Which of These Card Features is Best?

Picking the right credit card that fits your needs is not an easy feat. The huge number of options can be overwhelming and may make you ask which of these card features is best? There are many factors to consider when choosing a new card but we have outline the most common considerations below for you.

brown skinned hand holding three credit cards in a fan shape,  Top card is black, middle cars is green, and bottom card is red.

Check Your Credit Score

Before you start applying for any new credit account, regardless of the card features, check your credit report and score. Checking your credit report will help ensure that you have no errors being reported that can effect your chances of approval. If you do find errors, be sure to report them to the bureau. You also should check your credit score. This will give you an idea of what types of offers you can apply for. Most of the top tier, premium cards are reserved for individuals with excellent credit scores. but there are plenty of card available for those with both good and fair credit scores.

If your score is not as high as you hoped, spend time working on improving it before you apply. Generally the easiest way to improve your score is to pay your bills on time and reduce your credit utilization. This is the overall amount of credit you are using in comparison to the amount of credit you have available to you. Your score takes your overall utilization in to account so try to keep the number to 30% or less.

Keep in mind that any time you apply for a new credit card there will be a hard inquiry on your report and this will lower your score by a few points. This is why it is important to not apply to a bunch of different cards all at once, especially if your chance of being approved is slim. The more inquiries there are on your report, the less likely you will be to be apprved.

Most card issuers have a pre-approval section on their site. You can check to see if you are pre-approved before applying. This counts as a soft pull on your credit and will not change your score. Having been pre-approved does not guarantee you will be approved once you make the full application, but it will give you an idea of your approval chances. If you cannot get pre-approved, don’t bother applying.

Pick the Type of Card That Fits You Best

Once you have an idea of where your credit score stands, you can start to consider which card feature is best for you.

Want to Improve your Credit?

If you need to improve your credit, consider a card from a company that specialized in credit building. By using a card with this feature and making payment on time, you will be bringing your score up so you can get better cards in the future. These cards tend to have higher interest rates and lower credit limits. There are generally two types of credit building cards: student cards, unsecured credit building cards, and secured cards.

Student cards, like the name implies, are available to current students enrolled in a school, college, or university. These cards can come with lower fees compared to other cards and rewards are aimed at students.

Unsecured credit building cards are pretty self explanatory. They require no security deposit and as such are considered risker by lenders since there is no guarantee of them getting their money if you stop making payments. As such, these cards tend to come with pretty high interest rates and low credit limits.

Secured cards require you to pay an amount equal to your credit limit in to an account that acts as a deposit. That deposit is generally refundable when you close the card or upgrade it to an unsecured account after proving you can be a responsible card holder.

Have Debt to Pay Off?

If you have existing debt to pay off, consider a balance transfer card. This card feature will allow you to transfer an existing balance from another credit account with a higher interest rate so you can pay off your balance faster.

Balance transfer cards generally come with a 0% interest rate for a set period of time, usually between 3-18 months. Having no interest to pay means that the total amount of your monthly payment is going straight to the balance. Having a payoff plan in place before you apply means that you can eliminate as much of your balance as possible before the promotion expires.

Balance transfer cards are generally best for those with good to excellent credit but they may not come with additional perks such as cash back or rewards since the 0% interest period is its own perk.

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Planning to Carry a Balance?

If you plan to carry a balance from month to month, consider a card featuring a low overall interest rate. Having a lower than average rate will mean you will end up paying less in interest charges over the life of the account than if you picked a card with an average rate. Its always best to keep your balances low or at 0 but if you have to have a balance, try to make sure you are getting the best interest rate possible.

Want to Earn Something Extra?

If you plan on using your card regularly, especially if you can pay off the balance immediately, you might want to look at a card featuring a rewards program. These cards offer incentives every time you make a purchase. The reward can be anything from airline miles to hotel points to cash back offers.

Typically you will earn a percentage of you purchase back that is converted to a cash rewards to points for services like airline miles, hotel stays, merchandise, and more. You may even find there is a sign up bonus for spending a certain amount within a specific time frame after opening an account. The amount of the reward will vary depending on the company and there can even be multiple types rewards available within a single account.

Final Features to Consider

While picking the right type of card is important, there are also other factors to consider. Any new credit account will have a card featuring an interest rate and potential fees. Be sure you understand what the APR will be, if there is an annual fee, and any miscellaneous fees such as late fees.

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