Building credit is an important part of life. One way to do this is to have a credit card in your name. Of course, once you have this card, it’s important to either pay it off each month or pay at least the minimum payment by the due date. If you are going to get a credit card, make sure that you use it wisely and also get one that will work for you.
There are hundreds of credit cards on the market, so if you need to build credit, how do you determine which one is right for you? The good news is that there are several steps which can help you answer that question.
- Don’t always rely on credit card offers you receive in the mail. In most cases, these are actually advertisements. Instead, visit travel reward or credit card comparison sites for a comprehensive look at the best and worst cards available. On this site, actual card holders rate their cards in such categories as rewards, customer service and fees.
- Be sure to have a good understanding of all fees and other charges that you may incur while being a card holder. Read the literature that comes with the offer and make note of the APR and minimum finance charge.
- You must ask yourself if you plan on paying off the balance every month or if you are going to let it carry over. If you plan on paying it off, it may be better to go with a rewards card that has a slightly higher interest rate. Since you are paying it off in full every month, you won’t have to worry about how high or low the APR is. If you intend on carrying a balance, you will want to find a card with the lowest balance you can find. Because you will need a good credit score to qualify for the lowest rate, you may want to check your credit score before applying.
- Ask yourself what will benefit you most. If you like to travel, you will want to apply for a card that offers some type of reward travel points. If you would rather have money back in your pocket, you may want to search for a card that offers cash back or rebates toward certain purchases.
- Be sure to look for a card that offers either a very low annual fee or no fee at all. If you find a card with a fee, make sure that it will not offset any gains by using that particular card.
- Pay close attention to the grace period allowed by the card. The grace period is how long you have before finance charges are applied to any balance. Look for the longest grace period you can find because you will have more time to pay off the balance.
- Take careful note of the credit limit. If you are just starting to build credit, look for a smaller limit until you learn how to properly handle a credit card. Be wary of no limit cards because they look maxed out on a credit report.
Thoughts on Choosing a Credit Card
I’d love to hear your thoughts on the matter. How did you choose your credit card?Which credit cards do you use? How do you use your credit cards?
Credit: This is a guest post from Travel Reward Credit Card blog. This post was featured in the Carnival of Personal Finance!
Photo Credit: Robert Scoble