If you pay for everything in cash, learning how to find the best credit card may not be for you. However, if you plan to use credit cards responsibly and pay them off each month, choosing the right credit card is important. Save cash with these helpful hints.
No credit card is perfect
Imagine a credit card with a permanent zero percent interest rate, rewards and an ample grace period during which no late payment penalties occur. Now crumple up that fantasy and get ready to wade through thousands of credit card offers on sites like Bankrate and Credit Card Offers, to name two of many. The path to finding your ideal credit card must begin with a clear assessment of where you stand. The ideal situation is to pay off your credit card balance each month, but most people fall into one of these three categories:
- You’re attempting to pay down a pre-existing balance
- You sometimes carry a balance, spread across multiple cards
- You have either no credit history or are sporting a battle-scarred credit rating
1. Paying down the mountain
If you’re already dealing with a balance, you’ll want a credit card that offers a low introductory rate and an even lower rate on balance transfers. Such cards generally don’t offer additional perks, such as frequent flier miles. However, most credit card companies have pulled rewards programs off the table these days, so go for a great interest rate, no annual fee and no hidden usage fees.
Read the fine print to ensure that things won’t go south after the initial rate expires. If you execute a large balance transfer, you probably won’t pay it all off during the introductory period. Hence, be prepared for when interest rates go up. Watch out for loopholes in the introductory rate, too. It may only apply to purchases and not balance transfers. The cap for balance transfers may also be significantly lower than your approved credit limit.
2. Be prepared, balance carrier
If you plan to use a credit card regularly and carry a balance, go for a rewards program that offers air miles, points or even cash – if you can find such a program. Watch for expiration dates on your rewards, blackout dates for airline miles and minimum-spending requirements for cash-back programs. When it comes to managing your balance, choose a card with at least a 20-day grace period. That way, you can avoid being charged interest before you even receive your bill.
3. No credit? Not necessarily a problem
While no credit or bad credit will limit your options when it comes to choosing a credit card, many online resources can clue you in to the best subprime secured credit card offers. Try not to carry a large balance on a secured card because the APR is almost always more than 20 percent. Upfront fees of $200 or more on a card with a credit limit of only $250 should not even be considered.