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How to Choose a Credit Card: 4 Steps to Picking the Right Card

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With so many credit cards available, picking one to apply for can seem overwhelming. You can make this process much easier by learning how to choose a credit card. We'll go over all the steps to take and help you answer the question, "Which credit card is best for me?"

Here's how to choose a credit card in four steps:

  1. Pick the type of credit card you want.
  2. Figure out the most important features.
  3. Compare your credit card options.
  4. Apply for the credit card you want.

1. Pick the type of credit card you want

There are many different credit card types out there. A big part of how to choose the right credit card is understanding how credit cards work and which type of credit card is the right fit.

Once you decide which type of card you'll shop for, selecting a credit card is much faster and easier. A frequent traveler who wants to collect airline miles will obviously need a different type of card than a student who's building credit for the first time.

That's why the first step in how to choose a credit card is to figure out your main reason for getting a card. When I'm looking for the best credit card for me, I start by asking myself what I need it for. You'll likely find that you choose a credit card for one of the following reasons.

Improve your credit score

If you want to know how to choose a credit card because you have a low credit score or no credit history yet, then credit cards for bad credit are a good place to start. Many of these are secured credit cards, which you open by paying a deposit to the credit card company. If you're in college, student credit cards are another option.

Earn rewards on purchases

Rewards credit cards are a popular answer when consumers ask themselves, "What is the best credit card for me?" These cards allow you to earn rewards on your spending. If you want to earn cash rewards, you should look at cash back credit cards. For points you can redeem toward travel, check out travel rewards credit cards.

Pay off purchases over time without interest

If you have one or more expenses that will take you some time to pay back, 0% intro APR credit cards are just what you need. These cards offer a 0% intro APR (annual percentage rate) on purchases.

If you're wondering how to choose a credit card with a 0% intro APR, look at the length of the introductory APR period. It can last for a year or longer, depending on the card you get. Once it ends, the APR will increase, so you should aim to pay off your full balance by then.

Save money on credit card debt

Balance transfer credit cards help you pay less interest on your debt. Like 0% intro APR cards, these cards have 0% intro APR offers that apply to balance transfers instead of purchases. You can transfer your balance from credit cards with high interest rates to a balance transfer card with a 0% intro APR.

According to research by The Ascent, the average credit card balance reached $5,897 in 2020. If you have that kind of debt, knowing how to choose a credit card with a balance transfer offer can score you big savings. Use our balance transfer calculator to see how much you could save.

2. Figure out the most important features

The next step is choosing credit card features that matter most. This will depend on the type of credit card you're getting. Here's how to choose a credit card with the features you need.

Credit cards for improving credit

If you want to use a credit card for bad credit, a secured card, or a student card to improve your credit, here's what you should prioritize:

  • No annual fee: You don't want to take on any extra costs while you're working on your credit.
  • Payments reported to all three credit bureaus: The three consumer credit bureaus are Equifax, Experian, and TransUnion. All three produce credit reports which get used to calculate your credit score. To raise your credit score, you need a credit card company that reports your payments to each of them.
  • Free credit score monitoring: Many credit card companies include a free credit score tool that's updated monthly. This is a simple way to see if your score is increasing.

With secured credit cards, also look for cards that have the option to graduate. Graduation is when the card issuer upgrades your secured card and refunds your deposit. This is important because it means you can get your deposit back without needing to cancel the card.

Rewards credit cards

Perhaps you're interested in how to pick a credit card that earns cash back or travel rewards. If you're wondering how to choose a credit card that earns rewards, here are the features to look at:

  • Rewards rate: The amount of rewards a card earns on purchases. Some cards earn a flat rate, such as 1.5%, on everything. Others earn extra in bonus categories, such as 3% on gas and 1% on everything else.
  • Sign-up bonus/welcome offer: A bonus available to new cardholders. You usually get the bonus for reaching a spending minimum. For example, a card could offer a $250 bonus for spending $1,000 in the first three months. Not all rewards cards have sign-up bonuses.
  • Annual fee: A yearly fee charged for the card. This can range from $0, in the case of no-annual-fee credit cards, to over $500. Part of how to choose the best credit card is weighing whether a card's annual fee is worth it based on the perks it offers.

