The best credit cards for you are those tailored to your individual financial needs and objectives with low interest rates and, of course, those for which you will be approved. To find out what you’re looking for, answer the following questions:
1. Do you anticipate any large purchases in the next year (i.e. furniture, appliances, etc.)?
2. How long will do you anticipate keeping the principal of a purchase on your card?
3. Do you want to pay your entire balance every month?
4. Are you planning to use this card for purchases over a short time period or do you intend to hold it for a long time?
5. Do you currently have credit limits totaling more than 40% of your annual income or balances outstanding on those cards greater than 50% of the credit limit?
If you answered yes to the first question, you will need a card with a high credit limit and a low interest rate. This may seem obvious but not all people need these things. You may do best getting a card with rewards attached to something you are interested in, like an airline miles card.
If you answered greater than three months on the second question, you will need a low interest rate. Do not be discouraged by a low credit limit. The interest is where you will save money.
If you answered yes to the third question, you may be interested in finding a 0% interest charge card, such as American Express. These cards will not charge you interest as long as you pay your bill promptly and in its entirety every month.
If you answered that you want to hold on to your credit card in the fourth question, you should look for a moderate credit limit and a low interest rate. If you answered that you plan to use this credit card only in the short term, then you should look for a card with an introductory 0% interest rate. These are best coupled with a plan to pay off the balance by the end of the introductory term.
If you answered yes to either part of the fifth question, you may have some difficulty securing new credit cards. Part of your credit score is determined by the amount of credit you carry and the ratio of the balance outstanding to the credit limit. Some banks are unwilling to grant additional credit to those applicants whose credit scores are low due to outstanding credit, even if you have paid on time. The best credit card for you may be a card specializing in bad credit, regardless of how close you are to the acceptable credit rating.
