Shopping for the Right Credit Card for You
Finding the best credit card starts with knowing your financial goals. The most common goals we hear from our customers are listed below, with our suggestions for finding a credit card that helps and doesn’t hinder.
Do you want to lose as little money as possible on a balance that carries over month to month?
Then you’re looking for a card with a low annual percentage rate (APR). The APR tells you how much the credit card company is going to charge you on top of your purchases for any amount you don’t pay off completely each month. Lower APR means you owe the credit card company less. The national average APR is around 19%, but some companies offer APRs below 10%, so shop around!
Are you hoping to save money on a big one-time purchase or pay off an existing balance faster?
Some credit cards have a 0% APR for the first few months, which means they won’t charge you interest on top of your monthly balance during that time period. If you can pay off a big purchase or pay down an existing balance during the 0% APR window (often 3 to 6 months), you could save yourself some money on interest. But be careful! The 0% APR window doesn’t last forever—be sure you know what the APR will become after that (lower is better). And keep an eye out for balance transfer fees. Most credit card companies charge them, and they can be so high that they offset the 0% APR benefit.institutions offer the ability to deposit checks, transfer money, and pay bills directly through your smart phone. See if the bank or credit union you’re considering has these options, and check out the reviews of their mobile apps
Do you want cash or other rewards for your purchases?
Many credit card companies offer cards that give people incentives—usually money in some form—for using their credit card. The offers can be complicated, with different incentives for different types of purchases and sometimes with limits on how you can use the incentives (such as for travel only). Compare what the credit cards are offering against your typical purchases to see what you can expect to earn.
Are you trying to improve a low credit score or establish credit for the first time?
Secured credit cards can be a great way to (re)build your credit score, especially if you’re having trouble qualifying for more traditional cards. Secured credit cards usually require a deposit (often $300 to $500), and your credit limit will be low (typically the same amount as your deposit). But regular on-time payments can go a long way toward improving a low score or establishing a credit profile.
Keep an eye out for penalties and other fees. In your comparison shopping, be sure to look out for all penalties and fees, including:
- Penalty APR – This is an increase in your APR that a company can apply if you’re more than 60 days late in paying your minimum balance. Penalty APRs are often much higher than your regular APR and can last for a long time.
- Annual fee – Some credit cards require an annual fee just for having the credit card account, regardless of whether you’re using it.
- Late payment fee – If you pay your minimum balance late, you could owe the credit card company a fee, and the fee amounts vary from company to company.
Your best credit card offer may come from your financial home (your bank or credit union). Relationships matter, even in the financial world. The bank or credit union you already have a relationship with may be willing to offer you a better deal than a company that doesn’t know you, so be sure to include them in your comparison shopping.
- The Consumer Financial Protection Bureau put together some helpful information on credit card shopping: https://www.consumerfinance.gov/about-us/blog/how-do-i-shop-for-a-credit-card
- NerdWallet has an amazing comparison-shopping tool that can help you narrow your search to the credit cards that meet your financial goals: https://www.nerdwallet.com/credit-cards