Financial Education

How to choose a credit card: a complete guide

Read this article and learn the best tips for you to learn how to choose a credit card. It will help you save money, keep your finances in order, and avoid costly mistakes. Read on!

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The secret to choosing the right card for your finances

how to choose a credit card
Learn how to choose the perfect credit card for you! Source: Freepik

There is no question that credit cards are a convenient way to pay for purchases and get usable rewards. But how to choose the right credit card with so many options available?

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This complete guide will help you choose the best credit card for your needs.

So, whether you’re looking for a new card or want to make sure you’re using the best one, this guide has you covered.

How does your credit score affect your card choice?

Young woman using mobile phone at coffee shop
How does your credit score affect your card choice? Source: Adobe Stock

Before we begin the tips, you must understand that your credit score is one of the most critical numbers in your financial life.

This three-digit number ranges from 300 to 850 and indicates your creditworthiness. The higher the score, the higher your chances of getting better credit.

There are different versions of credit scores, but the most commonly used are the VantageScore and the FICO Score. Both follow the model below:

  • 300 – 579 indicates poor credit;
  • 580 – 669 means you have fair credit;
  • 670 – 739 is a good credit;
  • 740 – 799 shows a very good score;
  • 800 – 850 is excellent,

Your credit score will impact many aspects of your life.

A high-quality credit rating will make financing certain purchases easier, allowing you to take advantage of low-interest rates and premium rewards cards, for example.

Also, it might affect housing applications, security deposits, and job applications.

Want to rent a new apartment? Your landlord may check your credit history! Even buying a cell phone can be difficult if you have bad credit.

And when it comes to choosing a new credit card, it is no different. Most credit cards specify minimum credit rates for new applicants.

So if you want a top rewards credit card, you must work on your score first.

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What to look for when choosing a credit card: 4 best tips

If you’re wondering how to select a credit card that fits you, the first thing you need to do is research.

You don’t want to pick the first credit card you see and end up with some financial damage, do you?

So let’s take a closer look at the best four tips for choosing the right credit card for your wallet.

Understand what type of credit card is best for you

how to choose a credit card
Learn what to look for when choosing a credit card! Source: Freepik

There are undoubtedly many types of credit cards on the market, but not all will work for you. So before signing up for any card, make sure to understand how they operate and their features.

It would be best if you also considered what matters the most when it comes to credit cards.

Do you want rewards? Or do you think paying 0% APR and no fees is best for you? Do you want to build or rebuild credit?

There are a lot of things to be considered, but remember that the best card for you is the one that matches your specific needs.

Therefore, keep a close eye on your spending habits and pay attention to your credit card options.

Check your credit score

As previously said, your credit score is one of the most fundamental things in your financial life.

So once you find out what type of credit card you want, it’s time to check if your credit score matches the card’s requirements.

You might be eligible for credit cards with better perks with a higher credit score.

However, if your score doesn’t look good, you can take some time to improve it before you apply for the credit card you want.

Understand how fees and interest rates work

Interest rates and fees can be expensive, so it’s essential to do research before applying for any credit card.

Hence, if you’re interested in making large purchases that will take you some time to pay back, a 0% APR credit card might suit your needs.

Likewise, credit cards can charge you various fees, such as annual fees, balance transfers, and cash advance fees. Late payment and foreign transaction fees as well.

The examples above are just the most common types of fees you can face daily. But you may encounter others, so be aware of the credit card’s details.

Compare the options

Now that you know what type of credit card you want, what your credit score is, and what you might be charged for, it’s time for you to shop around for the best offers.

You will likely consider bonus categories for reward cards, for example. If you’re interested in low-interest rates, look for 0% APR intro periods.

If the cards you’re comparing have similar values, remember to look wisely for differences in fees, cash back bonuses, credit limits, and other features.

By taking these steps, you can be confident that you’re getting the best possible deal on your new credit card.

Finally, once you’ve chosen a great credit card, remember to use it responsibly!

As we mentioned, a very important step to improving your finances is learning about your credit score. Therefore, check out our post below to learn all about your score!

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About the author  /  Beatriz Vieira

Beatriz Vieira is a producer and copywriter who is part of the finance writer team in this portal. She has a degree in Journalism and aims to improve her bilingual writing skills. Her subjects of most significant interest are culture, finances, and self-development.

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