As a credit card user, it may feel like there are limitless options of cards to choose from. However, not all cards are the same, and some have better features than others. When you’re trying to choose a new credit card, it’s important to research these five factors so you can make be well-informed as you make the best decision for yourself.
1. Annual Fee
The annual fee can be a high cost, and you should consider how often you use your card. The more you use it, the less significant the annual fee will be. If you do not use your credit card often, consider a card without an annual fee. One can also split the cost of a card with an annual fee between multiple card users.
2. Rewards Program
Overall rewards programs can vary as some cards offer specific rewards while others offer a more general reward program. Some examples of specific rewards programs may include cash back, travel miles or points, car rental insurance, and status in hotel loyalty programs. General reward programs are typically cashback or miles that one can use to redeem any item within their reward catalogs. The best way to find the rewards program you want is to consider your expected spending on a credit card carefully.
3. Interest Rate
Interest rates and fees associated with the card should also be considered when comparing different credit cards for your needs. The better your credit rating, the lower the interest rate on your card. You may also find that some cards have an introductory period for the interest rate and then a higher fixed rate after this period ends. It’s essential to read the fine print of these offers. Keep in mind that high-interest rates are not always alarming; it indicates a card company’s concern for you paying back what you owe. On the other hand, some people may spend more when covering high-interest charges.
4. Purchase Protection
If you purchased an item with your credit card, you might have the option of having your card payment for damage to that item. Some cards offer more protection than others, and coverage varies from card to card. It’s important to realize that some purchases are not covered by purchase protection.
Cashback cards are an excellent option for consumers who spend money on the card and pay it off within the grace period. These cards will earn cash back for your purchases, and some rewards programs even offer additional comp plans to increase your cashback earning opportunities. The best cashback credit cards offer the option to earn cash back on specific categories. When considering a cashback credit card, make sure you compare the best offers to select the right option for your spending habits.
While there are many factors to consider when choosing a credit card, the key is to compare them all to find the best option for you. It may be beneficial to seek professional and knowledgeable advice regarding your finances and needs.