Whether or not you are trying to rebuild your credit score, or want to acquire new credit cards, there are specific guidelines to follow that will help you get the best type of plastic in your wallet. Here are five tips for getting the best credit card for you.
1. American Express Offer? Take It
American Express is probably the most well-respected credit card out there. For starters, they offer amazing APR rates, and are especially loyal to their customers. Indeed, their customer service is outstanding and they offer great rewards too. For instance, for some of their cards, for each dollar that you spend you earn a point. These points, once significantly accrued, can be used for flights, hotel reservations, restaurants and more. In addition, American Express is accepted worldwide, so whether or not you travel for pleasure or business, this card can be used pretty much anywhere around the globe. Moreover, business professionals benefit greatly from having this type of card. Again, an American Express personal credit card or business credit card rival their competitors. So if you are offered an American Express card, make sure to take advantage of that offer. Oftentimes, only people with superior credit are offered American Express credit cards.
2. Always Review The APR
In case you’re wondering what APR stands for, it means Annual Percentage Rate. APR is the amount of interest that is charged to your credit card or loan on purchases you make. Of course,the best types of credit cards offer zero APR., which means the credit card operates much like cash in the form of plastic.
How do I get a zero APR credit card? If you have outstanding credit, you will be offered credit cards with zero APR. Naturally, the next best credit cards are those that offer extremely low interest rates. Low rates range from 1% to 7%. If, however, you don’t have the best credit, you will be charged a much higher interest rate. Try to avoid credit cards with rates of 25% or higher. In addition, it is wise to skip card offers if you are required to pay an annual fee. Usually, these sorts of cards are offered to people with poor credit. If you have several credit cards with annual fees, the cost for those cards will wind up hurting your wallet, and perhaps even your credit.
4. FICO Uses Different Algorithms For Credit Cards vs. Retail Cards
Your FICO score offers lenders insight into your spending and borrowing habits. It also keeps record of the outstanding balances on your credit cards and how much you owe on loans (home, auto, student loans and so forth). In a word, this is your credit score and it ranges between 300 and 850. When applying for retail cards (such as a Target card, a department store card for Macy’s, etc.), FICO actually uses a different type of algorithm than when gauging your credit score with credit cards that can be used anywhere (cards such as Discover, MasterCard, American Express and Visa). Moreover, it is best to acquire only a few store or retail cards. Instead, stick with credit cards that can be used at any given location. If you have too many retail credit cards, this can actually hurt your credit score.
5. Rewards Cards
It is generally best to go with credit cards that offer rewards. After all, who wants to go with a credit card that doesn’t give you anything in return? However, credit cards with rewards aren’t always the best deal. Keep this in mind: these rewards are only offered to those who have reached a level with their spending and usage of credit cards. So, if you are offered a credit card with a bad APR and an annual fee, but then offered cash back for opening it, chances are, it isn’t a good deal. In a word, rewards come in handy when you have superior credit, always pay off your credit cards or carry a very low balance. That means, if you have a stellar credit score, always make sure to seek out credit cards with rewards.
(Also read: The Pros And Cons Of Rewards Cards.)
When choosing a credit card, it is important to read the fine print, understand the hidden fees and assess what sort of APR the credit card company offers you. Having good credit cards can help improve your credit score and allow you to maintain a credit score that is already in good standing. Again, try to avoid credit cards that charge annual fees and come with high interest rates.