How to Choose a Credit Card

Choosing the right credit card can vary on who will be using it. While one card might be right for one person, it could be a bad idea for another. Many factors can affect what type of credit card will be the perfect fit. While some might offer a great reward program, it’s APR might be a little too high.

Interest and fees. While credit cards are wonderful to have, they also have their downside. The downside comes in the form of interest. Whatever a cardholder has spent must be paid for. If it is not paid for soon enough they will have to pay penalties and fees. That is why the lower the credit card’s APR (Annual Percentage Rate) the better. Some credit cards have various fees on top of the normal amount of interest that has been applied to purchases. To avoid finding out after the fact, it is critical that the fine print has been read before using the card.

Looking for rewards. Credit card reward programs must also be considered when choosing a credit card. This can be anything from airline miles to an autographed basketball. Each credit card company will offer some similar rewards but also will have some different choices. Before someone decides to become a cardholder with a certain company, they must make sure that it will be worth their while. Some credit cards might give more points depending on where the cardholder uses it. So while the incentives are the same, the amount of points that can be received will vary. To get points quicker the cardholder should seek a credit card that offers more points at the typical locations that they use it. Many credit card companies offer multiple credit cards to choose from.

Sign-on bonus. On top of credit card rewards, many credit card companies will offer sign-on bonuses. These bonuses will change periodically. It is not unheard of for a first time cardholder to receive If a $100 just by making their first purchase. Credit card companies do this so the they can make sure that the credit card will be used. If the cardholder starts using it frequently, and falls behind on payments, the credit card company has a chance to make a good amount of profit from the interest. The higher the interest rate on the card, the more money they will receive. So while sign-on bonuses can be tempting, they can also be fatal to the pocketbook.