According to a national telephone survey of U.S. credit cardholders, it was found that 25 million Americans have had the same credit card for over 10 years. That means that anytime you sign up for a new credit card, you should most likely assume that you will have that card for quite a long time.
This also means that you will most likely be working with your credit card provider for a long time as well, which makes picking a credit card a very important decision. So how do you decide how to pick a credit card? There are a few key factors to look for, and questions to ask yourself.
What will you use the card for?
When first looking for a new credit card, you should decide what purpose you are obtaining this card for. Is it for general spending? Finding a lower interest rate or new rewards? Maybe you are looking to consolidate debt from other cards, or you want a card dedicated to business spending. Whatever your reason might be, you will need to research which card will benefit you the most based on your needs.
Will you be carrying a balance?
If you know you are someone who usually does not pay off your card fully each month and plans to carry a balance, then you should definitely look for a low-interest card. The average interest rate for new credit cards in 2019 was 19.02%, but it is possible to find a card that offers a promotional 0% APR. This promotional offer may often last for 10-15 months and can help you to avoid interest if you need some time to pay off your balance.
Where do you primarily use your card?
If you are going to use a credit card, then you may as well receive rewards based on your spending such as:
- Gas purchases
- Travel (including hotel stays or airline tickets)
- Grocery stores
- Restaurants
- Business expenditures
What reward will be most of use to you?
If you are someone who loves to travel then you might consider a credit card that gives you points or miles for each dollar you spend. Some travel cards even offer a large signup bonus of miles after spending (and paying off) a specific amount of money on your card, in an allotted amount of time.
Make sure this is something you plan to use, as it won’t be useful to have a large number of reward miles saved if you do not travel often. Instead, many cards offer cash-back on purchases. If you are looking to pay off a larger amount of your bill, then 3-5% cash back might interest you more than flights you will not use.
Read the fine print
Before settling on a credit card you must carefully review the key terms and fees. You do not want to be surprised while on your honeymoon in France that you have an added 5% foreign transaction fee added to all purchases. In addition to that, make sure you understand your APR (interest rate), rewards, minimum payments, sign-up bonus, annual fee, late fees and any other information you should know of.
Picking a credit card might seem daunting, but if you choose wisely and carefully, you should be able to reap the rewards for years to come.
