How to find the right credit card for you
Ever wonder how to find the right credit card given all the choices? It’s easy if you break it down: What are the different types of cards? What are their features? How will you use them? We’ll walk you through some of the major things to consider so you can find the right credit card for your needs.
What types of credit cards are available?
Get started by learning about the different types of credit cards:
- Standard credit cards provide basic credit card services. They typically have lower credit limits and fewer benefits than premium cards.
- Premium credit cards, such as platinum cards, offer higher credit limits and usually have extra features, such as product warranties, purchase protection, travel insurance and emergency services.
- Rewards credit cards offer rewards based on the amount of your purchases. Rewards can include cash, travel and gift cards. Some offer a combination of these. Standard, premium and even private label cards (department store cards, for example) may also offer rewards.
- Private label credit cards can offer special deals but can only be used at one or a few stores.
- Affinity credit cards show your support for a group or cause such as a charity, a college or a sports team. In some cases, contributions are made to the group when you use the card.
- Secured credit cards often require security deposits that become the credit limit for the account. These cards can be used just like any other credit card, and they can help build your credit because your payment history is reported to the major credit bureaus.
What do I need to know about rates, fees and features?
Rates and fees are an important part of the decision process. The law requires that this information be clearly displayed in a comparison box or chart in credit card agreements, on credit card sites and in mail promotions. You also want to consider any special features that might help with your decision.
There is important information you need to know about credit card rates, fees and features:
- Annual fees are included with some cards, so make sure you understand them when you compare benefits.
- The annual percentage rate (APR) may differ across transactions. For example, if you use your credit card for a cash advance, a different APR may apply than if you use the card to buy groceries. (With cash transactions, a fee may also apply.) This is important because it determines what your card issuer charges you if you don’t pay your balance in full. Learn more about how APR works.
- Be aware of any additional fees and penalties. Knowing the service costs for certain types of transactions, as well as what happens if you pay late or miss a payment, helps you avoid those fees.
- Rewards, discounts, warranties and rebates can be deciding factors in choosing a card. Make sure you understand any limitations associated with the stores or products included in these offers, and restrictions related to how rewards can be redeemed.
- Security features, such as fraud protection, are available on some cards. Read the details of your card agreement to learn the rules and determine if you are liable for fraudulent purchases.
How will I use the card?
Ask yourself a few key questions about your spending habits:
- Do I plan to use my card for everyday purchases? If so, consider a rewards credit card that lets you earn rewards for your purchases to use toward cash back, gift cards or other benefits based on how much you spend.
- Will I pay off my balance, or will I carry a balance from month to month? Paying your balance off every month will save you money on interest. But if you don’t think you’ll be paying it off every month, be sure to find a card with a low APR—you’ll save money that way. If you pay off your balance regularly, the interest rate may be less important than rewards, benefits and perks.
- Do I travel often? Many rewards cards let you earn air travel, travel upgrades, cruises or vacations. You may also get complimentary travel and car-rental insurance and other travel-related perks.
- Am I an emergency-only credit card user? Consider a card with no annual fee.
- Am I looking for deals? See if your favorite store has a card for faithful shoppers, or check out cards that offer shopping discounts.
Now that you know more about credit card categories, rates and features and how to assess your personal spending, you should be well-equipped to find the right credit card to suit your needs. Ready to start researching credit cards? Bank of America can help you find the credit card that’s right for you.