Applying for a credit card couldn’t be simpler. Nowadays, you can go into your local bank to apply or even complete an online application at your convenience. As great as this is, it presents an entirely new issue: narrowing down which credit card offers you the best possible terms. Fortunately, this isn’t an extremely difficult task as there are plenty of personalized factors that go into making this decision. Here is a definitive list of what to consider when choosing a credit card.
You typically won’t encounter credit card issuers with a minimum requirement for credit scores when it comes to their cards. However, there may be some sort of guidance there – and we’d suggest that you take it.
This is because some cards will be intended for use by individuals that fall directly into specific credit score ranges (whether good or poor or even somewhere in between).
For example, to stand the best chance at taking out a credit card with Arhaus, the recommended credit score is anywhere between 620 and 670. You might get the card with a lower score but that is not guaranteed.
You can check out this arhaus credit card review for more information.
This percentage determines exactly how much interest is generated when you carry the balance of a credit card. The average interest rate is around 16% just for your records.
If you manage (or intend to) pay off the entire balance of the card every month, you may want to consider a card with a lower interest rate as this will cost you less in the long run.
If you are planning to make big purchases that will be repaid over a set period, look for cards offering a 0% APR offer.
Our advice would be to compare the APR for different cards to see which one is the cheapest. You can also start to compare other factors with the cards, including incentives, charges, and fees.
If you are unable to pay off the entire balance each month, you’ll be asked to repay a minimum balance instead. This will usually be around 3% of the balance that is due.
When choosing your credit card, check your credit agreement to see the other charges apply to the card. You will generally be charged for going over the credit limit, or using the card abroad. You may also be charged for making any late payments.
Credit card fees can impact the cost of using a credit card even if you never pay any interest. Important credit card fees you must consider include the following:
The initial credit limit might depend on your credit score, history, and the relationship you have with the card issuer. Likely, you will not know the extent of your credit limit until you have applied for and been approved for the card.
Some companies may have a minimum credit limit set out in the terms and conditions of the contract. Thus, make sure to read the fine print!
Some credit cards offer amazing rewards for customers for every eligible purchase that they make. This may include cashback in particular places, airline miles, hotel points, or other points in any type of loyalty program.
The points in a loyalty program will quickly add up depending on the total amount you spend. These can then be used to purchase plenty of goods.
Make sure that you verify how and where the different rewards on offer can be used before you agree to take a credit card out with a specific company. After all, if you are unlikely to use these rewards, you may want to reconsider your credit card choice.
These are just a couple of the main things you must consider when choosing a credit card. Your potential card issuer may also inquire about how you’re planning to spend the money on the card so make sure that you are clear with your intentions.