6 Things You Should Consider When Choosing a Credit Card

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choosing a credit card

If you are considering getting a new credit card, you will probably get lost with card offers and deals in an abundance. Sure, credit cards are fantastic, but as Uncle Ben once told Spider-Man, “With great power comes great responsibility.” You should always do prior research before getting a card and never apply to too many of them as it might damage your credit score.

Here are six things you should consider when choosing a credit card:

1) Why do you want a credit card?

The first thing you must ask yourself before applying for a credit card is why you want to do it. Do you have bad credit and want to rebuild it? If so, choose a card that reports to the major credit bureaus, and use it with responsibility. Are you a frequent traveler who wants a credit card for the miles? Find a card that offers the most points and rewards on those purchases. There is a vast variety of options, and you need to choose your priorities before applying for a new card.

2) What are the interest rates?

If you were ever in debt, you would know that interest rates can become a massive problem when you don’t pay your bills on time. Compare the APR (annual percentage rate) on different credit cards to choose the cheapest one. Some even offer an introductory zero percent period to entice people into applying, but never forget to check what the rate after the promotional period ends so you don’t end up with an unpleasant surprise.

3) What is the credit card limit?

A credit limit is the maximum amount the issuer lets you borrow on your card at any given point of time, which can vary depending on the person. Sure, having a high credit limit on your credit card may seem amazing at first, but you should be careful if you are new to credit. Always try not to max your credit limit out, because it can hurt your credit score.

4) Penalties

Those people who don’t have discipline using their cards may have to pay a considerable price. Did you know that some issuers can raise your interest rates after one late payment? Be sure to always read their terms of service before applying.

5) Is there an annual fee?

Some credit card issuers usually charge a fee to their cardholders for merely owning a card, which is known as an annual fee. If you have a good score, chances are you won’t need to pay this charge since many issuers don’t impose annual fees.

6) What are the perks offered?

Most companies offer great incentives or benefits for credit card holders. Some of the best ones are cash back (where a percentage of the money you spent on your card is given back to you), lounge access, miles, free hotel nights, etc. Be aware of some details. See if your points expire, or if there are travel restrictions.

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