Credit Cards How To Use Credit Cards Wisely

How to Choose the Right Credit Card

Written by Hank Coleman

You shouldn’t leave deciding on a new credit card to chance. Ask most people how they chose their credit card, and you’ll get a variety of answers.

Some people just accept a credit card from the bank that they have done business with for years. It’s what they know. Why not just get a credit card from the bank they’ve always used?

Other people happen to pass by an advertisement, either online or on a billboard, that convinces them to apply. I recently signed up for a new credit card after receiving an email offer for reward points that was just too good to pass up.

In many cases, credit card users are almost certainly not receiving the best credit cards that are available. You shouldn’t apply for a credit card on a whim. It should be more strategic than falling for slick advertising. Here are a few things that will help you choose the right credit card the next time you apply for one.

Getting started

First, consider what type of credit card user you are. If you are the type that always carries a balance, you should look for a card with the lowest interest rate possible. Or, you may want to possibly consider a credit card that offers a low introductory interest rate at first. A low introductory offer often works well if you’re transferring a balance to a new card.

If you always pay your balances in full and on time, you would probably do better looking to maximize rewards for your spending.

Finding the lowest interest rate

Finding the credit card with the lowest interest rate is difficult for applicants because many cards only disclose a range of possible rates offered. The interest rate the lender gives an applicant varies based on his or her credit score.

When seeking the lowest interest rate, you should also keep in mind credit unions. Credit unions are non-profit institutions that exist for the benefit of their members.

For example, the Pentagon Federal Credit Union, commonly known as PenFed, was created for military personnel, government workers, and their families. Today, membership is open to anyone who is related to a qualified individual, or those who join a military support organization for a small fee.

There are a host of different credit unions around the country where you might qualify for membership. It’s often worth looking into the accounts and credit cards these institutions offer their customers.

Balance transfer offers

One strategy that many people use to reduce interest charges is to choose a credit card that includes a promotional balance transfer offer. Balance transfer offers often feature a 0% APR on purchases, balance transfers, or both, but for a limited time. These promotional periods can last for a year or more, offering cardholders incredible opportunities for savings by moving their balances to a new card.

Balance transfer offers can also be a good tool to help you get out of debt. You may want to consider combining your existing debt onto one credit card. You can benefit from focusing on your debt while also earning a low interest rate for a period of time.

About the author

Hank Coleman

Hank Coleman is the publisher or the popular personal finance blog, Money Q&A. He’s also a freelance journalist specializing in retirement planning, investing, and personal finance. You can also find him on Twitter @MoneyQandA.

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