Tuesday, May 14, 2013

Credit Cards: How to Choose One

Choosing a credit card is almost as confusing as navigating a maze.
Maybe more so?

Read This If: 

1) You want to know how to choose a credit card. 

--

Keep in mind while you're reading this that I'm talking about credit cards that the younger people would qualify for. As you get older and a more established credit history, you can qualify for many, many, many more different types of cards.

So what features should you look for?

No Annual Fee

Some credit cards have annual fees (I've seen examples of $50 to $60 a year). I want to minimize my spending, so that was a really easy option for me. After ruling out all the cards that had fees (no matter what extra features they came with), I had their rewards left to compare. 

Rewards

If I was going to get a credit card, then I wanted one with no annual fee that had some rewards. The most common thing I saw was every time you spent money, the credit card company would give you back a percentage of what you spent either in cash or in their own "point" system (those points could be used like currency). 

Cash-back rewards are more convenient because the rewards go straight into your bank account (I don't know about all the credit cards, but the one I looked at worked like this). Point system rewards require a separate account to manage the points and the points can expire. 

Interest Rates  

I didn't care what the interest rate was because no matter what, I was going to pay my bills on time. The Annual Percentage Rate (APR) only matters if you intend on NOT paying your bills on time. (The APR is the interest charged on outstanding balances after you're supposed to pay them). 

Just pay your bills on time. It'll make yourself AND Joan happy. 

Plan of Action: 

1) Look up credit cards that are good for students. 
2) Apply. 
3) Swipe responsibly. 

---

Photo credit:  MarcelGermain via photopin cc

2 comments:

  1. Any particular ones you'd recommend?

    ReplyDelete
    Replies
    1. The one I have is on this list. :) I don't like keeping track of "rotating categories," so you can probably guess which one I went with.

      http://www.dailymarkets.com/student-credit-cards/

      Delete