How To Choose The Best Credit Card With 4 Easy Steps
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Did you know that in America, over 80% of all adults have at least one credit card? While experts like Warren Buffett may question the use of these cards, the fact is that they are here to stay. Studies show that 73% of adults get a credit card by the age of 25. Perhaps you’re thinking of getting one for yourself too. If that’s the case, there are a few things you need to consider. With the right approach, you can discover what credit cards fit your lifestyle. To learn more about how to choose the best credit card, here’s what you need to know!
What is a credit card?
So, what exactly is a credit card and how does it work? Think of it as a financial ticket given by banks. Like a debit card, you can use it to pay for stuff. However, while a debit card takes existing money from your account, a credit card uses borrowed money. In other words, you pay for something by using cash from a lender or bank. In return, you pay these lenders back when your billing arrives. It’s like postponing your actual payments to a different date, allowing you to buy what you need before your funds arrive. Once you know how to choose the best credit card, you can master your finances!
However, knowing how to choose the best credit card is no easy feat. There are multiple things to consider before you understand how to choose the best credit card. Firstly, there are different types of credit cards. Each one can benefit its users, depending on how much is spent and how often it is used. Some cards reward you with points for special deals on flights, travel, and other transactions. Other cards can offer cashback for consistent use of the card, repaying you a portion of the money you’ve spent.
In addition, credit cards utilize something called a “credit score”. This score allows a bank to see how timely you are with payments. Think of it as a report card for all your spending habits. If you do well, you can discover how to choose the best credit card and secure some amazing loans and rewards. If you want a deep dive into how credit scores work, click here.
Why should I invest in a credit card?
Now that you know what credit cards are, it’s time to explore why they’re so useful. When used right, these cards can help you manage your finances and grow your money. Before you learn how to choose the best credit card, here are some benefits you get when you use one.
It works in all kinds of transactions.
In today’s world, credit cards have become as universal as cash itself. Many businesses and organizations let you use credit cards to pay for any transactions. Several online platforms only need your card details to purchase subscriptions or products. In other words, a credit card works anywhere at any time. Plus, you get the advantage of carrying less cash on your person. Once you know how to choose the best credit card, you won’t need to worry about lacking funds anymore!
It helps you build a good credit score.
As said before, a good credit score can lead to great opportunities in the future. You can use your credit score to secure better loans, lower interest rates, and other plans or purchases. That said, this advantage comes only when you know how to choose the best credit card. A good card that fits your lifestyle is one that you know you can use often, whether for groceries or bills. If you’re getting a credit card, remember that it has to be used often to secure a good score.
It has multiple security measures to protect your money.
Because of how much money you can spend on a credit card, it’s become the target of many scammers and thieves. A credit card can allow them to spend much more money faster than traditional cash. Because of these threats, credit card companies developed several anti-fraud measures features. Compared to cash or debit, credit cards can alert you of potential false purchases or scams. Some banks also provide zero-liability and insurance plans for any unauthorized purchases.
Credit cards also give you monthly statements and detailed breakdowns of your expenses. It can help you examine your financial plan and see where you’re spending too much or too little. You can also track unauthorized expenses through bills, emails, and phone messages. These security measures will help you avoid losing money and suffering the consequences. Once you know how to choose the best credit card, you’ll worry less about your financial security!
It offers you bonuses.
Lastly, learning how to choose the best credit card can help you access some bonuses for your subscription. Different card types offer different rewards that can boost your credit score and help your finances. For example, some offer cashback rewards that pay you in return for continued credit card use. Others provide plans that help you get discounts and deals for travel, food, and other amenities. Compared to a savings account or debit card, you gain access to a lot more rewards and one-time bonuses through your credit card plan alone. In other words, a good credit card plan can provide you with useful rewards to help your finances and improve your standards of living.
What can I do to learn how to choose the best credit card?
Now that you know the benefits that a credit card offers, it’s time to learn how to choose the best credit card. Here are four key steps to take when you want to get a credit card!
1. Check your credit score.
First of all, those who plan on applying for credit cards should check their credit scores. Whether a first-time user or an applicant for a new line of credit, these scores can convince banks to say yes. Credit scores aren’t only for rewarding your use. They can also be how you can start a new credit card plan, either with better benefits or better rewards befitting your lifestyle.
