Tips to Pick the Best Credit Card – Easy Steps
One of the most important and often neglected aspects of personal finance is how to choose a quality credit card that will not break the bank. As an example, many people choose a high-interest rate credit card because they don’t want to miss an opportunity to get rewards and bonuses from the credit card company. Despite a revolving balance on a debit card, any person can get lucky and find a high credit limit with a low-interest rate.
Credit card issuers are continuously competing to offer the best reward programs. A consumer who constantly picks the best credit card will benefit from the most attractive rewards. Many people don’t know how to pick the right debit card and end up with the wrong credit card, or worse, a credit card with a high-interest rate that blows their budget. So how do you pick the best debit card for yourself? Let’s get started.
Tips to Pick the Best Credit Card
1. Current credit score:
Make sure the debit card you are looking at has a high credit score. Every good credit card will have a credit score above 680, which is considered the best credit score in the United States.
2. Annual fees:
Having a credit card with no annual fee helps you to maximize your spending. A card with no annual fee is better than a debit card with a high annual fee.
3. Credit limit:
A credit card with a higher credit limit will not force you to spend more than you can afford. You can choose a credit card with a credit limit that’s way too high or a credit card with a credit limit that’s not enough. However, a debit card with a low credit limit that has a high annual fee, or one that has a low credit limit and a high annual fee, will not work well for your budget.
4. Gift cards:
If you know that you are going to receive a gift card as a gift from a family member or friend and you don’t want to spend the money on the card, choose the card with no annual fee. You will get some use from the card even without having to spend any money.
5. Sign up bonus:
As a good rule of thumb, sign-up bonuses are better than rewards. In some cases, you can get thousands of dollars or even more in rewards, but if you have the choice between spending the $1,000 sign-up bonus or earning 5,000 miles instead, choose the sign-up bonus. You can choose your rewards later.
6. No foreign transaction fees:
As a rule of thumb, the higher the APR, the lower the foreign transaction fees.
7. No credit check required:
A credit check is not always necessary and can hurt the good credit score of the cardholder.
8. Variable APR:
If a credit card has a variable APR, the interest rate will fluctuate with the prevailing interest rate on the market. The variable APR card will not help you to pay off your debit card in full.
9. Penalties for early payment of the balance:
Many people pay their credit card bills right before the due date to avoid a late fee. If you don’t want to be penalized for paying your debit card bill before the due date, choose a card with a high-interest rate, such as a debit card with a high APR.
10. Guarantee fee:
A guarantee fee is charged by some credit card issuers to protect their cardholders against the risk of carrying a balance from month to month.
11. No penalty APR:
Penalties for paying your credit card bill on time are usually 2% of the total balance. Most debit cards will offer a 0% APR if the balance is paid on time.
12. Credit lock:
A credit lock locks your credit card when you don’t make any payments for 30 days. This is beneficial for the debit card issuer because it will guarantee the customer to use the card for the next 30 days. However, it is not beneficial for the debit cardholder because you won’t be able to spend your money.
13. Cash advance fee:
Some credit cards will charge a 3% to 5% cash advance fee when you make a cash advance. Most debit cards will not charge a cash advance fee if you pay off the balance in full.
14. Extended warranty:
The credit card with the extended warranty will offer you a guarantee to pay for the warranty cost if you have not paid for the warranty within 3 years. In some cases, the warranty cost is not refundable and you have to pay for it.
15. Waiting period:
Some debit cards will require a minimum of 6 months before you can spend your money.
16. Bonus rewards:
A bonus rewards card will offer you special bonus rewards points or miles that can be used for free travel and airline tickets. If you do not earn enough points or miles through regular credit card use, you can go to the bonus rewards debit card and earn more points and miles.
17. Annual fee:
If the credit card you are considering has an annual fee, consider any other cards with no annual fee.
18. Minimum spending requirement:
Some cards impose a minimum spending requirement of $200 or more in order to get some or all of your bonus rewards.
19. Carryover balance:
There are two types of credit card debt: outstanding credit card debt and credit card interest. Most credit card companies allow you to transfer the credit card balance to your savings account if you pay the credit card in full by the due date. However, some credit card companies might charge a fee for this. The interest on debit card debt is usually lower than the rate of return for savings accounts, so it makes sense to transfer the debt to the debit card interest-free.
