Before we explain how to get a credit card that best meets your needs, let us recommend that you use our step-by-step credit card advisor if you are looking for quick and interactive experience. On the other hand, if you are interested in a more detailed explanation, please read below.
The first step in getting a credit card is knowing how good your credit is. You can get a good estimate of your score by using our free credit check or checking your credit score through a credit monitoring service. Once you have a pretty good idea of your credit standing, it is important to know that a credit card is good for one of the following:
- Transferring the balance over from another credit card(s) and making no new purchases
OR - Accumulating new debt by making purchases
OR - Transacting only (i.e. making purchases only, and then paying your balance in full every month)
Credit card companies would like you to both carry a balance AND use your card on a daily basis. This is how they usually make the most money out of consumers, given the payment allocation that they use.
Therefore, before looking for a credit card, you need to determine your most important need:
- Carry New or Existing Debt
- No Debt — Transact Only
In other words, you will be making purchases throughout the month, which you then pay in full every month, thereby incurring no debt
If you have both needs, then get one credit card for each of your needs.
MAIN NEED: Carry New or Existing Debt
If you have decided that you want to have debt on your new credit cards because you will not pay your balance in full every month, then the next decision you have to make is whether you want to use your new credit card to:
If you are planning to use the credit card for transferring existing debt only, then you should choose the best balance transfer credit card (i.e. the card that has the lowest introductory Balance Transfer Rate / APR for the longest period).
There are a few key things to be aware of when choosing a card to carry existing debt:
- Balance-Transfer Fees: Most credit card companies claim very low rates, but they accompany these low rates with fees that can really add up. Be sure to factor the balance transfer fees into your decision. Which offer truly charges the lowest fees AND interest rates for the introductory period (for example, 12 months)?
- Purchase Rate / APR: Do not use the card to make any new purchases! Low interest balance transfer credit cards usually have average-to-high Purchase APR. Why do credit card companies do this? Because when you send a payment, they use a payment allocation that first pays off the balance with the lowest APR. You won’t get around to paying off your highest APR debts until your lowest APR debts are paid in full. This will cost you more money in the long run.
If you are planning to use your new credit card only for buying new things (i.e. incurring new debt), then you should choose one of the best credit card rates credit cards (i.e. the card that has the lowest Purchase APR for the longest period).
If you are planning to use your new credit card for both transferring over some existing debt and incurring new debt, then you need a card with the lowest Purchase APR and Balance Transfer APR for the longest introductory period. Do not forget to pay close attention to the Balance Transfer Fees mentioned above. Also, some cards might have an introductory rate of 0% for both Purchases and Transfers, but the Purchase Intro APR might last for a much shorter time period than the Balance Transfer APR. You do not want that.
It is very possible that you’ll be better off if you apply for two credit cards: One of the best balance transfer credit cards (for your existing debt), and one of the best credit card rates credit cards (to finance your upcoming expenditures).
MAIN NEED: No Debt — Transact Only:
If you pay your bill in full every month, then you are using your card to transact only. If you have decided to use the card to transact only, then it’s most important that you get a card that offers you rewards that you will find useful.
If you’d like our advice, we recommend that you choose one of the best cash back credit cards. It’s hard to keep up with the constantly changing fine print and redemption processes for airline mile rewards, travel bonus rewards, and others. But there’s nothing confusing about getting a check in the mail from your credit card company. In fact, it’s downright satisfying! Therefore, keep things simple and just get a credit card that just gives you cash back.
If you are not sure which credit card is right for you and you want an interactive experience in finding the best credit card, you should try our free credit card advisor. It’s free and takes less than 2 minutes.
