Choosing The Best Credit Card- How To Decide

When you decide to apply for a credit card you will inundated with choices. There are cards with low interest rates, reward programs, and even cash back incentives. Some cards carry a combination of these three things. Some are free, and others have annual fees associated. So how do you know which best credit card is going to work best for you? Here’s a quick guide of what to expect with different card types to help you narrow down your choices. 

Reward Programs

Reward programs are very popular with credit card companies. It’s a way to earn rewards you wouldn’t ordinarily receive just for using your card. Many cards are branded with specific stores or airlines, and only offer rewards that can be used with that specific retailer. These cards can be the best credit card type for those who frequent these airlines or establishments, but there are a few things to keep in mind.

To reap the rewards of these benefits you may have to give up a low interest rate. Many co-branded cards (such as credit cards associated with airlines) will offer generous rewards for use with that brand, but in return you will pay a higher interest rate. The interest is how the bank is able to recover enough money to pay for these rewards.

Rewards may also have restrictions on them. While many card issuers are getting better about not having black out dates or periods of time when the rewards can’t be redeemed, you will still want to check the fine print. Airline cards may only allow you to redeem so many points per year, and others will have a list of flights that are excluded. Retail branded cards may restrict what you can use the rewards on all together. You may find that you can’t redeem rewards for gift cards, and things of that nature.

Still, a reward card program can be a great credit card for those who spend frequently on their cards and want to receive something in return.

Cash Back Cards

Cash back cards are quickly becoming the most popular type of card program offered. These cards offer you incentives in the form of cash for using your card. These programs vary greatly, but in most cases will offer anywhere from 1-5% cash back in the form of either quarterly or yearly checks of statement credits. Just as many of the reward programs have restrictions, the cash back programs will as well. Most of them only allow a maximum amount of cash back per year, and cash back rewards are usually not offered on cash advances, mortgage, or insurance payments made with your credit card.

This type of card may be the best credit card for those who spend infrequently, or those who don’t mind waiting for the rewards.

Low Interest Rate Cards

Believe it or not, this is considered a benefit if a credit card offers it. Most low interest cards don’t offer rewards, or any other bells and whistles. If you just want an affordable way to finance purchases, this may be what you should apply for. Just beware before you apply for a credit card with a low interest rate that you can forfeit the rate if you are over-limit, late, or miss a payment.