20. Personal guarantees:
Personal guarantees mean you are giving the credit card company a promise to pay for certain charges or specific charges that might occur in the future. For example, if you go to a restaurant and make a purchase and the food does not arrive or is served in a way you don’t like, you will have to pay for the damages yourself and the debit card company might not be responsible for it.
21. Personal liability:
Some credit card issuers might not be responsible for any losses or damage caused by their cardholders. This means that your credit card may be liable for the charges that you make even if you used your card for the wrong purpose.
22. No portability:
Some credit cards offer portability, meaning you can keep your old card as your primary card and switch to a new card after a certain period. Most debit card companies do not offer portability on their regular debit cards and this is a good reason to avoid such cards.
23. Points transfer:
Some credit cards transfer points to the new card instead of giving you cash for them. While it is a good idea to get cash for the points, you should always take advantage of the points by using them to get a discount on the purchase you are making.
24. Withdrawing cash:
Most credit cards will not allow you to withdraw cash from their ATMs without paying a cash advance fee.
25. Loss or theft:
If your credit card is lost, stolen, or lost in the mail, you will have to pay a deductible or replace the card. In some cases, a cardholder may also have to pay for damaged or stolen items if the property damage was caused by the loss or theft of their card.
Some of the above concerns are just in your head and are most likely not issues with the debit card that you are considering. If you are afraid that your debit card issuer might close the account without your authorization, for example, ask them to give you written notice.
Here is one final question that you can ask the debit card issuer before you decide to sign up for a credit card:
“Could I open a new account with a different debit card company with no penalty?”
If the answer is yes, then you have to go ahead and open a new account. But be ready to answer another set of questions if you decide to switch to a new debit card issuer.
If you are considering a credit card for the first time and you already have a debit card, it is better to use your debit card for everyday purchases, rather than having a debit card issued solely for use with the purchase of travel tickets or events tickets.
Essential Things to Know More About best Credit Cards:
Credit cards have evolved greatly over the years. Many debit cards allow you to consolidate existing cards into one card with a single interest rate and a single credit limit. A debit card that you use for everyday purchases might offer you lower interest rates than the higher interest credit cards that you have. A lower rate will mean that your debt will be forgiven sooner, which will make your credit score much better.
Be cautious when applying for new credit cards. Banks are trying to sign up customers for debit cards and get them to commit to a long-term contract in exchange for the rewards that they offer. If you sign up for a new debit card, remember that you are agreeing to a long-term contract, and pay attention to all of the details that come with it. If you choose to use a debit card, be sure to read the terms and conditions carefully. You should also remember to inform your debit card provider that you are opening another debit card.
In a transaction between you and a bank, a small business, or a debit card issuer, you will probably need to give a physical or electronic signature. You might also need to enter your PIN. You will also probably be asked to enter your birth date and social security number. It is good practice to memorize these and carry them with you so that you can give them to anyone you are communicating with. If you choose to pay with cash or a card, you should be aware of the type of transaction that you are making. For example, a merchant may be charged a fee for a cash transaction or for using a debit card.
24% more credit available to millennials than non-millennials
Credit card applications are becoming more and more difficult to get approved. Millennials in particular are finding it more difficult to get approved for a debit card compared to their parent’s generation, according to a study released by the Federal Reserve. This is partly because the Millennial generation has less access to credit, and because Millennials generally are more risk-averse.
Millennials also tend to do more of their spending on their mobile devices rather than their credit cards, which makes it more difficult for banks to verify their identity. It is also important to remember that you can take out a debit card with different providers in your name, so your credit history can be recorded differently depending on the issuer.
Consider your credit!
Credit cards are also important because they can increase your credit score. Choosing a debit card is a difficult task that needs to be examined personally. A debit card is a huge purchase that will be recorded on your credit report for a long time. You may want to factor in the amount of debt that you plan to take on and whether or not you can make payments each month.
If you decide that you will use a credit card for your purchase of travel tickets or event tickets, be sure to plan ahead so that you will not get into a debt situation that you cannot pay off. If you plan to travel abroad and do not have a debit card in the country, you will need to rent a debit card or prepaid card to make your purchases. Hence, considering your debit card is very important.
Must Read: The 15 Most Important Things to Consider for Credit Repair
