Which Item Is Important To Consider When Selecting A Credit Card? When it comes to selecting a credit card, it’s important to consider several factors that can affect your financial well-being. From interest rates to rewards programs, there are several important elements to consider when evaluating your options.
There is a lot to consider when looking for a new credit card. Choosing the right card can depend on the card’s features and cost, along with your financial situation and personal goals. Whether you want to keep a card from your current bank or card issuer or are looking for the best overall, keep these six factors in mind.
Which Item Is Important To Consider When Selecting A Credit Card?
1. Credit score requirements
Credit card issuers don’t necessarily have (or share) a minimum credit score requirement for each of their cards, but they can provide some general guidelines. Certain cards may be primarily aimed at people who fall into certain credit scores – be they bad, very good, or somewhere in between.
When it comes to selecting a credit card, your credit score can play an important role in determining your eligibility and the terms and conditions of the card. A credit score is a numerical representation of your creditworthiness, calculated based on your credit history and several other factors.
Credit score requirements can vary depending on your credit card company and the type of card you are applying for. In general, the higher your credit score, the better your chances of being approved for a credit card with favorable terms, such as a lower interest rate, a higher credit limit, and a more generous rewards program.
In general, credit scores are categorized into several ranges, with each range representing a different level of creditworthiness. Here are some common credit score ranges:
- Excellent: 720 or higher
- Good: 680-719
- Fair: 630-679
- Bad: 580-629
- Very poor: 579 or less
If you have an excellent credit score, you are likely eligible for most credit cards on the market and can take advantage of the best rewards programs and lowest interest rates. However, if your credit score is fair, bad, or very bad, your credit card options may be more limited and terms may not be as favorable.
Some credit cards are designed specifically for people with lower credit scores or limited credit history and may have looser credit score requirements. However, these cards can also come with higher interest rates, lower credit limits, and fewer rewards.
When selecting a credit card, it is important to check the credit score requirements and make sure you meet them before applying. This can help you avoid unnecessary tough questions on your credit report, which can temporarily lower your credit score.
2. How do you plan to use the card
Which Item Is Important To Consider When Selecting A Credit Card? Consider how you plan to use your new credit card.
For example, if you’re going to be using a card for day-to-day expenses, a fixed rewards card might make more sense. If you’re willing to work a bit to make sure you maximize your rewards, try getting different reward cards that offer additional bonus categories. For example, you can get a grocery card for your groceries, a travel card for when you travel, and a flat-rate rewards card for everything else.
If you plan on using the card only in an emergency, you may want to look for a card with a high credit limit, low-interest rates, and no annual fees.
Or maybe you have a specific future purchase in mind or want to consolidate and pay off debt. A card with an introductory offer of 0% annual percentage rate (APR) on purchases or balance transfers can make sense.
3. Cost
Credit card fees can affect your card usage costs, even if you never pay interest. Some of the most important fees to consider are:
- Annual Fee: An annual fee isn’t necessarily a bad thing, but it can affect how much you get from a credit card. Many good options don’t require an annual fee, including some of the best credit cards for beginners. When looking at an annual fee card, keep in mind the benefits that come with the card. Premium cards can have a high annual fee, but they can also offer benefits that outweigh the cost. If you think you’re ultimately getting the most out of the card’s benefits, it might be worth paying the annual fee.
- Balance transfer fees: Balance transfer fees generally range from 3% to 5% and may apply to all balance transfers. You can save money by finding a card that charges a lower transfer fee.
- Late payment: Card issuers may charge a late payment fee if you do not make the minimum payment by the due date. Some cards have no late payment fees. But you can also avoid being charged accidentally by setting auto-pay to at least the minimum payment amount.
- Foreign Transaction Fees: Foreign transaction fees may apply for purchases outside the US or for online purchases if the purchase is not made in US dollars. It’s usually around 3%, but there are also many credit cards, including many travel cards, that don’t have this fee.
4. Annual Percentages (APRs)
Which Item Is Important To Consider When Selecting A Credit Card? A credit card’s APR determines how much interest accrues when you carry a balance.
