Best Credit Cards: How Do I Know Which One is The Best?
What are the best credit cards for me? This question is very common among credit card users whether new or existing card carrying individuals. Before you continue reading this article, let me quickly mention that this is not credit cards review website. I know many people will be expecting me to start mentioning credit cards such as Visa Card, Master Card, Capital One Card, CITI Card, Chase Sapphire, Discover it Card or Bank of America Card etc. Well, we are not comparing any credit cards here. Of course, all these credit cards that I mentioned are good on their own. However, the fact that they are good cards does not mean that they are the best credit cards for you. That may sound confusing to you but that is the fact.
The above notwithstanding, we will provide you a guide which can be described as ‘Do-it-Yourself’ approach. By the time you are through reading this article, I hope you will have a better understanding of what the best credit cards are all about.
How to select best credit cards
If you are shopping around with the aim of getting the best credit card for yourself, taking the following steps will be helpful:
Define your objective: You need to ask yourself the main objective for the credit card you are shopping for. Your objective may fall into any of the points listed below:
- To earn rewards (points, miles and travel perks)
- To build credit
- To save money on interest
- To get cashback
Your aim may be to achieve one or the combination of any above listed objectives. The most important thing is that, you must get your objective right. You should know why you need a credit card. If your objective is not properly defined, any card will look like as if it’s the best to you. This could be worse if you are presented with credit cards that promise to reward you in one way or the other. A wise man once said, it you don’t know where you are going, all roads will seem right to you. If earning rewards is your objective, there are different types of reward credit cards. So, you should ask question about the kind of rewards you will receive. Are you hoping to earn points, miles or travel perks? Some travel perks may limit you to a particular airline or hotel. Specific airline or hotel rewards could be restrictive. At the end of the day, you may not be able to utilize the rewards. Besides, you need to understand that most travel cards have annual fees. Are you comfortable with the annual fee? One major disadvantage of annual fee is that, you need to pay the fee every year whether you enjoy the benefits on the card or not. If you don’t do your calculation very well, you may end up paying more on the card than what you would have paid on a regular credit card. You should ensure that the benefits you enjoy on the card outweigh the annual fee you will be paying.
Read Also: Credit Cards Application and How to Choose the Right One
Another important factor you need to consider is foreign transaction fees. Cards that waive foreign transaction fee can be nice if you plan to shop overseas. Other likely perks that may interest you include free checked bags, annual companion fare flight, airport lounge access, annual fee hotel night, primary rental car insurance, Global Entry or TSA PreCheck application fee credit.
For cashback credit card, the higher the percentage of the cash reward on purchase the better. Some credit card companies place limit on how much cashback you can earn while some will tell you that your cashback has expired if you don’t claim it within a specified period.
Are you planning to save money on interest? It may be that you want to pay less interest on your existing revolving balance. On the other hand, you may want to access higher credit limit that will allow you to make a big purchase without having to pay interest before you pay off your card balance. In this situation, your best credit cards may be 0% APR cards especially the ones with longer introductory 0% APR period. How much you can pay per month also plays a significant role here. If the amount you can afford to pay per month is too low, scouting for personal loans instead of credit cards may be a better option.
If you want to build or increase your credit, you will need to consider how much you spend in a typical month compared with your monthly income.
Know Your Credit Score: To get the best credit card, your credit should be very good. There are certain credit cards you may not be able to get if your credit score is below a certain point. For instance, you may not be able to get 0% APR card or reward credit card with a poor credit score. If you are going to get a credit card with a bad credit, you should expect to be charged a very high APR.
Shop Around: You can’t determine best credit cards without making a comparison between three or more credit cards. If you shop around, you will have wider options. But if you want to shop for credit cards, it is usually better that you do the shopping within a very short space of time.
Acceptability: There are credit cards that you can’t use outside your country and there are some that are recognized globally. If you are the type that travel often and you will like to make purchase overseas, travel credit cards may be consider the best credit cards for you.
Spending Habit: Above all, developing a good spending habit is very crucial. No matter how good a card may be, if you don’t know how to manage it, it may lead to frustration.
Read Also: What to know about reward credit cards
In conclusion, the best credit cards are the ones that help you achieve your objectives. If your card is not helping you achieve your goals, it may be the time to shop around. When shopping around, let the above guide you in your choice. In summary, seeking advice from a personal finance specialist can make the difference.