What to Look for in a Credit Card?

Credit card Q%A: “What to look for in a credit card?”

When shopping around for a credit card, there are a number of things you should keep your eye on to make sure you not only get what you’re looking for, but also that you get a good deal.

There are a wide range of credit cards out there, and not all of them are best suited for every consumer, as we all have different needs and unique characteristics.

So the first question you need to ask yourself is why you want/need the credit card to begin with?

What type of credit card do you need?

Are you looking to earn cash rewards? Check out the best cash back credit card.

Do you want to establish credit? Find a credit card that reports to the major credit bureaus (most do, aside from prepaid credit cards).

Do you want to pay off other high-APR balances? Get your hands on a balance transfer credit card. If you want to avoid fees, check out no fee balance transfers.

Or if you’re simply short on cash, try a 0% APR credit card (on purchases), which will give you some breathing room for a while without being subject to interest charges.

Once you know why you’re looking for a credit card, you can dig deeper and look at the characteristics of each card.

What is the credit card’s APR?

One of the most important features of a credit card is the APR, or annual interest rate. It is expressed as a percent and the associated fees are called finance charges (how to calculate credit card interest).

If you carry a balance, you’ll be subject to finance charges, so if you think you’ll carry a balance, choose a low interest rate credit card. Or a 0% APR credit card if you only think the balance will be temporary.

Be sure to look at both the purchase APR and the balance transfer APR, as the rate will typically vary between the two.

Lastly, is the APR variable or fixed. If it’s variable, it can move higher.  Perhaps a fixed-rate credit card is a better choice, if you can find one…

Is there an annual fee?

Another biggie to watch out for is the annual fee. When comparing credit cards, make sure you’re aware of any annual fee for use.

Many credit cards, including rewards credit cards, come with no annual fee, so don’t feel you need to pay one simply to get the credit card you want.

While you’re at it, compare other fees, like overdraft and late payment fees to ensure they’re reasonable.

What level of credit is needed for the credit card?

And don’t bother applying for credit cards that require excellent credit scores if you have a bad credit score (or even an average credit score).  Check out my credit score range for more on that.

You won’t want the credit inquiries to pile up against you unnecessarily, as they can lower your credit score.

So there you have it – do your research and comparison shop online (and offline) until you find exactly what you’re looking for.