Choosing a Credit Card: A Step-By-Step Guide
Choosing a Credit Card: A Step-By-Step Guide

When it comes time to pick a new credit card, it's a good idea to have a game plan. The card you pick can have a significant impact on your financial well being, so instead of applying for the first credit card offer you see, follow this step-by-step guide to help you choose the best credit card for you.

Step 1: Choose your credit card style.

What kind of credit card you choose should depend on how you plan to use it, among other factors. Here's a quick description of the types of credit cards available and when you might want to choose one over another.

  • Choose a balance transfer credit card if you're currently paying off card balances on multiple credit cards, and would like a way to consolidate your debts into one monthly payment. The best balance transfer cards offer an introductory rate of 0% APR for 12 to 18 months so you can spend that time paying off your balance.
  • Choose a low interest credit card if you typically carry over a balance from month to month. Remember that since the APR is variable, you won't necessary be granted the lowest APR advertised.
  • Choose a rewards credit card or cash back credit card if you'll use your credit card often to maximize your rewards or cash back earned. Keep in mind that the very best rewards and cash back cards are only available to consumers with excellent credit. Note that if you don't pay your credit card off in full every month you will probably be better off with a low interest credit card.
  • Choose an airline credit card if you fly frequently and plan on using your card to pay for travel expenses. Remember than many airline credit cards are particular to a single carrier.
  • Choose a secured credit card if you have no credit history, or if you are recovering from a foreclosure or bankruptcy. You'll have to provide a security deposit, typically between a few hundred to a few thousand dollars, so make sure you have some savings before opening a secured credit card.

(Read more about which credit card might be best for you.)

Step 2: Let your Approval Odds guide you.

Before you can pick out the specific card you want, you'll need to know where you stand credit-wise. Make sure your credit score is up-to-date on Credit Karma. (The site will automatically update once a week for you when you log in or whenever you receive a credit monitoring alert.) Then, head over to the Credit Cards tab. You'll automatically be directed to the cards recommended for your credit score.

If you want even more guidance on which card to choose, look at your Approval Odds for a particular card, which are based on the average credit score approved for each card. When you select a single credit card, you'll see a badge to the left that will show you your odds of being approved for the card. Focus on cards for which you have a "good" or "excellent" chance of being approved. For more details on credit scores approved for a particular card, view the "Credit Score Approval Data" to the right of each card.

Step 3: Do the research.

Choose two to three credit cards for which you have good Approval Odds. Then, compare the two by reading credit card reviews. Pay attention to the points that matter for you. For instance, if prompt customer service is important to you, make sure none of the reviews complain about poor customer service.

Step 4: Read the fine print and apply.

Finally, before applying for a card, read through the details of the credit card offer to make sure you know what you're applying for. For instance, if you're uncomfortable paying an annual fee, make sure the card you're interested in comes fee-free. When you've read through the fine print, go ahead and apply. If you've followed all of the steps and relied on your Approval Odds, you'll have a good chance of getting the card of your choice.

Step 5: Use your new card responsibly.

Once you receive your new card and activate it, it's time to start making responsible credit moves with it. Using a credit card is one of the best ways to build your credit, so follow some guidelines for using your new credit card, such as making your payments on time and keeping your credit card utilization rate below 30 percent.

When you update your credit score to see how your new credit card account is affecting your credit, remember that it sometimes takes up to a full billing cycle to begin reporting to the credit bureaus.

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What banks are FIA that you cannot make balance transfers to

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