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?"
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.
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.
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.
If you have one or more expenses that will take you some time to pay back, 0% APR credit cards are just what you need. These cards offer a 0% intro APR (interest rate) on purchases.
If you're wondering how to choose a credit card with a 0% APR, look at the length of the zero-interest introductory 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.
Balance transfer credit cards help you pay less interest on your debt. Like 0% APR cards, these cards have zero-interest offers, except the zero-interest offer applies 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.
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.
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:
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.
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:
There are also two other features to check out if you want to know how to choose a credit card for travel:
When it comes to how to choose a credit card with a 0% intro APR, pay attention to how long the 0% 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% APR you can find.
If multiple 0% APR cards fit your needs, use sign-up bonuses and rewards as tiebreakers to decide which credit card is best.
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.
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:
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?"
Once you're done choosing a credit card, here's how to apply for a credit card:
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.
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, 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:
You can sign up for either of those tools free of charge to view your current FICO® Score.
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