There are also two other features to check out if you want to know how to choose a credit card for travel:

  • Ways to use travel rewards: You redeem travel rewards for travel purchases, but exactly how this works depends on the card. Make sure it will be easy to book the travel you want with whichever travel card you pick.
  • No foreign transaction fees: You don't want extra charges when you use your card internationally. Most travel cards don't have foreign transaction fees, but it's still good to check.

0% intro APR credit cards

When it comes to how to choose a credit card with a 0% intro APR, pay attention to how long the 0% intro APR lasts. The intro period should be long enough to pay off the purchases you'll make. If you're not sure how long you need, look for the longest 0% intro APR you can find.

If multiple 0% intro APR cards fit your needs, use sign-up bonuses and rewards as tiebreakers to decide which credit card is best.

Balance transfer credit cards

The length of the 0% balance transfer offer is the main feature to look at. Ideally, you should get a balance transfer card with a 0% intro APR that will last until you can pay off your debt. If that's not possible, then you should choose the card with the longest 0% balance transfer APR.

Balance transfer fees are also important, especially if two cards are otherwise equal. If you're stuck on how to select a credit card for balance transfers and one has a lower balance transfer fee, then that's the clear choice.

Watch the video below for more information on picking a credit card.

 
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3. Compare your credit card options

That covers most of the work behind how to choose a credit card. Now, it's time for the fun part. Pick the top credit cards in the category you've chosen so you can compare them.

Let's say you're shopping for cash back cards. You'd choose credit card products that earn cash back and view the best options. Then, you'd look at each card's cash back rate, sign-up bonus, and annual fee.

A great way to speed up the process of how to choose a credit card is a comparison tool. Here's one option:

  1. Go to The Ascent's Compare Cards page.
  2. Click "Full card list."
  3. Choose your credit rating and the type of credit card you're looking for.
  4. Click "Add To Compare" under the credit cards you want to compare.
  5. When you're done selecting cards, click "Compare."

That will give you a full breakdown of those cards. You can then quickly check which cards have the cheapest annual fees, which earn the most rewards, and any other features that can help you answer the question, "What credit card is best for me?"

4. Apply for the credit card you want

Once you're done choosing a credit card, here's how to apply for a credit card:

  1. Go to the credit card's page and click the "Apply Now" option.
  2. Enter the required information. Credit card companies usually require your personal information, mailing address, and financial information.
  3. Submit the application and wait for a response.

Hopefully, you'll get an instant approval. If so, you can expect your card in the mail within seven to 10 business days.

There are also two other potential outcomes. The card issuer may need more time to review your application. In that case, you can wait for a decision, which you'll get by mail and possibly by email. You could also follow up by phone.

If your application is denied, you can call the credit card company's reconsideration line to see if it will change its decision. Or, of course, you could apply for a different credit card. Fortunately, once you know how to choose a credit card, the process goes faster each time.

How your credit score impacts your chance of approval

Your credit score is a big factor in how to choose a credit card, because that affects which cards you can get. Most credit cards are aimed at consumers in a specific credit score range. To have a solid chance at getting approved for a card, your credit score will need to be in that range or a higher one.

For example, the best credit cards are usually reserved for those with good or excellent credit. Good credit starts with a credit score of 670. So, if you want one of the top credit cards good credit, you should have a credit score of 670 or higher. If you need to raise your credit score, check our guide to improving your credit score for steps you can take.

To know which credit cards are within reach, you need to know your credit score. There are plenty of ways to get your credit score for free online. I recommend using a credit score tool that provides your FICO® Score. That's the most widely-used scoring model. Free options to view this type of credit score include:

  • Experian CreditWorksSM Basic
  • Discover® Credit Scorecard

You can sign up for either of those tools free of charge to view your current FICO® Score.

Still have questions?

Here are some other questions we've answered:

Choosing a credit card

Don't you wish you could take a peek inside a credit card expert's wallet sometimes? Just to see the cards they carry? Well, you can't look in anybody's wallet, but you can check out our experts' favorite credit cards. Get started here:

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