Once upon a time, it was relatively easy to choose a credit card. There were basically three choices: Visa, American Express, or MasterCard. There now exists a plethora of options, turning a once simple decision into an incredibly difficult one. For example, you have to consider a number of potential features: lower interest rate, no-fee, travel rewards, cash-back, or even regular rewards points. The decision can be mind-boggling.
First you need to determine if you are willing to pay an annual fee. Most rewards programs are tied to an annual fee, and the more expansive the rewards program, the higher the fee. If you answered no to the above question, you’ve narrowed the field significantly. This doesn’t mean you won’t be able to access any rewards programs, just that some of the more expansive ones are now off the table. As well, most financial institutions carry no-fee rewards cards that are watered down versions of the fee carrying cards and can reward you handsomely depending on your card usage, just not as quickly.
The next factor to consider is how often you plan on using your credit card. If you intend to use the card on a day to day basis for things like groceries and gas, a fee-based card will allow you to gain the maximum reward for the spending you were going to do anyway. However, if you only plan on using the card for the occasional online purchase or in the case of an emergency, the rewards earned on a fee-based card will not likely be enough to justify the annual fee.
Finally, you will need to look at what type of reward or feature is a fit for your lifestyle and habits. Will you carry a balance? If so, perhaps a low-interest card is the right fit. The savings in interest from a low interest card will save you the cost of the annual fee and then some. Do you want something more tangible? A cash reward? Perhaps a travel, or merchandise rewards program are a better fit for you? These particular cards are available from almost every financial institution, department store, and even car dealerships. The key here is to do your research. Look up the cards online, search for comparisons between competitors, and even speak with your financial advisor. The key is to really know what you’re looking for before committing to a card, as multiple applications for multiple cards can damage your credit score.
Finding the right credit card for you is much more difficult than it was even five years ago. The market has been inundated with all sorts of reward and incentive programs for almost anything. However, a little hard work, research, and a strong knowledge of what you do and do not want will ensure you end up with the right credit card solution for your needs.