What are Your Spending Habits?
The first consideration for choosing the right card is determining how you plan to utilize it. Are you hoping to simply build a solid credit history and pay off the bill in full each month? If so, cards with no annual fees and longer grace periods are a good bet. This is also a good type card for users that carry a low balance from time to time. If you know you will be carrying a balance from month to month, card with low intro rates and low interest rates are a must. Same goes for someone who plans to use the card for most of your purchases—in addition, you want to get a higher credit limit and a quality rewards program. If the card will be for emergencies only, go for the most basic card you can find with low interest and fees.
No matter how you plan on using the card, getting a low interest rate is always a top goal. When researching cards, you need to bone up on any information regarding the interest rate so you know what you are getting into. The advertised rate is almost always introductory and subject to increase after a certain amount of time. Do you need to make any minimum purchases to keep that rate? Do the rates differ for cash advances or balance transfers? Is the rate being offered based on approval—meaning you may not get this rate, but a much higher one.
With the exception of annual fees, credit card companies are only making money if you are using your card. Rewards programs are mean to entice you, and provided you do not have to pay anything extra to get them, can be a nice bonus. But, before you get lured in to a particular card because of the rewards, do a bit of sleuthing first to determine whether it is worth it. These days, many reward programs are not as wonderful as they once were, due to new regulations and economic difficulties. Choose programs that allow you to claim rewards in various ways—like cash or travel. How easily can you earn points and how easy are they to redeem? Bone up on restrictions, which almost certainly exist. Are there limits to points you can earn? Do the rewards ever expire? What is the minimum reward requirement and do you think you will ever actually earn that many points? Are reward points subject to a change in value? If so, are you notified beforehand so you can cash out before the reduction takes place? Can you purchase points? Are rewards transferable?