If you’re getting ready to apply for a credit card for the first time, you may be concerned about finding the best credit card.
Here’s a secret little tip for you – there’s no such thing as a best credit card. There’s only the right one for you. And even the right ‘one’ can go woefully wrong if you don’t handle it wisely. Here are a few nuggets of advice from experienced users – some of whom learned the hard way how NOT to handle plastic.
1. Before you make applications, take stock of your spending and saving habits.
Does money burn a hole in your pocket? Are you the type that does without lunch for two days before payday because you HAD to buy that scarf on sale? If so, credit cards are going to be a dangerous temptation in your wallet. Minimize the dangers of temptation by opting for a credit card with a low spending limit and the lowest interest rate that you can find. That way you can only dig yourself so far into debt before the spending limit stops you.
2. Consider why you need a credit card.
People want cards for lots of different reasons, and those reasons can help you choose the best option for your situation. If you want the convenience of not having to carry cash, for instance, and a ready record of all your spending – but you don’t intend to live beyond your means on plastic, then a good choice for you is a rewards option with a mid-range APR. By charging everyday purchases on your card, you’ll keep a running record of your expenses AND earn cash back or rewards. It’s a good plan for you as long as you only charge what you can afford to pay off in full each month. That way you won’t be incurring interest on your balance – so the APR doesn’t mean much.
3. Choose the right credit card for the job.
The best credit card for charging large purchases is not the same as the one that’s right for everyday use for expense accounts and the like. If you need a card in order to finance a new computer or refrigerator – something that you’ll pay off over the course of the next several months – you’ll want a card that has a low APR. If you shop carefully for your credit card, you may even find one that offers discounts on large purchases, and insures any item that you buy with it against loss or damage for up to a year.
4. Read the cardholder agreement in full before applying. There’s more to your credit card than just the APR. Before you choose a card, take the time to read ALL the small print. Total up annual fees, application and processing fees, late fees, transaction fees and any other charges that may be hiding behind the legalese so that you know exactly what it will cost you to apply for and use each credit card.
That last is especially important. Shop as carefully FOR your credit card as you will WITH your credit card. If you don’t, you could find yourself in a situation where your new card arrives – complete with a balance of