Not all credit cards were created equal. Whether credit card offers are pouring into your mailbox or you're shopping around to find one that meets your needs, it is important to know which credit card is best for you. To find the best credit card, you will need to understand what you qualify for and recognize what credit card features suit your lifestyle.
Step 1
Examine your credit history. You are entitled to pick up a free credit report once a year annualcreditreport.com. Your credit history and credit score determine what type of credit card you qualify for. If you have excellent credit with a high credit score (in the high 700s,) you will likely qualify for "platinum" and "titanium" type cards that come with high limits and low interest rates. If your score is on the low side (below 620) and your credit history has been scuffed up by past financial errors, you can still qualify for some credit cards, but they might come with requirements such as security deposits and they typically have higher interest rates and lower limits.
Step 2
Examine your spending habits. If you qualify for more credit cards, you have more options when it comes to finding a card that meets your spending habits. Decide whether you plan to make smaller purchases that you can pay off every month or larger purchases (with residual monthly balances.) If you intend to buy big-screen televisions and boats, you might be better off getting a card with a low interest rate. It won't come with the same rewards as a card with a higher interest rate, but you don't want to have to pay high penalties. Alternately, if you intend to use your card instead of cash for day-to-day purchases such as groceries, you shouldn't have a problem getting a card with a higher interest rate because you will likely be able to pay off your bill in its entirety every month. Getting a card with a higher interest rate will typically allow you to reap benefits such as "reward points" that you can redeem later on.
Step 3
Look for cards tailored to meet your interests. Your current lifestyle might benefit from a credit card with unique rewards systems. For example, if you are a frequent traveler, you might want to pick up a card that offers rewards like free hotel stays and frequent-flier miles. If you are a big shopper, you might want to find a credit card that offers bonuses, discounts and cash back at specific stores.
Step 4
Line up your choices next to each other. Every credit card has a box of information that includes information such as annual percentage rate and limits. Once you have narrowed your selection based on your credit history, your spending habits and your interests, line up the cards' information boxes side-by-side. Compare interest rates, grace periods, annual fees, transaction fees, finance charges and late fees. Generally, low interest rates, low fees and long grace periods are your best bet if you want to save money. But if you're good at paying your bills and you want added perks, weigh your options accordingly.
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