Credit cards can be an essential piece of your financial life. They allow you to pay for purchases over time, earn cash back, take advantage of perks, and build your credit score.
However, picking the best credit card for your needs and preferences from the array of options can take time and effort. There are several factors to consider, like rewards, fees, APRs, card acceptance, and online and mobile apps. This article will dive into five factors to weigh when comparing credit cards.
1. Rewards and perks
Many credit cards offer rewards, allowing you to earn points when you make purchases in various spending categories. Some cards pay a flat rate on everything, whereas others may pay higher rates on specific fixed or rotating categories. For example, a credit card may pay higher rates for grocery or gas purchases and lower rates on everything else. Or, you may be able to earn more rewards when you spend money at certain stores that are specified by your card issuer.
2. Annual fees
Some credit cards charge you a yearly fee to maintain the card account and cover the cost of perks and rewards. Fees can range depending on what type of card you have, and higher fees tend to accompany more exclusive cards. You’ll be charged the annual fee every year during the month you opened the account.
Cards with annual fees may offer more perks than no-fee cards. However, if you don’t use all of a fee-based card’s perks, the annual fee may not be worth it. Consider what benefits you want out of a credit card, and avoid fee-based cards if you don’t think you’ll take advantage of the perks.
3. Annual percentage rate (APR)
The annual percentage rate (APR) can determine the interest charged on outstanding balances you carry monthly. A lower APR will result in less interest on outstanding balances, making it easier to manage debt if you carry a balance.
Furthermore, cards may charge different APRs in different scenarios. For example, your regular purchase APR may be lower than cash advance and penalty APRs. Your credit score can also impact APR, meaning a higher credit score could help you secure a lower APR on a card.
Different credit cards vary in which businesses accept them as payment. For instance, Visa and Mastercard credit cards are accepted almost anywhere. American Express cards also have a wide acceptance rate, but less than the first two because they charge merchants higher processing fees.
Meanwhile, credit cards from small banks or local credit unions may be accepted at fewer locations. Even if these cards offer great perks, they may not be useful if the places you shop at don’t accept them. Make sure to check where a card is accepted before applying.
5. Online and mobile card management
A good sign to look for is if the card company lets you apply for a credit card online and the online application is quick and simple. However, it’s also smart to read review articles and ratings from websites like Trustpilot. These can give you a better idea of the online portal and mobile app user experiences. If you’re applying for a credit card through your current bank, keep in mind that online and mobile card management may be much easier because it’ll likely all be in the same app.
The bottom line
The number of credit card options may seem overwhelming. However, you can narrow down your choices by evaluating cards across several criteria. Start by looking at rewards and perks, then weigh those against the annual fee and APRs. Next, research how widely each card is accepted, and read reviews and articles about your top choices to learn more about their online and mobile card management experience. Following these tips will help you whittle your list down to a few top choices fitting your needs and preferences that will be easier to choose from.
Name: Carolina d’Arbelles-Valle
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