3 steps to choosing the right credit card

Posted at 2:41 PM, Nov 28, 2016
and last updated 2016-11-29 10:15:23-05

There are countless credit cards on the market, with so many banks and credit unions interested in getting your business. Whether you recently got a new credit card or you've been using the same one for years, it's possible the one you chose isn't the best one for you.

Here are three steps you can follow to find the right credit card for you.

1. Know your credit score

Every credit card is targeted at people in a certain credit score range. This means your options are limited if you are new to credit or have poor or average credit, and you may get denied if you apply for the wrong card. A number of companies offer a free credit score. Just do a web search for "free credit score" to see several options. Check terms and conditions to make sure you won't be charged at some point down the line.

2. Know what you want

Credit card issuers compete for your business by offering rewards, zero percent interest promotions and other perks. The trick is knowing your top priority. Do you prefer rewards? Or are you looking to make a big purchase or transfer a balance and get some time to pay it off, interest-free?

If you're looking for rewards, there's more to consider than just getting cash back or travel points. Some cards offer bonus rewards for certain spending categories, such as groceries, gas, dining out or travel. Take stock of what you tend to spend a lot on each month, and search for a card that offers extra rewards on those purchases.



3. Use a comparison tool

Getting a credit card from your bank is easy and convenient. It's nice to have everything in one place, and the bank generally isn't going to overwhelm you with options. However, with so many credit cards on the market, it's wise to research all the best options before making a final decision.

The best way to do this is to use a comparison tool online. A quick search for "compare credit cards" will show several comparison tools. You can usually filter the results based on your preferences and credit score. Take time finding the right card because, every time you apply for a credit card, your credit can take a hit, so the card you apply for should be one you'll keep for the long run.

Use credit wisely

Getting a new credit card isn't always a fun process, but finding the right one can make life easier. Once you have the right card, use it responsibly to avoid getting into financial trouble. This includes living on a budget to avoid overspending, paying off your balance on time and in full each month, and keeping your balance low relative to your credit limit. With these tips in mind, you'll enjoy the perks of your new card while building credit and avoiding interest and penalty fees.