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If you’re thinking about applying for a new credit card, you’re probably wondering, “What is the best credit card for me?” The answer depends on your primary purpose for the card.
It might be to build your credit, pay a lower rate for balance transfers and purchases, or get cash back bonuses, travel rewards or other perks.
Here are four steps to help you identify your priorities and understand the factors you should consider when choosing a credit card.
- Consider your credit.
- Decide whether you will pay off your card every month or carry a balance.
- Know if you want to transfer a balance.
- Choose which type of rewards you want: cash back or travel?
At a glance: Our picks if you want to …
|Improve your credit||Capital One® Secured Mastercard®|
|Pay less interest||Chase Freedom Unlimited®|
|Transfer a balance||Chase Slate®|
|Earn cash back||Citi® Double Cash Card|
|Earn travel rewards||Chase Sapphire Preferred® Card|
Card issuers typically use your credit scores as a factor when deciding whether to offer you a card. Knowing your scores can help you apply for cards that fit your credit profile, whether it’s truly awesome or just so-so.
Once you know your scores, you can apply for cards that you’re more likely to get approved for, which means that the hard inquiry would be worth it. That means you’ll have a better chance of avoiding the unnecessary hard credit inquiry that you’d get by applying for a card and being rejected. Hard inquiries could hurt your scores.Learn more about hard and soft credit inquiries
If you are new to credit, or are working on rebuilding your credit, you may want to consider applying for a secured card. This type of card can help you build credit as long as you use it responsibly and the issuer reports your payments to the credit bureaus. The Capital One® Secured Mastercard® has a $0 annual fee and reports regularly to the three major consumer credit bureaus.
To help build your credit with a secured card, be sure to make payments on time and try to use no more than 30% of your available credit.
If you normally carry a balance or plan to carry one on your new card, your top priority should be a low annual percentage rate, or APR.
There may be a 0% introductory APR offer with a card. For example, the Chase Freedom Unlimited® card has a 0% APR offer for purchases and balance transfers for 15 months from account opening, then a variable APR of 16.49% - 25.24% kicks in for both.
If you transfer a balance during the first 60 days your account is open, you’ll pay an intro balance transfer fee of 3% (minimum $5). After that, the balance transfer fee is 5% (minimum $5) of the amount transferred.
To understand why APR is so important when you carry a balance on your card, suppose you had a $3,500 balance and could afford to pay $120 every month. With a hypothetical APR of 18%, you’d pay around $1,138 in interest and it would take you about three years and three months to pay off your balance.
But with an APR of 15% and the same monthly $120 payments, you’d pay about $881 in interest, saving $257. And you’d pay off your balance in about three years and one month.
Pay attention to which APR applies when and for how long. Cards may have an introductory APR offer that expires after a set number of months, different APRs for purchases and balance transfers, or a higher penalty APR that’s typically triggered by late payments.
If you plan to transfer a balance from a card you already have, you should compare balance transfer offers for different cards to find one you like.
Some factors to consider when choosing a balance transfer card include …
- The rate you’re currently paying
- Whether the new card has an introductory APR offer
- The rate you’ll pay after the intro APR offer expires
- Any fee you’ll have to pay to transfer all or a portion of your balance to the new card (known as a balance transfer fee)
Chase Slate® has an introductory 0% APR offer for balance transfers for 15 months from account opening (then the variable APR will be 17.24% – 25.99%).
That gives you 15 months to pay off your transferred balance before you start accruing any additional interest on it. Chase Slate® also has a $0 intro balance transfer fee for transfers made within the first 60 days of account opening.
After that, the fee will be 5% or $5 minimum.
If you don’t need to build your credit with a secured card and don’t plan to carry or transfer a balance, you can prioritize rewards programs or other perks. You may want to check your Approval Odds through Credit Karma before you apply, though — rewards cards typically require you to have good to excellent credit.
If you want cash back
Cash back cards can help you earn money back for your daily purchases. With the Citi® Double Cash Card, you can earn cash back twice on every purchase: 1% cash back when you make your purchase, and an additional 1% back as you pay for it.
If you want travel rewards
There are lots of options if you prefer to earn travel rewards or points. With the Chase Sapphire Preferred® Card, you can earn 60,000 bonus points if you spend $4,000 on purchases in the first 3 months from account opening. When redeemed for travel through Chase Ultimate Rewards®, that’s worth $750.
You’ll also earn two points per $1 spent on travel and at restaurants worldwide, and one point per $1 spent on all other purchases.
When you apply for a rewards card, be aware of how much value you’ll get per $1 or point and read the terms of any sign-up bonus rewards that interest you.
Choosing a new credit card is all about figuring out what your financial needs are and what type of card will work best for you. Once you’ve made that top-level decision, you’ll be ready to research specific cards, compare offers and benefits, and apply for a card you like. Keep reading to learn how to get a credit card.