Whether as a financial mainstay, or as a just in case of emergency, just about everyone has a credit card - or a few - at their disposal these days. As well as being borderline impossible to reserve a vacation or book airline tickets without a credit card, they've also become a fantastic way to buy big ticket tech items and earn a little kick back at the same time.
While the need for the credit card is fairly obvious, the best one to choose may not be as clear. In fact, just like when buying a new smartphone or laptop, there really isn't a single answer that is best for everybody.
The ideal credit card can certainly vary from person to person. The best thing is to take an honest assessment of your needs, including the potential usage patterns, and to figure out the best credit card to obtain, for your specific financial situation. So when choosing a credit card, these are some important factors to consider:
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1. Interest rates
Banks want you to use their credit card, and in turn they make their money by charging interest on the purchases that the user makes. Some users like to carry a balance, and therefore should look for a card with a lower interest rate, so that the interest charges will be lower.
Also take note that some credit cards offer a lower introductory low interest rate offer, but it is time limited, like for the first 12 months. And pay attention to the interest rate thereafter if you plan to have an ongoing balance.
Of course, you might be somebody who likes to pay off the bill promptly each month and so the interest rate actually matters little.
2. Annual fees
A credit card annual fee is the cost of being a card carrying member. Some cards charge this annual fee that needs to be paid to continue using the card, while other credit cards have no annual fee.
While the simple answer is to seek out the card with a free or low annual fee, it is not always so simple. In some cases, the card with the higher annual fee also offers significant other benefits to justify the higher cost (see our 'Rewards' section below), so be sure to factor these into the decision of the choice of card. Also be aware of some cards that do not charge an annual fee for the first year or so as an introductory offer, but then charge annually thereafter.
Many credit cards offer a reward system, where the more that the user charges the greater bonus is offered. This reward can take different forms, commonly as cashback, airline miles, or points to be used for the purchase of future travel, such as plane tickets.
This type of reward can certainly be a valuable incentive to use the card, as who does not like to get some free stuff. However, be aware that the cards that offer these rewards often balance this giveaway with a higher interest rate, or higher annual fee so it may not be the best overall deal when considering your usage pattern.
4. Use CardMatch
CardMatch is a clever little tool hosted by creditcards.com. Give them a few of your details (don't worry, it uses 256-bit encryption and is a PCI Level 1 Compliant organization) and it will keep you up-to-date with any special offers and pre-qualified matches.
Even better, you may be targeted for extra sign up bonuses and other perks that you wouldn't ordinarily have access to.
Head to CardMatch to find out more and sign up.
Do I really need a credit card?
Honestly, it entirely depends on your circumstances. If, for example, you've been eyeing up a new laptop or iPhone XS Max for a while now (or maybe preparing for Amazon Prime Day) and know that you can afford to buy it, then a credit card is a great way to get a little something back from your big purchase. Especially if you pay off your balance immediately.
But if you're trying to buy something that's actually beyond your budget and the only way you can afford it is by using a credit card, it's probably a bad idea. The only thing that's really good for is getting you saddled with debt that you can't clear and potentially harsh interest rates to make things even worse.
Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.