What Credit Card Should You Get?

To choose the credit card that’s best for you, it’s important to identify what you value most out of a credit card. Then, compare credit card offers to find one that has the features that matter most to you.

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APA Schell, J. (2022, July 18). What Credit Card Should You Get? Annuity.org. Retrieved August 17, 2022, from https://www.annuity.org/personal-finance/credit-cards/what-credit-card-should-you-get/

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Chicago Schell, Jennifer. "What Credit Card Should You Get?" Annuity.org. Last modified July 18, 2022. https://www.annuity.org/personal-finance/credit-cards/what-credit-card-should-you-get/.

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How To Choose the Best Credit Card for You

Opening a credit card is a foundational personal finance milestone. But with so many cards on the market, it’s often difficult to know which card is the right choice for you. Choosing the best credit card for you is a matter of understanding your current financial situation and finding a card that suits your lifestyle. Some important considerations that can make the choice easier are your purchase habits, occupation and credit history.

Purchase Habits

The first factor to consider when shopping for a new credit card is your purchase habits. Do you intend to use the card for everyday purchases, or only to swipe it once in a while to build your credit?

Also ask yourself if you plan to carry a balance on the credit card. Generally, it’s best to pay off the balance in full each month, as you’ll avoid paying costly interest.

But if, like 60% of credit card users, you intend to carry a balance on your card, you’ll want to take that into account. Look for cards with the lowest APR, or annual percentage rate, to minimize the amount of interest you’ll owe when you carry a balance on the card.

Occupation

People with certain occupations may qualify for special credit card offers. If you’re an entrepreneur or a full-time student, for example, look into cards that offer you special features.

Small business credit cards work much the same way that traditional credit cards do. These cards might offer specific benefits geared toward the needs of small business owners, such as interest-free financing or travel rewards points.

Student credit cards, meanwhile, can help young people who may not have much credit history gain access to a line of credit. A student credit card should be easier to qualify for than a regular credit card, and the account may offer perks like robust cash back rewards or no annual fee.

Credit History

When you apply for a credit card, the issuer will pull your credit report to determine if you qualify. This report is a snapshot of your financial health and includes records of current and past credit accounts, any history of missed payments and public records like bankruptcies or tax liens.

The more negative entries on your credit report, the lower your credit score, and the less likely you are to be approved for loans and credit cards. For this reason, it’s very important to pay your credit card bill on time each month — even if you only make the minimum payment.

If you’ve never had a credit card or other type of loan before, you might not have any credit history at all. This can make it difficult to get approved for a traditional credit card.

Fortunately, there are other ways to build credit, including with secured cards and student cards. A secured credit card is like a traditional card, but it requires a refundable security deposit to open the account. The amount of the security deposit determines the credit limit of the secured card.

If you’ve been building credit for a while and now have a strong credit score, your options for credit cards open up considerably. You may ‌qualify for a card with a lower APR or a higher credit limit than those with lower credit scores. Cards for those with excellent credit also tend to have very generous rewards programs for cash back, travel miles and more.

Consumers who are trying to pay off debt on a high-interest credit card might consider transferring their balance to another credit card with a better interest rate. A balance transfer card can consolidate payments and save you money by reducing the interest you pay. Credit card issuers often charge small fees for transferring a balance, so keep an eye out for that in the fine print.

Most Popular Credit Card Categories

Once you understand how a credit card will fit into your financial lifestyle, you need to decide what card will best suit your needs. There are three basic categories of credit cards to consider.

Cards for Credit Building

If you want to get a credit card to build up your credit score, ‌look for a card that doesn’t require a high credit score to qualify. As previously mentioned, a secured card or student card will be easier to get approved for and can help you build your credit.

You can also consider applying for a retail credit card. This is a type of credit card‌ offered by a specific retailer, like a department store or grocery store chain. Retail credit cards typically have lower credit limits than traditional credit cards, so you might have an easier time getting approved for a retail card than a traditional credit card with the caveat that they also carry high APRs. But these types of cards still allow you to build your credit, helping you eventually qualify for a traditional credit card.

Cards With Low Interest Rates

Consumers who will carry a balance on their credit card should pay close attention to the APR listed on a credit card offer. The APR is how much interest you’ll pay when you carry a balance on your credit card.

Credit card offers usually provide an APR range. When you’re approved for the card, you’re given an APR in that range. The average credit card APR runs between 15.56% to 22.87%.

Credit cards with low APRs include the Discover it® Chrome Card, with an APR range of 12.74% to 23.74%, and the BankAmericard® Credit card, with an APR range of 13.24% to 23.24%. Both ‌cards also carry no annual fees.

Some credit cards offer an introductory APR even lower than the normal rate. Cards like the Wells Fargo ReflectSM Card offer 0% APR for the first 18 months of holding the card. Always read the fine print on credit card offers, as the low introductory rate is often hiding a much higher rate that will go into effect after the introductory period is over.

Cards With Rewards

Many Americans choose credit cards specifically to take advantage of rewards programs. Credit card issuers offer a variety of rewards categories to customers who use their cards.

Types of Credit Card Rewards
Cash Back
  • One of the most popular types of credit card rewards, cash back means you’ll receive cash equal to a percentage of the purchases you make with your card. Usually this falls between 1% and 3% back. Some programs might offer you a higher percentage of cash back for certain types of purchases, such as gas, groceries or restaurants.
  • Examples: Chase Freedom FlexSM, Discover it® Chrome
Rewards Points
  • Some credit cards offer rewards in the form of points you earn by making purchases with your card. The points can then be redeemed for merchandise, gift cards and other rewards.
  • Examples: Citi Rewards+® Card, U.S. Bank Altitude® Connect Visa Signature® Card
Travel Miles
  • Consumers who travel often might prefer a card that offers travel miles as rewards. These miles can be used towards travel-related expenses, including flights and hotel stays.
  • Examples: Capital One Venture Rewards Credit Card, Delta SkyMiles® Gold American Express Card

Once you’ve decided which credit card you want, all that’s left to do is apply for the card. After you submit the application, the credit card issuer will let you know if they have approved you. You should receive your new card in the mail within one to two weeks of approval.

Frequently Asked Questions

What credit card should I get?
The type of credit card you should get depends on personal factors such as your purchase habits, credit history and the rewards that are most important to you.
Does it matter which credit card I get?
Credit cards are a large financial responsibility, so choosing one that’s right for you is important. The right card can make the difference between the credit card costing you money in interest or earning you money in rewards.
What are the different types of credit cards?
The different types of credit cards include unsecured cards, secured cards, student cards, small business cards, travel rewards cards, cash back cards and retail cards.
What credit card is best for beginners?
Consumers who are just building their credit can apply ‌for a secured credit card or a student credit card, depending on their situation.
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: July 18, 2022

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