5 Most Important Things To Consider When Picking A Credit Card

May 23, 2014, Written By Bill Hardekopf
5 Most Important Things To Consider When Picking A Credit Card

If you are interested in obtaining a new credit card, then you need to think about a few of the critical factors that should go into that decision. Applying for a new credit card should not be a decision made lightly, and there are credit cards designed for different types of consumers. When you are selecting a credit card, make sure that it has the benefits you want, and not some of the negative things, such as a high interest rate. If you make a bad selection, you could be locked into a credit card that you don’t want. You need to thoroughly research all possible cards in order to make an informed decision.


Obviously, the credit card’s APR is a critical consideration. The interest rate for credit cards is described as the APR, or annual percentage rate. APRs are either variable or fixed, and this is something you want to consider. Variable rates have the ability to change, which can increase your debt load, sometimes significantly. With a fixed rate card, you know what your interest rate will be from month to month. Consumers with higher credit scores and better credit histories will usually have access to credit cards that have lower interest rates. Those with lower credit scores will likely only be approved for cards with higher interest rates. You’ll want to find a credit card with an APR that you feel is fair for your credit status. If you pay your credit card bill in full each month, you won’t have to worry much about the interest rate. But there may come a time when you carry a balance from one month to the next, so the APR is a consideration for every cardholder.

Annual Fees

Annual fees are something that most consumers assume comes with every credit card, but that simply isn’t true. A very large percentage of credit cards do not have an annual fee. In addition, a number that do waive the annual fee for the first year of being a cardholder. Make sure that you do your research, but most credit cards with high annual fees simply are not worth that fee.

Rewards And Benefits

Most credit card companies offer some form of rewards and benefits to consumers as a way to get them to use the card. There are plenty of different types of rewards programs, such as cash back or airline miles. You can search for different rewards programs, and there is a plethora available for those with good to excellent credit scores. If you have a low credit score, you may not be eligible for a credit card with a rewards program, but you can always work to increase your credit score and make yourself eligible for one of these cards. Rewards are a great perk, but only if you pay off your card in full on time each month. Otherwise, the card’s interest penalties will more than eat up any rewards you receive. Only get credit cards with rewards programs for goods and services that you already purchase.

Hidden Fees

Credit card companies are running a business, and that means that they are going to look for ways to make money off of you. There are plenty of ways for credit card issuers to do this, including fees for transactions, balance transfers and cash advances. There are also late charges and charges for going over your credit limit. You’ll have to make sure that you read all the fine print when you are signing up for a credit card. There are various fees that credit card companies are going to try and assess, and they aren’t going to point them out in big bold letters. Instead, you’ll have to find those fees on your own, looking through the credit card agreement and researching the card on the web. You’ll want to stay away from credit cards with high late fees or exorbitant hidden fees, as those can really add to your financial stress.

Credit Limit

Credit limits affect the amount of money that you are able to borrow from your credit card company. The amount of your limit will depend on your credit score and your credit history. You’ll want to think out what kinds of purchases you will make with your card on a regular basis before you apply for a card. Then, you can figure out what kind of credit limit you need.

When you are choosing a credit card, there a variety of different factors you’ll want to consider. Obviously, the card’s interest rate should be a big consideration, but you should also be thinking about hidden and late fees. You’ll want to consider the things that you buy on a regular basis so that you can figure out what credit limit will best fit your needs. And the rewards program can help you make money by using a credit card, provided you pay off the balance completely each month. Whatever you choose, make sure the card fits your financial needs.

The information contained within this article was accurate as of May 23, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Bill Hardekopf

Bill Hardekopf is the CEO of LowCards.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
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