Deciding which credit card is right for you
By Ben Woolsey | Published: July 25, 2005
If you are trying to choose between credit cards, take these factors into consideration before filling out an application:
• Interest rate
• Reward programs
• Annual fees
• Member benefits
If you pay off your balance every month, a low interest rate probably isn't too important to you. But about 45 percent of cardholders carry a balance and pay monthly interest. If you tend to carry a balance, a credit card with a low interest rate could save you a lot of money.
Most issuers offer credit card reward programs that pay you back for specified spending. If you travel frequently, this type of card could result in a few free plane tickets each year. Be aware that you have to earn a large number of points before attaining rewards, and points may expire, so this type of card will not benefit infrequent users.
Credit card perks often have a price: annual fees. Consider whether the benefits you get from a card outweigh the fee. For example, if you're not going to be using the card frequently and aren't likely to earn a reward, is an $85 annual fee really worth it? Many credit cards have no annual fees.
Benefits vary from card to card. Some offer travel protection. Others offer roadside assistance. These benefits can be useful if they match your lifestyle. Weigh the pros and cons of its benefits. For instance, if you don't travel often, you may not want to go with a card that has travel benefits.
See if you can get the same benefits elsewhere for a cheaper price. If you are already an AAA member or could join for a very low price, for example, a credit card's roadside assistance perk wouldn't be useful.
When selecting a credit card, it helps to take these factors into consideration and pick the card that best fits your lifestyle and credit situation.
- Card debt pitfalls for late-in-life marriages – Older couples face a wider range of financial complications than their younger counterparts ...
- 7 rules for using credit cards to finance a dream – Founding a business, getting an education or even a once-in-a-lifetime experience could be reasons to take a risk ...
- 8 ways to save on wedding costs, avoid debt – Some frugal, chic strategies to save money on your nuptials and avoid relying on credit cards ...