How To Choose A Credit Card

It’s important to know how to choose a credit card to ensure that you get the best deal possible and don’t end up in a card agreement that charges high fees and offers few benefits. By taking the time necessary to evaluate what each credit card company has to offer rather than just applying for the first credit card offer you receive in the mail, you can be sure that you get a credit card that suits your needs.

1. Check your credit before you choose a credit card. The majority of credit card companies have credit requirements for applicants. Some credit card companies have more stringent requirements than others. Knowing your credit score ahead of time will help you evaluate which credit cards you are most likely to be approved for and which may be out of your reach.
2. Decide between a secured and unsecured credit card. Secured credit cards typically charge a cash deposit that can be debited in the event that the card holder fails to honor his agreement with the credit card company. These cards, however, are easier to obtain for individuals with a limited or poor credit history. Unsecured credit cards offer more benefits but often have higher spending limits. If you don’t trust yourself to properly manage your debts, you may wish to choose a credit card that is secured to establish good debt management skills.
3. Evaluate which credit card benefits matter the most to you before you choose a credit card. Perhaps you want cash back on your purchases or maybe you prefer to accrue frequent flier miles. Whatever your preference is, there is a credit card out there perfect for your needs. Unless you compare the various benefits programs offered by credit card providers, however, you may not get a card that offers you the type of benefits you want.
4. Compare the interest rates on prospective credit cards. Your interest rate depends on your credit history and the type of card you apply for. Some credit cards charge higher interest rates than others even for individuals with stellar credit histories. If you fail to consider the interest rate, you may end up paying more in interest than you should.
5. Read the cardholder agreement for any credit cards you are interested in before you choose a credit card to apply for. The Credit Card Accountability Responsibility and Disclosure Act of 2009 requires credit card providers to post their cardholder agreements online for individuals to review. Reading the cardholder agreement thoroughly will inform you of any hidden fees or high penalties that you may be subject to as a cardholder.
6. Choose the credit card to apply for after calling the credit card company with any questions you may have. Get the answers to your questions before you choose a credit card and fill out an application. If you don’t like the answers you receive, you can find another credit card company to apply with rather than having to cancel a credit card after approval.

Resources:

The Federal Reserve Board: Consumer Guide to Credit Cards

The White House--Office of the Press Secretary: Fact Sheet--Reforms to Protect American Credit Card Holders (CARD Act)