How To Find The Best Credit Card
Credit card shopping can be tough business. There are literally thousands of different options – even some cards that the credit card companies don’t advertise! And then, there are the options! So many different types of credit cards to choose from with so many different options! It can be a challenge just to decipher which ones offer what. So, here are the four things you need to compare when trying to find the best credit card deal:
1. Interest Rate
The first thing you need to look at is the interest rate, or APR, on the credit card. This will determine how much you will pay each month if you don’t pay off you balance in full. The best credit cards out there have an interest rate below 10%, while the average interest rate for a credit card is around 18%. If you plan on keeping a balance on the card, lower is always better. However, if you don’t keep a balance ever, and there are other great features on the card, a higher interest rate may be okay.
The next thing to look at is fees – specifically annual fees. Many of the highest yielding rewards cards charge annual fees, which could easily wipe out the value of any rewards you may have received. If you are thinking about a credit card, look for a card that doesn’t have any annual fees. You can still get good ones, with good rewards, that don’t charge anything.
The next thing to consider is any promotions the credit card is offering, and how valuable they may be to you. Many cards offer incentives to sign up: bonus points or miles, special cash back incentives, or 0% balance transfers for a certain period of time. You should really consider the reason you are getting the card and see if these promotions make sense. For example, if you want to travel, find a travel card that offers bonus miles. You may be able to get a free domestic flight just by signing up. That can be a good deal. Or, if you’re trying to avoid a big purchase, a 0% interest rate for a long time can make more sense. Ask yourself why you’re getting the card, and make the promotions work for you.
Finally, there are the regular rewards the credit card will offer you for your spending. Deciding the type of rewards card is important: it should match your lifestyle. If you like to travel, get a mileage or hotel card. If you like free stuff, consider a points card. If you just like cash, there are plenty of cash back credit cards. The point is, get a card that makes sense to your lifestyle.
The other thing to consider is the value of the points vs. the cash. The best cash back cards currently offer 2% cash back. That means, to get $100, you need to spend $5,000. Now, look at the points cards – most offer 1 point for $1, so after $5,000, you would have 5,000 points. Check in their point catalog and see if 5,000 points gets you the equivalent of $100 in value. Many point places don’t – 5,000 points usually equals about $50. In that case, cash back rewards would be better.