By having good creditworthiness, you can convince banks and financial institutions to approve your application. However, don’t assume that you can apply to several places at once. The application process is known as a “hard inquiry” in the credit card business, which does affect your credit score. If you want to know how to choose the best credit card, you need to check your credit score first. To avoid a hard inquiry before you’re ready, start by examining your savings accounts. You can also use websites that check your credit scores, such as Experian and Transunion.
2. Remember the purpose of a credit card.
One of the biggest fears that you might have with a credit card is overspending. Many people have gotten in trouble for going over the limit or accruing large amounts of debt. To learn how to choose the best credit card, you should always remember what its purpose. Think carefully about what that credit card is for and how it benefits your lifestyle.
To illustrate this point, two types of credit cards exist. The first is a secured credit card, which requires you to put down a security deposit equal to your monthly limit. The second is an unsecured credit card. While the first one is safer and protects you from overspending, the second one allows more benefits, like cashback at 2% for every purchase or points for special rewards and one-time deals. These rewards are easy to get if you use them for frequent expenses, like groceries or fuel. Knowing which of these fits your needs can help you understand how to choose the best credit card for your lifestyle!
Ultimately, while there isn’t a “perfect” credit card that fits everyone’s needs, there are plenty of unique options. By knowing what you plan to use a credit card for, you can do research and see which ones meet your needs. Remember, different cards offer various bonuses and benefits. Soon, you’ll learn how to choose the best credit card and find the right one for your financial needs!
3. Examine the criteria and questions you want for your card.
Aside from knowing what your credit score is and what your card’s purpose is, it’s important to research beforehand. As said before, several kinds of credit cards can meet your criteria. Different banks offer different cards and card plans, some of which can be more useful than others.
Before you even start to apply for a credit card, always research to see your options and compare them.
Learning how to choose the best credit card also means knowing the right questions to ask. For example, if you plan on using a credit card to build your score, you should ask the bank if their card will do so. Believe it or not, creditors are not legally obligated to report to credit bureaus. The last thing you want is to use a card to build your score, only to find all that effort wasted. Other questions you should ask include the issuer’s interest rates, annual fees, credit limits, and late payment concerns or sanctions.
Once you ask all these questions, you can compile them into a list. Using this comparative list, you can examine each option and learn how to choose the best credit card. You should also do some calculations on the annual rates, and the credit card limits, and see how that will affect your daily life. Otherwise, you could overestimate how often you use your card.
4. Know yourself and your spending habits.
Lastly, if you want to know how to choose the best credit card, you have to examine yourself first. Credit cards are like a double-edged sword; on the one hand, they can offer a lot of useful benefits and improve your standard of living. On the other hand, they can also be abused, leading to serious financial problems and debt issues. Ultimately, the one who makes that change is you.
Before you apply for any credit card, you should follow all the previous tips to see if you can even secure one. After that, take time to examine your spending habits and see if a credit card will help you. Remember, credit cards should help you handle your finances. Getting one isn’t ideal if you struggle with impulse buying, overspending, or late payments. If you feel confident in your ability to cover your bills and avoid building too much debt, then you can give credit cards a chance.
Alternatively, if you struggle to manage your finances then you should consider what kind of credit card to take. If you still want to have one or try it, a secured credit card is your best bet. Thanks to the security deposit, you can start learning how to choose the best credit card and manage it responsibly. However, remember that it requires a deposit equal to your monthly limit. By following all these tips, you’ll discover how important and effective is it to know how to choose the best credit card. Once you find one that fits your lifestyle, you can start to build your credit score and explore more opportunities for financial growth!
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- Ali, M. (2023, February 7). 4 Steps On How To Choose The Best Credit Cards.
- Bloomenthal, A. (2021, May 17). Credit Card: What It Is, How It Works, and How to Get One. Investopedia.
- DeNicola, L. (2021, May 22). How Do Cash Back Credit Cards Work? Experian.
- Fontinelle, A. (2021, May 17). 10 Reasons to Use Your Credit Card. Investopedia.
- Pokora, B. (2023, March 9). Credit Card Statistics And Trends 2023. Forbes Advisor.
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