With various credit card options available, finding one that matches your unique needs takes careful consideration. This decision requires:
- Knowing your budget.
- Determining what you'll use the credit card for.
- Weighing the card's fees and features.
This guide explores different steps you can follow to choose the right credit card and an in-depth look at the types available.
How to Choose a Credit Card
Choosing the right credit card involves understanding your personal needs. These five steps can help you narrow down your choices and understand which credit card is best for you:
1. Check Your Credit Score
Your credit score can help you determine which credit card to get. Even if you've never owned a credit card, you may have built credit in other ways, such as paying off car loans or student loans.
Depending on the strength of your credit score, you may be able to expand or narrow down your options. Check your score and determine which issuers will accept it ahead of time. That way, you can establish the providers you can apply with.
There typically isn't a minimum credit score to apply for a credit card, but you may need a higher score to qualify for the best available types. For instance, cash-back and travel credit cards are usually reserved for individuals with good to excellent credit (670 or higher). Experts recommend a credit score of at least 600 when applying for basic credit cards with limited perks.
If necessary, you can take the time to improve your score before applying for a credit card. You can do so by paying down debt or paying your bills early or on time. Try to refrain from having too many credit lines open — this may make you look riskier to lenders and reduce your chances of approval.
2. Decide What You Want the Credit Card to Do
Various credit cards are available to help you achieve different goals. For instance, you could get a rewards credit card to earn cash back or a secured card for building or rebuilding your credit. Consider which type will benefit you most by asking yourself the right questions:
- What type of credit cards do I already have, if any?
- Is there something specific I need from the credit card?
- Can I get a credit card that helps me fulfill multiple goals?
- What are my biggest expenses?
3. Evaluate Your Current Spending
Check the highest spending categories on your current credit card if you have one. You can find this information on your year-end credit card summary. This step helps ensure you're fulfilling your needs. For example, if you're getting the most rewards for restaurant purchases but spending most of your money on groceries, you may need to reorder your priorities.
You'll also want to set an appropriate budget. This can help you structure and track your spending to avoid credit card debt.
4. Ask the Right Questions
The best way to narrow down credit cards and issuers is to ask yourself and issuers the right questions. For instance, when inquiring about a card, ask them to explain the policy of that particular card type. Find out the associated fees to ensure the card falls within your budget.
Knowing what features are most important to you can help you determine the best credit card. By asking the right questions, you can compare cards more accurately and narrow down your options.
5. Pick the Card With the Highest Value
If you have a few close contenders, look closely at the differences in value. Do they offer any special perks or benefits? Do they allow you to create a personalized debt payoff plan?
It may also help to choose the card with lower annual percentage rates (APRs), annual fees or late fees. While lower expenses on your credit card may be beneficial, ensure the card still fulfills your needs.
What Kind of Credit Card Should You Get?
If you're wondering what credit card you should get, here are some of the most common options available:
1. Business Credit Card
Whether you own a big company or a small side hustle, a business credit card is a valuable asset that helps separate your business expenses from your personal expenses. You may either choose one that offers cash back or allows you to earn travel rewards.
2. Cash-Back Credit Card
Cash-back credit cards may be useful if you're looking to earn rewards on everyday expenses. While some issuers offer rewards on all categories, others offer them on specific categories. Some may also cap them at certain amounts, so be sure to confirm these things when speaking with the issuer.
3. Travel Credit Card
If you frequently travel or have specific plans in mind, travel credit cards may offer flexible rewards and worthwhile benefits. These perks might include cash back on gas, electric vehicle charging, grocery store purchases and restaurants. Consider what you plan to do on trips and how frequently you'll travel to determine if these features are worth it.
4. Balance Transfer Card
Balance transfer credit cards can be beneficial for building or rebuilding your credit. If you have existing debt, you may be able to transfer the balance to a new card with 0% introductory APR or a low introductory promotional rate. This offers a great way to avoid incurring interest in the intro period, allowing you to pay off debt faster.
What to Look for in a Credit Card and Issuer
When inquiring about a credit card, consider fees to ensure the card is within your budget. You should also ask about the card's unique offerings. Let's explore these aspects in detail:
- Annual fees: While some issuers offer higher annual fees for better perks, others may offer lower or no annual fees for fewer benefits. Weigh the benefits with the annual fee to establish whether the card is sensible.
- Interest rates: If you're going to carry a balance, it's essential to consider the interest rates. Factor these rates into your budget to ensure they work with your monthly payment budget.
- Perks and benefits: Besides fees and interest rates, considering the benefits can help you decide whether the cost is justifiable. It can also help determine if the credit card meets your primary needs.
Consider a Credit Card With AAA
It's crucial to follow the above steps when choosing a credit card. Ensure you thoroughly understand your needs and get a card from an issuer you can trust. Are you looking for a credit card with convenient fees and excellent benefits? AAA offers cash-back and travel credit cards that may come with a 0% annual fee and numerous exciting cardholder perks and benefits.
Your purchases will earn you a certain percentage of cash back on gas, electric vehicle charging, travel, restaurant and grocery store expenses. We'll also offer travel and emergency assistance services, assistance with attaining entertainment tickets, AAA travel store discounts and more. To leverage these perks and benefits with a AAA Visa Signature credit card, become a valued AAA member today.
