When it comes to choosing a credit card, the options out there seem endless. After a while, how do you even know what you’re looking at anymore?
Getting your first credit card is exciting. For many people, it’s their first step towards adulthood. However, before you apply it’s important to know how credit cards work. When it comes to choosing the right credit card for you, the options seem endless. After a while, how do you even know what you’re looking at anymore?
You’ll want to determine what’s important to you in a credit card before you start your search. Your criteria will help you narrow down the options. to give you a head start, we’ve helped narrow down a few factors that are important to pay attention to when deciding what card to apply for.
1. Understanding Rates & Fees
Not only is the rate itself important to pay attention to, but the type of rate as well. There are either fixed or variable rates. Fixed rates will not change so the rate you get when you apply is the rate you’ll have throughout the time you use that credit card. Variable rates are just that, variable. They can change often (up or down) or rarely at all, it’s really hard to tell. However, make sure you understand that when signing up for a variable rate card. If the interest rate is already sky high and the rate is variable and can go up, figure out if that will work for you or not, especially if you tend to carry a balance from month to month. If you’re carrying a balance, you’ll also probably want to look for a card with a lower rate, whether it’s variable or fixed.
There are cards out there that charge you an annual fee just to be able to continue using their card. You might be thinking “why would I pay that?”, but if the rewards you receive from that card outweigh the annual fee cost then it may not be such a bad idea. For example, say your credit card has an annual fee, but has a great rewards program for airline points. If the points you accumulate and use throughout the year value higher than what you pay for the fee, this card will work for you! You are taking advantage of the card’s benefits which fits into your lifestyle. Plus, you’re saving more in airline flights than you’re paying for that fee. Win, win! However, if you pay that fee and the card sits in your wallet mostly unused, take a second look at this and see if the fee is really worth it.
Foreign Transaction Fee
This is for all you travelers out there! If you are a frequent international traveler and use your credit cards when you travel, pay attention to whether or not there is a foreign transaction fee. While this fee is usually small and not a huge deal if you only travel to a foreign country once in a blue moon, for those that travel overseas quite often can often pay more than they’d like to. There are cards out there that have no foreign transaction fee if that is an important factor to you.
2. Find a Rewards Program that Fits Your Lifestyle
Most cards in today’s world have a rewards program, but not all do so pay close attention. What kind of rewards are you looking for? Airline points? Merchandise redemption? Cash back? Everyone’s needs are different and this factor can make a huge difference in what you choose. Decide what’s more important for your lifestyle and streamline your search with that criteria in mind.
3. Research the Different Types of Credit Card Offerings
There is no such thing as a single “best” credit card – there is only the best credit card that fits you. When choosing a credit card, consider how it fits your goals, lifestyle, and spending.
Many financial institutions offer various types of credit cards. Using your credit card will help you build credit, offers better protection than cash, and in many cases allows you to earn rewards for cash back, merchandise, gift cards, travel and more.
At HFS, we know that our members are at different stages of life with varying lifestyles and needs. That’s why we developed two card programs so that you can find your best fit. Our HFS Visa Platinum®️ Credit Card has a low variable rate and no balance transfer fees, allowing you to transfer existing higher rate debt so you can save on interest and pay down your principal balance faster. It’s also a great card to help you get started with and build your credit.
If you’re looking for more from a credit card, check out our HFS Visa Signature®️ Credit Card. Enjoy all the features and benefits of the Visa Platinum®️ Credit Card, plus more! More rewards, more exclusive benefits, and special offers.
With both the HFS Visa Platinum®️ and Visa Signature®️ Credit Cards, manage your daily spending through the HFS Cards App where you can view account balances, check your available credit, view transactions, make payments, set up alerts, track your rewards, and more! Visit our website for more information on our credit card offerings.
4. Your Credit Score Plays an Important Role
Your credit score plays an important role in whether or not you qualify for a credit card, what your credit line will be, and sometimes even what interest rate you will get. Generally, having a higher credit score may make it easier for you to qualify for a credit card with a lower interest rate.
To obtain and maintain a high credit score, make sure to always make payments on time each month. This accounts for 35% of your credit score. You’ll also want to pay more than the minimum balance due, if possible, but always aim to pay the balance in full to avoid paying interest on your purchases. We also recommend not using more than 30-50% of your available credit limit. Using more than that can have a negative impact on your credit score.
5. Know Your Options to Help Credit Card Approval
Getting a credit card could pose some obstacles for someone without an established credit history, or if your credit is less than perfect. However, there are still options to help you get a credit card. many financial institutions, like HFS, offer a product called a Secured Credit Card. This is a special type of credit card that requires a cash deposit – usually equal to your credit limit – to the credit card issuer to open your account. This money is still yours, but is frozen so you aren’t able to touch it. In case you fail to make your payment the credit card issuer can take from those secured funds. This option is less risky for financial institutions, which makes it easier to get approved. Secured Credit Cards can be a great tool for people who are establishing, building, or rebuilding their credit. Using a secured card to help improve your credit profile will also help you work toward a card with better rewards or a higher credit limit.
Another option to help with credit card approval is adding a cosigner. A cosigner is someone with good credit and income who guarantees that they will pay your credit card balance if you cannot. It is important to ask a trusted person who is willing to accept responsibility on your behalf. In most cases, the cosigner is a parent, close relative, or friend.
6. Practice Using Your Credit Card Responsibly
A credit card can be a valuable tool if used responsibly. Credit Cards are fantastic for building credit and a convenient method of payment. It’s easy to get into the habit of using a credit card for everyday purchases, which can be both good and bad.
Credit Cards can come with significant risk when not used wisely. It’s important to budget and analyze your credit card use each month. Avoid overspending and carrying large balances just because you have an available credit limit. The best approach to keeping a credit card under control is to only spend what you can afford to pay off in full each month when the bill arrives. This helps keep interest charges from accumulating and helps you to create healthy spending habits.
7. Credit Card Fraud is Manageable
We all know fraud happens and this should not deter you from getting a credit card. Understandably, credit cards offer you more protection against fraud than debit cards do. Since debit cards are linked to your bank account, there is the potential threat that a scammer could drain your bank account, leaving you without funds for days before the issue is resolved with your bank.
When your credit card is used fraudulently, it’s the credit card company’s money at stake, not yours. Federal law minimizes your liability for unauthorized credit card purchases so you don’t have to pay. lastly, getting a replacement card is relatively fast and easy.
At HFS, we take credit card fraud seriously. That is why if a credit card seems suspicious, fraud alerts are sent to you through text message, phone call, and/or email so we reach you in a way that’s convenient and quick for you.
Apply for a Credit Card
When choosing a credit card, figure out what matters most to you. Be sure to weigh all of these factors against each other and rank what is most and least important to you. Although a card might have a foreign transaction fee, it also may have a low rate and no annual fee with a great rewards program. Choosing the card with the right fit will help you enjoy the benefits of a credit card.
Are there other factors you look for when finding the perfect credit card? Share them with us in the comments below.
Spend Wisely. Earn Splendidly! When you use your HFS Visa®️ Credit Cards, you’ll earn CURewards®️ points to use toward travel merchandise, gift cards, or even cash back. Check out the HFS Visa®️ Credit Card webpage for more details.