Choosing the Best Credit Card for 2013

Choosing the Best Credit Card for 2013

December 31, 2012         Written By John H. Oldshue

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The start of a new year is typically when consumers take a close look at their finances, making resolutions on saving money and cutting expenses. It may be an annual tradition, but this year there is an urgency as lawmakers and the President wrestle each other over the fiscal cliff that will affect the finances of almost every American. While it is uncertain what the tax rates or deductions will be next year, there are steps that households can take to save a little extra and protect their finances in the uncertainty of 2013, such as getting the right credit card.

Changing credit cards can save substantial money on interest payments or earn some extra cash with a reward card. The choices can be overwhelming since there are over 1,000 credit cards offered in the United States. Credit cards are not “one-size-fits-all,” so it is important to thoroughly research and compare cards to find the right one to meet your needs.

Getting Started

Before shopping for a credit card, it is important to have a plan for how you will use the loan. Are you a disciplined person that only charges what you can afford and pays off the balance in full on time every month? If so, a rewards card is a good option for you. If you carry a balance from month to month, then getting a card with the lowest possible interest rate is the most important consideration.

The ads you see on television and in print can make every card look good, but ignore the pictures of happy faces and the promises in the headlines. Read the terms and conditions of the offer before applying for any credit card. The offer you receive today is determined by your credit score and how you have handled finances in the past. The lowest interest rate is only given to applicants with good or excellent credit scores, not to everyone who applies. If you don’t have a good credit score, you could receive an offer with a higher interest rate, or a declined application. Don’t assume that you know what your credit score is. Before you apply for a credit card, check your credit score so you know what offer you can expect. This also gives you a chance to find and correct any errors that may be pulling down your score. A FICO score in the mid-700s is considered a good score and you can expect to receive a relatively low interest rates. A FICO score less than 640 may be too low to be approved for a card so you may have to look at other options like a secured card.

Low Interest Rates

If you carry a balance on your credit card from one month to the next, get a credit card with a low interest rate. The average advertised APR last week was 14.35% according to the LowCards Complete Credit Card Index. The advertised rate is usually the lowest rate that issuers charge so don’t stop here. Look in the terms and conditions for the range of interest rates because most cards have three rate tiers. The higher your credit score, the lower your APR will be. If your FICO score is in the mid-600s, you will probably get the highest rate.

Here are some of the most attractive low interest credit cards:

Capital One Platinum Prestige
The lowest rate is 10.90% (the highest rate is 18.9%). The card offers 0% through March 2014 on purchases as well as balance transfers with a 3% balance transfer fee. There is no fee for international transactions.

Simmons First Visa Platinum
An APR of 7.25% but you have to have outstanding credit to be approved. No transaction fee for balance transfers.

When shopping for a low interest credit card, consider your credit union and local bank. The interest rates may be slightly lower when compared to national banks. Here are examples of low rates from credit unions

The rate is 6.9%-18%. The credit union is open to residents of Washington state and Boeing employees. There is a $25 annual participation fee.

First Command Bank Platinum and Classic Visa
The Platinum rate is 6.25%, the Classic rate is 10.25% and there is no fee for balance transfers. The bank is located in Fort Worth Texas, currently accepting new account applications only from existing clients of First Command Bank or First Command Financial Services.

Platinum Premier Visa from First Tennessee Bank
The rate is 5.15% to 13.15% based on credit worthiness but is only available to First Tennessee banking customers.

Balance Transfers

If your interest rate is above 14 percent and you have a good credit score, this may be a good time to try to secure a lower rate on your credit card. Start with a call to your credit card issuer and ask for a lower rate, telling them you are considering transferring your balance to a card with a lower rate. They may lower your APR just to keep you as a customer. If they don’t, transfer your debt onto another card that is offering an attractive interest rate and you may be able to save a significant amount of money on interest charges. Currently, many issuers are offering 0% interest rates on balance transfers for an extended time period. The two important considerations for consumers are to make sure they can pay off this transferred balance during that 0% introductory period, and that the interest penalties you save are more than the fee you will pay to transfer the balance from one issuer to another.

When comparing cards for a balance transfer, also look at the ongoing interest rates. If you can’t pay off the balance before the introductory period ends, you will eventually be paying that ongoing interest rate. Another consideration is that the credit card issuer may only accept a portion of the amount you want to transfer, so the remaining balance may be charged the ongoing interest rate.

The best offers will typically be given to applicants with a credit score in the mid-700s. If you have a score less than this, you may receive a shorter introductory period, or your application may be declined.

Citi Simplicity

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This card gives you a 0% interest rate for 12 months on new purchases and 21 months on balance transfers, as long as the transfer is made within the first four months of being a cardholder. That gives a year and a half without paying interest on your transferred balance. The balance transfer fee is 5%. The ongoing APR is 16.24% - 26.24% (Variable).

Discover More
There is currently a Discover More card that offers 0% interest on balance transfers for 18 months. Consumers also receive 0% on purchases for six months. The balance transfer fee is 3% and the ongoing APR is 10.99-20.99%.

Cash Rewards

According to Consumer Reports, 56 percent of Americans pay off their credit card debt each month, so reward cards are a good option for the majority of Americans. If you are undecided about the best reward card for your needs, a card that gives you a little extra cash is always a good choice. A common reward payout is a penny per dollar spent–so reward cards won’t make you rich, but every little bit helps. Some also offer a bonus as a new customer if you make a certain amount of transactions during the first three months. Cash back cards typically have a slightly higher interest rate, so only apply for a reward card if you will pay off the entire balance each month.

Secured Cards

If your credit score is too low (less than FICO 640) to qualify for a regular credit card, then a secured card may be your best option. These require a security deposit which will be your credit limit. Choose a card that reports your payment history to the credit bureaus because this can eventually raise your credit score if you use this card responsibly and make all payments on time. You do not have to use this card, but just keeping it open and in good standing can create a positive credit history. Secured cards offer almost 100% approval, but they also charge higher interest rates and fees.

Capital One Secured MasterCard

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Receive automatic reporting to the three major credit bureaus. You can earn credit line increases based on your payment and credit history. The card requires a $200 minimum security deposit and your credit line will be equal to your security deposit. The interest rate is 26.99% (Variable), and there is no annual fee on this card.

The information contained within this article was accurate as of December 31, 2012. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About John H. Oldshue

John Oldshue is the creator of He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for
View all posts by John H. Oldshue
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