With credit card use comes great responsibility and guidelines are easily found. Don’t overuse them, don’t spend money you can’t afford to pay back, don’t open too many credit accounts, etc. Still, the usefulness of credit cards endures. Credit cards are so useful, in fact, that many companies have noticed the high demand, making the marketplace very competitive for consumer choices. Before you impulsively sign up for a card, take a moment to make sure your plastic suits your needs. And before you write off entirely, consider the benefits.
Credit cards are great tools while traveling because many automatically convert your money into different currencies. They can also serve as identity cards, especially when they include your photo. They are better than walking around with a lot of cash, which can be stolen, or even traveler’s checks, because stolen cards can be reported sooner and prevented from use.
So what type of card is right for you? The easy answer comes if you have trouble paying off your account balance in full each month or if you’re seeking to consolidate debt. In either case, you’ll want to find a card with a low interest rate. If you pay your balance in full each month or if you’re interested in these cards for the rewards programs, the decision starts to get more complicated.
Fees or no fees?
A no-fee card with rewards is perfect for people who pay their balance in full but don’t use credit cards heavily. For heavy credit card users, a credit card that comes with an annual fee might end up paying for itself in rewards. To fully take advantage of cards with fees, however, you need to do an assessment of how often you actually use credit cards. Otherwise, a no-fee card is your best option.
Navigating the rewards system
To figure out which rewards systems are best suited to your own needs, consider their offers in terms of the dollar amounts you would pay for those rewards. Cash back is easily calculated as cash, as are gift cards to certain department stores, but airline miles and point systems might be more of a challenge. Figure out what you’d pay for those extra airline miles or points and calculate those as monetary value so you can easily compare rewards systems with very different rewards.
One aspect of rewards systems that might make it easy to choose one card over another is when rewards systems maximize benefits for certain types of purchases, like gas or groceries. If you decide to use one of those credit cards, keep it clearly marked in your wallet so you use it as often as possible for the type of purchase that card rewards.
Which companies want you?
It’s important to know from the very beginning what companies will likely deny your application if you have bad credit. Free credit reports are available annually and can be accessed online from different free credit report websites. If you have a bad credit rating, choose a card company that will work with you. To apply for many cards in a short period of time is a bad idea because the more often companies run your credit check, the more likely your credit score will be negatively affected. People who apply for many credit accounts are considered higher risk than people who don’t.
Do your homework
Learn all you can about what cards are most appealing to your particular needs and open an account with the top choice. If you open many accounts to figure out which one you like best with the intention of closing the others, your credit can be negatively affected because many accounts open at once can indicate a high risk.