Now more than ever, banks and financial companies are offering an array of credit cards with different perks, terms, fees, incentives, and interest rates. With so many options to choose from, it’s understandable if you’re having a hard time deciding which credit card will best fit your needs.
Below are three tips to help you find the right credit card.
1. Check your credit score.
The first step to finding the right credit card is understanding your current credit score. You can obtain a comprehensive credit report free of charge through: annualcreditreport.com, the only website endorsed by the Consumer Financial Protection Bureau. This online portal allows you to request a credit report from the three major credit bureaus: Equifax, Experian, and TransUnion. As a result, you’ll receive a clear picture of your credit score.
If your score is lower than expected, check the details of the report to find out what might be causing your low score. Additionally, if you notice any errors on your report, take time to dispute them, as this can boost your credit score by several points.
Related post: 3 Ways to Improve Your Credit Score
2. Understand the three major types of credit cards.
Although the range of credit card products can vary greatly, most credit cards will generally fall into one of the following categories: low interest rate cards, cash back or rewards cards, and cards that help you build credit or improve damaged credit.
Below we’ll explore each credit card category.
Low Interest Cards
Low interest cards allow you to purchase what you need without accumulating excessive interest charges from month-to-month. These cards are ideal for those who tend to carry balances on their card.
Cards with a 0% introductory annual percentage rate (APR) are also a great option if you’re planning on making a large purchase you plan to pay off before the introductory period is over. In addition, balance transfer cards allow you to save money on interest charges by letting you transfer debt from a high-interest card to a card with a lower interest rate.
Cash Back or Rewards
Cards Cards in this category typically offer a points system by which you can earn rewards or a certain percentage of cash back on your purchase. Rewards cards allow you to accumulate a certain number of points with every purchase, which you can redeem for a variety of perks, such as free airline tickets or free hotel stays.
Cash back cards are a beneficial option if you’re planning on paying off the balance in full every month, as you’ll basically be receiving free money for your purchases. However, cash back cards typically have high interest rates, but if you pay the full balance every month this won’t be a concern.
Cards That Help You Build Credit or Improve Damaged Credit
Also called secured cards, these types of credit cards provide a limited amount of credit to those who are looking to build their credit score, or who are recovering from bad credit. With this card, you’ll likely be required to make an up-front security deposit (typically $200 or $300) to secure your line of credit.
The primary advantage of using this type of card is the issuer will report your account activity to the three major credit reporting bureaus, enabling you to build or rebuild your credit.
3. Go with the credit card that best fits your situation.
Remember, what credit card is best for a friend or family member may not be the right card for you. Try to choose a credit card that offers the most value and makes the most sense for your needs. No matter which card you choose, do your best to use it in a responsible manner, so you can take full advantage of the benefits.
Related post: 7 Common Credit Card Mistakes to Avoid
If you’re interested in exploring credit card options, contact the financial professionals at General Electric Credit Union. At GECU, you’ll discover a number of options, including industry leading, low rates for purchases, balance transfers and cash advances, no annual fee, and more.
High-interest debt can cause financial strain.
Consolidate your high-rate balances to a low-rate GECU credit card and save on the amount of interest you'll pay.