Four Strategies for Choosing the Best Credit Card
With so many credit card options, how do you pick the right one? It all depends on your financial goals.
Shopping for a new credit card, but not sure which one to choose? Before you apply, think about how you plan to use the card and what you hope to accomplish.
First, identify your goals for obtaining a credit card. Instead of asking yourself, “What credit card is best for me?” ask, “What is my purpose for having a credit card?”
The answer to this question will help you determine which card is the best fit for your individual needs.
Consider the following four tips for choosing the best credit card based on your goals.
Credit Card Goal #1: Build or rebuild your credit
If you have limited or damaged credit, a secured credit card can help you establish or improve your credit profile.
With a secured credit card, you make a cash deposit into a savings account that serves as your credit line, as well as collateral for the lender or issuer. Once you’ve made that initial deposit, you can use your secured card anywhere credit cards are accepted. After a specified period of time, many issuers will allow you to graduate to an unsecured card and they will refund your deposit.
Although you may qualify for other unsecured credit cards, keep in mind that traditional cards marketed to consumers with poor credit often come with high interest rates and fees.
Credit Card Goal #2: Earn cash back or travel rewards
If your objective is to use your credit card purchases to earn rewards, start by deciding which type of rewards fit your lifestyle. Rewards credit cards come in two main categories: cash back and travel rewards.
Next, research the earn rate of each card and how rewards or cash back can be redeemed. Sometimes a credit card that boasts a rich introductory offer doesn’t have the best earn rate. On the other hand, some credit cards with higher earn rates don’t have great introductory offers.
Don’t be misled by a card’s sign-up bonus. Do your homework and choose the card that is the best value long-term.
In addition, some rewards cards charge an annual fee, and some do not. Don’t dismiss a card based on an annual fee. Instead, assess the value you will receive in return for the fee, whether it’s a superior earn rate, generous travel credit or useful upgrades.
When it comes to travel cards, be sure to look for multiple flexible redemption options and avoid a credit card that may adjust the value of your points based on how you choose to redeem them.
Also, be on the lookout for fees, rules or exclusions that could complicate your travel plans or limit the usefulness of the card.
Finally, watch out for cards that require you to spend more than you usually would in order to generate and redeem rewards.
Credit Card Goal #3: Save on interest charges
If your goal is to save money on credit card interest charges, shop for a card with a 0% annual percentage rate (APR) intro offer and ongoing low interest rate.
Aim to find a credit card that offers a long interest-free introductory period. Many cards offer no interest for six to 12 months, but there are also cards in the marketplace that offer 18 months or more.
If you plan to carry a balance over time, choose a credit card with a low ongoing APR. Even a few percentage points could translate to hundreds of dollars in savings in the long-run, so be sure to select a card that will help you pay off your debt efficiently.
One more thing: avoid applying for too many new credit cards at once. If you have multiple credit inquiries on your credit report over a short period of time, it could damage your credit. Research your options and apply for the card that is the best fit for your needs.
Credit Card Goal #4: Transfer a balance
If you’re planning a balance transfer, research balance transfer offers and choose the one that is the best value for your situation. Most balance transfers require additional fees, so compare what each issuer will charge you to transfer your balance.
Many card issuers also have terms and conditions regarding what types of debt can be transferred, as well as transfer limits. Read the fine print when determining which card is the right choice for your balance transfer.
Keep in mind that the balance transfer APR can differ from a credit card’s ongoing purchase APR. Don’t overlook the terms your card offers once the balance transfer is complete.
A Zions Bank credit card* can help you maximize your purchasing power and strengthen your credit score. Compare Zions Bank’s AmaZing credit cards, which come with terrific benefits and no annual fee. Visit your nearest Zions Bank branch or apply for a credit card online.
*Credit Cards are subject to credit approval. Terms, conditions and restrictions apply. See a banker for details.
Ali Hardy is a freelance writer for Zions Bank.