In general, you pay no interest on purchases if you pay off your entire card balance each month. A card with potentially low-interest rates might be better if you plan to change your balance now and then. For reference, the average interest rate on credit cards is about 16%.
If you plan to use the card for a large expense that you will pay back over time, look for a card with a 0% APR initial offer. Similarly, balance transfer cards may offer a 0% APR on balance transfers for a limited period.
Also, credit card cash advances may have a separate (usually higher) APR that will apply even if you have a 0% APR offer on purchases and balance transfers.
5. Rewards
Rewards credit cards can offer cash back, points, or miles on any qualifying purchase. In general, a rewards card uses one of three earning styles:
- Flat-rate rewards cards offer the same rewards for every purchase that earns rewards.
- Cards with tiered rate rewards earn bonus rewards in certain purchase categories.
- Revolving Rewards cards have varying bonus categories.
- In addition to the earning style, think about the type of reward you want to earn.
- Cashback is perhaps the easiest to use, as you can often redeem the rewards for a statement or check credit or transfer them to an eligible bank account.
- Cards that earn reward points can be very flexible and potentially offer more value.
- Co-branded cards that offer airline miles, hotel points, or points in other loyalty programs can sometimes be more appropriate if you’re already a fan of the brand.
Having a strategy for earning and redeeming miles is a fun and rewarding pastime for some. Others prefer the simplicity of cash back.
6. Credit Limit
Which Item Is Important To Consider When Selecting A Credit Card? Your card’s credit limit determines how far your balance can go before you can no longer make additional purchases. Your initial credit limit may depend on your credit history, score, and relationship with the issuer, and you generally don’t know your exact credit limit until you’ve applied and been approved.
However, some credit card offers state the minimum credit limit in the terms and conditions. Some cards may also have different minimums depending on the card version you are approved for.
Some cards have different minimum values depending on the version of the card you are approved for.
Some cards can automatically rate your account to increase your credit limit. For example, you can automatically qualify for an increase in your credit limit after just six months. It may be a good idea to call the provider if this is an important factor for you.
You can also request a credit limit increase for one of your outstanding cards. But the request can result in a difficult question, which can hurt your credit score a bit. Focusing on improving your credit, paying your bill on time, and updating your card issuer with your new income as it rises can also lead the issuer to increase your credit limit without asking.
Apply for a credit card?
If you are interested in applying for a credit card, here are some important steps to follow:
- Check Your Credit Score: Before applying for a credit card, it’s a good idea to check your credit score and make sure it meets the credit score requirements of the card you’re interested in. You can check your credit score for free from a variety of sources, including credit bureaus and credit monitoring services.
- Research Credit Cards: There are many different types of credit cards available, each with its benefits, rewards, and fees. Research different credit cards and compare their features to determine which one is right for you.
- Check the credit card conditions: Before applying for a credit card, read the card conditions carefully. This will help you understand the fees, interest rates, and rewards associated with the card, as well as any other important information.
- Complete the form: Once you have selected a credit card and verified that you meet the credit score requirements, you can complete the credit card form. This usually includes providing personal and financial information such as your name, address, income, and employment status.
- Wait for a response: After submitting your credit card application, you’ll need to wait for a response from your credit card company. This can take several days or even weeks. If you’re approved, your credit card company will usually send you a card.
- Activate the card: Once you have received your credit card, you must activate it before you can use it. This usually involves calling a toll-free number or visiting your credit card company’s website.
By following these steps and considering your credit score and credit card terms, you can increase your chances of being approved for a credit card that meets your financial needs.
Conclusion – Which Item Is Important To Consider When Selecting A Credit Card?
Which Item Is Important To Consider When Selecting A Credit Card? When selecting a credit card, it is important to consider interest rates, fees, credit limits, rewards programs, credit score impact, and benefits. By carefully evaluating your options and understanding your financial situation and spending habits, you can select a credit card that will meet your needs and help you achieve your financial goals.
