Credit cards make purchasing things much more convenient, and they are a good way to build or improve your credit score. Additionally, there are many different kinds of cards and each of them offer different features.
If you’re thinking about opening your first credit card, be sure to continue reading to learn how to choose the best one for you.
Table of Contents
Think About Your Spending Habits
Although some people use their credit card on a few purchases, others use it on everything to accumulate large rewards. Because of this, it is important to assess your spending habits and find a card that matches it. For example, if you drive quite frequently, you should try to find a card that offers cash back on gas purchases. On the other hand, if you are only using your card to build credit, finding a card that offers rewards isn’t as important.
Compare Interest Rates
When you use a credit card, you’re essentially borrowing money from the card issuer which must be paid back with interest. All credit cards have an annual percentage rate, however, some are higher than others. Because of this, it is important that you look for a card with a lower APR so you can pay less interest. However, most cards with low APR are only available to those with excellent credit, but you should still try to look around.
Don’t Forget About Fees
Credit card companies make money from charging interest and from charging you different fees, such as annual fee, balance transfer fees, late payment fees, over limit fees, foreign transaction fees or cash advance fees. For the most part, if the card offers more benefits or a higher credit limit, you can expect to receive lots of fees.
Read the Fine Print
It is crucial to read the fine print when you sign a credit card agreement. Many card issuers will impose penalties against cardholders for different infractions and it is important to know about these up front. For instance, there could be a fee for extended inactivity on your account or you could be subject to a higher interest rate if you miss a payment. If you’re not paying attention, it’s easy to make a costly mistake.
Credit Cards for People with No Credit
If you’re getting denied for a traditional credit card because of insufficient credit history, there are a few things you can do to improve your chances of getting approved. For instance, getting a secured credit card can help you build or improve your credit score. This type of card requires you to give the card issuer a cash deposit which serves as your credit line.
Another way to improve your chances is to find someone who can act as a co-signer or add you to their account as an authorized user. If the primary cardholder already has a decent credit history, this may help bring your score up by a couple points. However, if they miss a payment or run up their balance, it could negatively affect your credit profile.
If you are trying to choose your first credit card, hopefully this post has informed you on all the things you should look out for. Additionally, be sure that you use your card responsibly and always make your payments on time.
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