Credit cards are not free money so it is important that you use them wisely to avoid paying interest or hurting your credit score. There are a few factors you should consider when you are choosing a new credit card. I listed a few tips to help you make that decision!
1. Research what type of credit card you want
Do you want one for travel perks? associated with a hotel? cash back? Nerd Wallet can help you research and compare different credit cards. First narrow down what is important to you so you can decide what type of credit card you want.
2. Look at card fees
Many credit cards have annual fees that can be quite costly. There are plenty of great cards with no fees but great rewards. If you do not think you will get enough back in rewards or money, do not choose a card with annual fees.
3. Look at interest rates
If you plan on paying only the minimum balance or less than the full balance each month it is important to look at what the interest rate is for that card. Usually there is an introductory rate and then it significantly increases after the first year. The goal is to never pay interest but if you do you want to understand your interest rate.
4. Don’t open too many cards
There is no need for more than 2-3 cards. I personally have three. One is from when I was in college so it has my longest credit history. My favorite is my Capital One Venture card that I use to get travel rewards. My newest is my Bank of America Cash Back so I can get extra cash back because it transfers into my Bank of America checking account. Every time you complete a credit card application they run a credit check which affects your credit score (you want to keep the number of credit checks to a minimum!)
5. Read Reviews
it is important to understand how their customer service is if you have issues and what other people think about the card. Have they had any issues? Is the bank quick to help you with fraud? Are there any issues with the company? You can google the credit card or the bank and read a ton of reviews prior to applying for the credit card.
It is important to pay your credit card statement balance in full each month if possible. This will help increase your credit score and also prevent you from paying interest on your purchases. If you want to learn more about why you should care about your credit score click here.
If you have any questions about certain credit cards or want to know which credit cards I have let me know!