Among many different options, sometimes answer on how to pick a credit card seems like a very difficult task. Each option has its pros and cons, different interest rates, many variations of awards programs, bonuses and other features. In this case, an option unsuitable for your lifestyle can lead to a large debt, and you will not be able to use the benefits of the card to your advantage.
Nevertheless, we often need additional finances, and credit cards offer us such assistance in an easy-to-use form. How not to make the wrong choice and even get the benefit of your credit card? We suggest you understand this question, taking into account all the details.
What to consider when choosing a credit card
You must understand, first of all, what you want to receive from a credit card, for which you need it. Do not forget that a credit card makes many expenses inconspicuous for you until such time as you learn that your debt has grown strongly.
Since you do not give out cash from your own pocket when paying for purchases with a credit card, you don’t feel it as a loss and you don’t see how much money you have left.
In addition, the credit limit set by the lender allows you to spend more using credit funds. This feature of using credit cards is a risk to spend money more than you can afford at the moment.
Pay attention to your income and credit card balance.
You have to be very well aware of how things really are going with your finances. Know how much you owe at the moment and how much your income will you have this month. Try to keep your balance low, not exceeding 30% of your credit line. In addition, it is worth monthly to repay the balance on your credit card in full, if possible. This behavior will allow you to keep your debt at a minimum level and reduce the risk of excess debt available to you, as well as harming your credit.
Define on your needs
To answer the question, how to pick a credit card, you need to clearly decide what needs you want to meet with a specific credit card. Would you like to get more benefits and rewards, get a zero interest rate for faster and more profitable repayment of your debt, or increase your credit with a credit card, most often it will be three different credit card options.
Rewards, benefits and cashback
If you are going to use a credit card for your daily purchases of products or gasoline, then a card offering cashback on all purchases or on certain categories of them will be the best choice for you.
If you regularly travel around the country and the world, then one of the credit cards with miles and points for purchases during travel, with access to a separate passage at airports and comfortable lounges around the world, will become your top choice.
Reduced interest rate
Credit card interest rates are among the highest at the same time for new clients, especially those who transfer from other lenders, many of the latter offer interest rates at 0% per annum for the first months after registration.
Such credit cards will be ideal for those who wish to repay their debt on a past credit card, thanks to the balance transfer. If this is about you, then you should pay all your debt before the end of the zero interest rate.
Credit rating increase
Some types of credit cards offer a great opportunity to build your credit. They are specifically designed for those who do not have a credit or have a damaged credit due to any obligations.
Often these credit cards require some kind of credit line security. Most often, a cash deposit is used as collateral. There are unsecured credit cards for people without a credit, but they usually have more stringent conditions and high interest rates, which may not always be profitable.
However, if you make timely and responsible payments every month, your credit rating will increase and after a while you will be able to apply for credit cards with better conditions. So you have an excellent opportunity to gradually improve your credit to a state of excellence with a responsible attitude towards your obligations.
Analyze the details
You can see that there are credit cards for almost any situation for any person. Now, to find out how to pick a credit card, it is enough to collect information and analyze all the details that relate to this issue.
Analyze to begin with your needs, which motivate you to get a new credit card, and then the features of each credit card from those that meet your needs.
Read more about different credit cards in separate articles in our financial blog. Leave your comments below.