Most people probably don’t put much thought into choosing a credit card. Others accumulate them like pennies, constantly adding more to their collection. However, there are several things you should consider when applying for a card.
- First of all, don’t apply for more than one or two cards at a time, and limit the total amount of cards you have (excluding store cards) to one or two. Too many can impact your credit score.
- Don’t pay an annual fee. Sure, those perks of the fee cards look enticing, but for the average person, it’s not worth it.
- If you usually carry a balance, look for a card with a low interest rate.
- Check to see how long the grace period is. This is the amount of time you have before you are charged interest.
- Find out what your credit limit would be. Too small an amount may cause you to exceed your limit if you make a lot of large purchases, perhaps resulting in a fee and a higher interest rate. Too high an amount may affect your credit score.
- If you’re carrying a balance on a card with high interest, you may benefit by switching to a new card with a low interest rate for new balance transfers. Some also offer low introductory rates for a fixed period of time.
- If you pay off your credit balance every month, choose a rewards card that fits your needs. Cash rewards are the easiest, although some have limits on the amount you can accumulate in a year. If you travel a lot, you may prefer an airline card. Be sure to check to see when or if your points expire. Restaurant cards are convenient for those who like to eat out a lot.
Credit cards are a great convenience. However, they can also be a big problem for people who have trouble controlling their spending. If you pay off your balance every month, don’t have an annual fee, and get a rewards card, you will come out ahead.