What Kind of Credit Card Should I Get?

How to Choose the Right Credit Card

Before we dive in, a quick note: there isn’t one right card for everyone. Individuals have unique financial situations, credit needs, lifestyles, etc. So you should choose a credit card that’s best for your specific situation and credit score.

When it comes to credit cards, there are a few things you should keep in mind. You’ll probably see a lot of terms being thrown around–intro and ongoing APR, annual fees, balance transfer, etc. Let’s break a few of these terms down:

• Intro/ongoing APR: Essentially, this is the amount of interest you’ll pay annually. The APR, or annual percentage rate, depends on the card. An intro APR is a promotional interest rate for new customers, typically lower than the ongoing APR, and usually can last up to a year. Ongoing APR, on the other hand, is the amount of interest you’ll always pay.
• Annual fees: While all credit cards have APRs, not all cards have annual fees. Some lenders will charge consumers an annual fee, especially if the credit card offers decent rewards. This can range anywhere from $25 to $500 or more.
• Balance transfer: Depending on your financial situation, you may or may not get hit with a balance transfer fee. A balance transfer fee is charged when an existing debt is transferred from one card to another card. Balance transfer fees vary from credit card to credit card.

What Is the Best First Credit Card?

There is no single “best” credit card because everyone has a different financial background and needs. To find the right credit card for your situation, you’ll want to check your credit. If you have good or excellent credit, you’ll have more credit card options than someone who has no credit or bad credit—though there are still credit cards for people with bad credit.

How Do I Get a Credit Card with No Credit?

If you have poor or completely nonexistent credit, you could still get a credit card if someone cosigns your application. That means that your cosigner is responsible for your late or missed payments. When you ask someone to cosign a credit account, you’re asking them to put their finances and credit at risk. So make sure you and your potential cosigner carefully consider the consequences and how you’ll manage the arrangement before you commit.

If you don’t want a cosigner (or don’t have the option) but have bad credit or no credit, you may want to consider applying for a secured credit card.

Secured Credit Cards

With a secured credit card, you pay a deposit to secure your line of credit. That way, if you don’t make your payments, the credit card company can take your deposit and protect against losses. It’s risky to extend credit to someone with no credit history, because the lender has no indication of how the consumer will handle it.

Your security deposit generally sets your credit limit. With a $500 deposit, you’ll have a $500 credit limit. Because you need to give the credit card company a deposit, many if not most issuers require you to have a bank account in order to get a secured credit card.

To establish good credit using a secured credit card, make on-time payments and use as little of your available credit as possible. If possible, try to keep your credit utilization ratio to less than 30%.

Student Credit Cards

Due to the Credit CARD Act, consumers younger than 21 must have an independent source of income to qualify for a credit card on their own. Still, there are credit cards for students—you just may need a cosigner to get one. Some cards accept applicants with little or no credit history, and they’re often offered by local banks. If you have average credit, you may be able to get a student credit card that offers some rewards.

Balance Transfer Credit Cards

Remember how we mentioned balance transfer fees? Well, there are balance transfer credit cards. These allow you to move either some or all of a balance from an existing credit card to a new card.

Why would you need a balance transfer credit card? They’re typically for people who need to get a handle on their debt. If you have a decent amount of debt on a card with a high interest rate, you can transfer that debt to a card with a lower interest rate.

Cashback Rewards Credit Cards

If you have experience with credit and a strong credit profile, a cashback rewards credit card could be a good fit for you. Just keep in mind that these credit cards can have annual fees and a high APR.

In the market for killer cashback rewards? You can choose your card based on the right rewards for your lifestyle. If you’re constantly grocery shopping and cooking, for example, you might want to find a card that offers decent cashback rewards at grocery stores. Or if you’re always commuting in your car, you can find a card that has cashback rewards at gas stations. There are some cards that even offer cashback rewards on streaming services! Plus, most rewards credit cards offer at least 1% cashback on all purchases.

Travel Credit Cards

Are you constantly traveling? If you have good credit, a travel rewards credit card could be a great fit. Travel rewards cards are ideal for those who are constantly going on business trips, flying to visit loved ones or just love jetsetting.

Not only do travel offer airline miles, but they can come with some other killer traveling perks:

• Seat upgrades
• Access to airport lounges
• Trip insurance
• Hotel discounts
• Car rental discounts
• Cashback rewards
• Complimentary concierge services
• Credits for spa treatments or hotel amenities

On top of all that, credit cards might also offer a significant amount of membership points or even travel miles to new cardholders.

Small Business Credit Cards

Thinking about starting your own business? You might want to consider getting a small business credit card. It’s an easy way to streamline expenses across multiple employees. Plus, it’s a great way to build your business credit score. Some small business credit cards offer perks that are particularly useful to business owners: travel rewards, cashback rewards on business purchases, etc.

How Credit Cards Help Your Credit

A great way to improve your credit score is by using your credit card responsibly.. Use your card and pay your bill on time every month, and over time you could establish a sound payment history.

Your credit score affects so many areas of your life, not only your ability to get loans but also renting an apartment or getting a job. With good credit, you could get lower interest rates when you apply for a car or home loan, or even another credit card. Many insurance companies also consider credit scores when determining their premiums.

A potential employer may check a version of your credit report to see if you are responsible about handling your financial obligations. Landlords and rental agencies may pull a copy of your credit report as a part of the review process. Electricity and cable and other utility companies may check your credit report when determining your rates. Even a cell phone company may check your credit before granting you a service contract.