lot, that may be a better card to get. Some cards even rotate their categories, so you can earn up to 5% in certain categories every 3 months.
Don't forget to look at sign-up bonuses too. If you know you can hit the minimum spending limit, then you should go for it. Just don't get a limit that's higher than what you would normally spend. Again, DON'T SPEND MORE MONEY THAN YOU CAN AFFORD TO SPEND.
Should you get an annual fee credit card?
That really depends on whether you will get more benefit from it than the annual cost. Depending on what the card offers, you could get great value from the annual fee. These cards often offer better rewards than no-fee cards, so if you do a lot of spending in certain areas, it could benefit you more. It's also useful if you travel a lot and want to use a hotel or airline rewards card. The main thing to look at is if the benefit you get from it will be more than the annual fee.
Even if they waive the fee the first year, you should factor it in, because it will become a recurring cost. You may also need to get an annual fee card if you have poor credit. Some companies may not offer you a card without some kind of deposit if your credit score doesn't reach a certain minimum.
What else should I look for?
Do you spend a lot of money with one company? If so, it may be beneficial to open up a credit card with them for extra rewards and discounts. Just like the annual fee cards, make sure that you spend enough there to be worth it.
If you already have a card or bank account with one bank, it may make sense to stay with them. This would help you avoid making multiple accounts across different banks, which can be confusing. However, if that's not a problem for you, then look for a card with any bank you want. And if you like a card from another bank, make sure to check if your bank has a similar option first.
And then you have to ask, do you even qualify for this card? Sites will tell you what credit score they generally will accept. Use a service like Credit Karma to see what your estimated score is. If your credit is bad, it's not too late to fix it.
When looking for a card, the main question to ask is which card that you qualify for will give you the best benefits. Of course, there are other factors, but the benefits are pretty nice to have.
