With so many available options, choosing the right credit card can be an overwhelming and confusing process.
Fiscal responsibility has become very chic and stylish these days. And choosing the right credit card requires the same thoughtfulness and devotion as choosing the perfect pair of shoes–for fit, function and fashion.
Here are some tips to help with the selection process:
• Do Your Research
First, check out consumer reports and customer reviews on different credit cards. Generally, you want to consider cards that have at least 100 reviews.
Next, consider the approval odds. Customer reviews contain valuable information concerning the approval process—for those who were approved and those denied. Most reviewers will share their credit score and general insight on the entire approval process. This information can help you approximate your chances of being approved and give you a general sense of what the lender is looking for and how you compare.
Make sure you pay attention to customer service experiences. Everyone has had at least one maddening experience involving poor and in some cases, nonexistent customer service. We are all aware of how frustrating it can be to have an issue linger or go unresolved because quality customer service is lacking. Awareness of procedures for adding an authorized user, updating personal information, replacing a lost or stolen card or disputing fraudulent charges can save you time, money and headaches. Customer service reports can also assist in steering you away from companies with a history of frequent billing errors and constantly adding hidden fees.
The last and most important thing to do during the research phase is read the fine print. Understanding all of the conditions and terms of the agreement is one of the most critical pieces of this process.
• Know your credit score.
Before choosing a credit card—or attempting to purchase anything using credit—be sure you know where your credit stands. This includes knowing your credit score and being knowledgeable about everything included in your credit history. Credit Karma is a website that provides credit reports from all 3 credit bureaus– for free. It is important to review your credit report so you can dispute and clear up any discrepancies prior to attempting to secure a line of credit.
Select a credit card that is compatible with the range of your credit score. The higher your credit score the lower you interest rate will be—if you do your homework. Just because a credit card offer arrives in the mail promising cash back, reward points and a pony, does not mean it’s the best option for you. If you have fair to good credit you have a bit of flexibility in the type of card, credit limit and terms from which you can choose. If you have poor credit your options are a bit more limited but you do still have options.
• Choose the card That Is the best for you.
Understanding your spending profile and personality can greatly assist in choosing the right credit card. There are a plethora of cards available that suit just about every credit score and financial situation. If you are looking to establish or repair your credit or are prone to making impulse purchases regularly, a secured credit card is probably your safest option. If you travel frequently or will only use the card for specific purchases you may want to select a card that has a points system or offers travel rewards. Those looking to eliminate debt or to consolidate the balances of other cards, may want to consider credit cards offering balance transfer services and low interest rates.
• Don’t Apply for Multiple Cards at Once.
This is where doing research becomes critical. Once you’ve selected the card that best fits your spending profile, you want to look at your approval odds. Consider the credit scores, and credit histories of people who have been approved for the card you are seeking. How do you compare? Fitting the profile does not guarantee approval but it does improve your odds.
When you apply for a credit card or any line of credit—a hard inquiry is made against your credit. Several hard inquiries in a short period of time lowers your credit score—which in turn decreases the odds of you receiving the card of your choice at a reasonable interest rate.
Now you have completed all the steps and have secured the perfect credit card. Here are a few things to keep in mind:
• Don’t miss a payment
• Make your payments on time
• Pay off the card whenever possible
• Keep your credit utilization at less than 30% of the card limit