Seven out of 10 Americans have at least one credit card. 38.1% of households carry credit card debt. We’re a credit loving nation! When it comes to figuring out which credit card is right for you, things get a little murkier.
Choosing a credit card is a big decision. You’ll likely use it every day, and there are plenty of rewards you can reap with the right card. So let’s talk about three things to consider when choosing a credit card for yourself.
Are you comfortable paying an annual fee?
Many credit cards come with an annual fee, and the truth is that the very best ones definitely do. Credit card companies are companies after all- they want to make money off people using their cards. Paying a fee is not a good or bad thing- it depends on the price of the fee and the rewards the card offers in return.
For example, the Chase Sapphire Reserve card has a $450 annual fee, but is widely regarded as one of the best credit cards for rewards. You get an immediate $300 credit when you meet the spending limit ($4,000 in three months.) Plus, the travel rewards are incredible and can’t be found many other places for Americans. The Points Guy even wondered if it was too lucrative!
Bottom line: if you utilize a card right, a fee might not matter at all. Fee cards have better options, and if you’re comfortable with one, it might change your options.
Be honest about your debt
If you currently carry tens of thousands in debt you’re a less desirable credit card user. That means you won’t be eligible for some of the better cards, and you’ll pay a higher interest rate one the one you do get.
Before you open a credit card, consider if you really truly need it. If you can get by with cash, try bringing down your debt load before you apply. Having a low debt-to-income ratio will make you more appealing and open to doors to better card offers.
Decide which rewards matter to you
Credit cards offer a lot of rewards options. This can be great- and overwhelming. Weed out a lot of cards by deciding which rewards you want. Travel? Cash back?
Once you know what your primary reward goal is, look for cards that are strong in that area. I like travel reward cards, so I only look for those. I don’t need information on cash back cards because I don’t care for them.
Choosing a credit card is a process. Take your time with it! If you need to bring up your credit score a little, here are our tips on that.
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Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.