Credit cards are a good way of improving your credit score. Your credit score is based on your credit report and essentially tells lenders whether or not you are a suitable candidate for loans, especially if you’re considering starting a company.
However, you will have to have a somewhat decent credit score to begin with if you are going to receive a credit card, but choosing a credit card can be very difficult.
There are various different things that you need to think about before selecting one. Here are 7 tips you can use to help you choose the perfect credit card.
1. Comparison Sites
There are many different credit card providers to choose from in the USA and Canada. The best way to choose the best one is to use a comparison site, which will show you all of the cards that you could be eligible for, their rates, and the benefits you get from them.
Before using a comparison site, it is essential first to conduct a little research of your own. Most comparison sites will just display the leading credit card providers.
You should take some time to research these providers yourself so that you know who they are, what they offer, and what it’s like having a credit card with them.
In addition to researching the leading credit card providers, you should also research the comparison site you are using, which you can do by reading its reviews on Google and Trust Pilot.
2. Annual Fees
An important factor to consider when looking for a credit card is the card’s annual fees. Every credit card has annual fees, it’s just that some are more than others. Generally speaking, cards with higher borrowing and more favorable interest rates tend to have the highest annual fees.
If you are on a very tight budget and only want a credit card to improve your credit score, then you should opt for a credit card with low annual fees. After all, if you won’t be using your card much (or don’t need it), there’s no point paying many fees each year.
3. Loyalty Points
Arguably one of the most important factors to consider when you intend to get a new credit card is the loyalty points system and rewards that the credit card providers offer. Some credit cards give their clients rewards and loyalty points for making purchases.
These rewards can range from anything, from cashback to holidays. Loyalty points can be built and used to purchase things like groceries, flights abroad, and even clothes.
As mentioned previously, some card providers give cardholders cashback as a reward. Whether or not cashback is offered as a reward, it is very common for credit card providers to give new sign-ups cashback on their first few purchases.
When considering applying for a credit card, you should always consider how to get the most out of your card. Initial sign-up cashback is a very effective way of getting the most for your money. The amount of cashback you can earn on your first purchase is usually around 10% but can sometimes be more.
5. Interest Rate
Your card’s interest rate needs to be carefully thought through. The higher your card’s interest rate is, the more you will pay on the money you have to pay back to them each month. Ideally, you should find a card with as low an interest rate as possible.
To access low-interest cards, you usually need to have a very good credit score. The reason for this is that most lenders won’t offer good interest rates to people who haven’t got good credit history.
A comparison site will be able to tell you about all of the available credit card providers and which one has the best interest rate.
6. Exclusive Deals
Going back to comparison sites for a moment, it’s worth noting that some credit card providers offer clients exclusive deals if they take out a card using a specific comparison site’s referral link. This is more of a reason to use comparison sites.
Usually, if any deals are offered, the comparison site will highlight this information in a little box underneath the credit card provider’s name and information. Accessing exclusive deals through comparison sites can be a great way of getting more rewards.
7. Minimum Repayment
One last thing to consider is your prospective card’s minimum repayment. Some credit card providers require their clients to spend a certain amount each month; otherwise, they can’t access their cards.
Make sure that you carefully consider your prospective card’s minimum repayment rate; otherwise, you could take out a card you can’t afford.
Choosing a credit card isn’t easy. If you have never taken one out before, then the best way to find a card that’s right for you is to use a credit card comparison site. The bottom line is that a comparison site will show you all the credit cards available with the rates.
Be sure to check your credit score before applying for a card, so you can guarantee that you would even be eligible. And as always, living within your means is a wise idea.