Between banks, credit unions, and other financial institutions, there are thousands of credit cards on the market. But even if you find a list of the best credit cards available, it can be overwhelming trying to pick the right one.
If you’ve ever asked yourself, “What is the best credit card for me?” we’ve got a few questions you can ask yourself to narrow down your search.
What is the best credit card for me? Ask these 3 questions to find out
While picking the right credit card can sound complicated, it’s a straightforward decision once you know what you’re looking for. Ask these three questions, and you’ll be closer to picking the right card.
1. What does my credit look like?
Your credit score is a big factor in determining whether you can get approved for a credit card. While some cards are designed for people with poor or fair credit, some of the best rewards cards require a good or exceptional score.
If you have poor credit, it might make sense to apply for a secured credit card, which can help you build up your credit history so that you can get a better card in the future.
If you have fair credit, a card such as the Capital One QuicksilverOne cash rewards credit card may suit you. While this basic cash-back card charges a high APR and an annual fee, you’ll still get 1.5% cash back on purchases.
If your credit score is on the good to the exceptional side of the spectrum, you’ll have a much wider selection of cards from which to choose.
If you don’t know your credit score, you can get free access to your FICO credit score through the Discover Credit Scorecard. You don’t need to be a Discover customer to register.
2. What kind of benefits do I want?
If your credit score is good or exceptional, you’ll have a good chance of getting approved for most credit cards on the market. Consider what type of benefits you want.
To give you some ideas, here’s a quick summary of the main types of credit cards:
- Cash-back credit cards: These cards offer cash-back rewards on everyday purchases. Some even offer bonus rewards in certain spending categories. While some cash-back credit cards offer sign-up bonuses, they’re typically not robust.
- Travel rewards credit cards: These cards offer points or miles that you can use to book flights, hotel stays, and more. General travel credit cards offer rewards you can redeem for just about any type of travel. Airline and hotel credit cards may restrict you so that you can only redeem rewards with the card’s brand partner.
- Low-interest credit cards: You’ll either get a 0% introductory APR on new purchases or balance transfers, or a low ongoing APR. Low-interest credit cards are great if you want to finance a large purchase or transfer a balance from a high-interest card and pay it off over a year or more.
- Store credit cards: These cards offer special rewards or perks with a specific retailer. While most store credit cards are a closed loop — meaning you can only use them at the retailer — others are open loop and can be used anywhere. Store cards are typically easy to get even if you don’t have stellar credit.
- Student credit cards: College students can get one of these unsecured credit cards to help them establish a credit history. Some student credit cards offer special perks for those in school, such as cash back for good grades, or extra rewards for responsible credit behaviors.
- Secured credit cards: Designed for people who are new to credit or have a poor credit score, these cards require a collateral deposit to get approved. Secured cards are common credit-building tools that allow you to improve your credit for free as long as you pay your balance in full each month.
- Charge cards: These cards require you to pay off your balance in full each month. You can’t carry a balance from one month to the next. These cards are uncommon and typically charge a high annual fee.
- Small-business credit cards: With these cards, business owners will earn rewards and other benefits for their company. Business credit cards tend to offer higher credit limits than personal ones and can help you build a credit history for your company.
Keep in mind that some of these cards offer more than one feature. For example, some rewards credit cards offer a 0% introductory APR on purchases and balance transfers. Some secured cards offer rewards.
As you compare credit cards, consider what’s most important to you to narrow down your search.
3. What are your spending habits?
If you want a rewards credit card, it’s a good idea to get one that offers bonus rewards in categories where you spend a lot.
Families that frequently spend on gas and groceries, for instance, might want to choose a card that offers a higher rewards rate on those purchases rather than others.
Take some time to review your expenses over the past few months. You don’t need to count every dollar, but at least get a good idea of where you spend most of your money. Then pick a card that allows you to maximize your rewards based on your spending.
You can consider getting more than one credit card to achieve your goal. For example, I use five different cards depending on where I shop to make sure that I get the most bang for my buck.
Avoid analysis paralysis
With so many great credit cards from which to choose, it can be easy to get overwhelmed by all of the options. If you’re having a hard time picking between two or more cards, consider applying for more than one.
If you prefer not to use more than one card, though, apply for your first choice. You can always replace it with a different card in the future if it doesn’t work out for you. The key is to know what to look for and to make the decision process as simple as possible.
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