Key factors to consider when choosing a Credit Card
When choosing a credit card, it’s important to consider several key factors to make sure it is the right one for your wallet and needs.
Here are few things to consider when choosing a credit card.
🟡Credit Score requirements for approval
Applying for cards you’re not eligible for can negatively impact your credit score.
In case your credit is poor or have no credit at all, then consider getting a Secured Credit Card for building or rebuilding your credit.
Student credit cards may be a good option if you don’t have a credit history yet because you’re attending school.
Premium credit cards, with their enhanced rewards and benefits, typically have stricter approval requirements, including having a good or excellent credit score.
🟡Interest Rate (APR)
A credit card’s APR stands for Annual Percentage Rate. It represents the interest charged if you have a balance on your card. It is very important to check the annual percentage rate (APR) for purchases, balance transfers, and cash advances. The higher your APR, the greater the cost of carrying a balance on your credit card over time.
🟡Annual Fees
Consider that annual fees on credit cards can vary significantly, but they usually range from $0 to hundreds of dollars. For instance, Premium Credit Cards have fees starting around $300 to $700 or even higher. Anyways, Premium Credit Cards come with valuable benefits like generous rewards programs, higher credit limits, travel benefits such as airport lounge access etc.
🟡First-time offers
Some cards have 0% APR for the first few months or signup bonuses after you spend a certain amount for a specified time. But keep in mind that this is just a one-time offer.
🟡Rewards & Benefits
As mentioned above credit cards might offer rewards programs like cashback, points, or miles that match your spending habits (e.g., groceries, travel, gas). Some cards offer fixed rate earnings on every purchase or based on amount spent on certain purchases, while others offer higher rewards.
🟡Fees and Penalties
Pay attention to foreign transaction fees, late payment fees, and over-limit charges.
Transaction fees are additional charges when you make purchases in another currency or through a foreign bank.
Late payment fees are applied when you miss your minimum payment deadline.
Over-limit charges are applied if you spend beyond your credit limit and have opted into over-limit coverage.
🟡Credit Limit
A credit limit is the maximum amount of credit that a credit card issuer allows you to borrow.
When choosing a credit card, it’s important to decide on a credit limit that fits your financial habits.
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