If you’re in the market for one or more credit cards, don’t just consider the annual fees, the interest rates, or the perks you’ll get from having certain credit cards.
It’s also smart to consider your lifestyle, spending habits and how you actually use credit cards.
No matter what your credit rating, or what phase you are in life, here are some tips for choosing the best credit cards for your wallet.
Selecting the Best Credit Cards for Students
If you (or your child) are looking to establish credit, a good student credit card is a nice way to get started.
Student credit cards typically have lower credit limits. Nevertheless, they offer perhaps the most straightforward way to score your first real form of credit. After all, you’ll probably get approved for a credit card long before you can get approved for other, bigger forms of credit, like a car loan or a mortgage.
Tip #1: Know the Law
Just be aware that due to the Credit Card Reform Act, it’s a bit more difficult for students to obtain credit cards than it was in years past.
If you’re 21 or under, a parent must co-sign your credit card application; otherwise, you have to show enough income to be able to repay any credit card debt you incur.
Getting the Best Credit Cards for Bad Credit or Fair Credit
Late payments, collection accounts and certain serious credit issues like bankruptcy or foreclosure will all cause banks to second-guess your credit card application.
But even if you’ve had financial setbacks, that doesn’t mean you can’t get credit. In most cases, you can use a couple of approaches and still get a decent credit card.
Tip #2: Take a non-conventional approach
If you have bad credit, start by seeking a secured credit card, which requires you to put up a deposit – say $500 – and that deposit amount becomes your credit limit.
Just be sure to only go with a bank that reports your secured credit card payment history to the credit bureaus. This way, you can also build your credit rating and improve your credit score.
If your credit score is low, another option is to simply apply for regular, unsecured credit cards designed specifically for those with fair credit or so-so credit.
Picking the Best Credit Cards for Good Credit or Excellent Credit
When your credit is good to excellent, and your credit score is 700 or higher, you should enjoy lower credit card interest rates and have an easier time getting approved. You can also afford to be a lot pickier about which cards you want.
Tip #3: Be very selective
The best part of having great credit is having options.
So before you settle on any credit cards, do your homework, understand the rates and terms of each card, as well as any special cardholder benefits offered with each potential card.
Choosing the Best Rewards Credit Card
As mentioned before, your lifestyle should also account for a lot in your decision-making. If you’re a very disciplined person, and you pay off your balances in full each month, then a rewards credit card could be your best bet.
Likewise, if you are a heavy spender, and you hit the road a lot, a credit card with lots of travel benefits will be most attractive for your on-the-go lifestyle. When you shop, travel cards can help you earn airline miles and hotel stays, among other thing.
Likewise, rewards cards can be a great addition to your wallet.
Tip #4: Focus on what matters most
It’s very easy to get enticed by a slew of potential benefits credit card issuers may offer. But here’s where you have to keep your head and not get distracted by fluff.
Focus on what benefits matter most to you, based on the likelihood that you’ll actually accrue those benefits and use them.
For example, if a reward credit card mainly offers hotel stays or free airline miles, but you actually tend to stay at home, then you’ll probably be better off with a cash-back card, or a card that rewards your spending on gas, groceries and other items.
Finding the Best Balance Transfer Credit Cards
Finally, if you typically carry a balance on your credit cards, take that into account when you’re hunting for the best credit card deals.
After all, there’s no point in getting a rewards card when you really need a low-interest credit card, or a money-saving balance transfer card to pay off existing debt.
Tip#5: Think strategically, but not too far into the future
Depending on your current interest rates, the right credit card can help you save up to $1,000 or so a year. So balance transfer deals are all about getting the lowest possible rate.
But don’t forget to watch out for those pesky balance transfer fees as well; they can be as high as 3% to 5% of the amount you transfer.
And finally, remember that you don’t have to get locked into a credit card deal forever. In fact, if there’s one thing you can count on, it’s that in a year or so from now, credit card issuers will be out with a fresh round of balance transfer offers.