If you’ve come home to find your mailbox stuffed with enticing offers from credit card lenders, you’re likely not alone. In 2015, credit card companies sent more than 3 billion mailers. That’s enough to send 28 pieces of mail to every U.S. household.This begs the question: How to find a credit card that’s is right for you. A good first step is to look at your credit score and at what you are looking for from your card.
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I want to build credit.
One way to build a credit history is to have and use a credit card. If you want to build or rebuild your credit history it can be hard to find a credit card for which you qualify. That’s where a secured credit card comes in.
It works like this: After you are approved, you make a deposit to your card issuer and that money acts as collateral. Your credit limit is usually equal to the amount deposited. If you deposit $200, you would have a credit limit of $200. If you deposit $5,000, your credit limit would be $5,000.
By putting your own money up, you become less of a risk to the lender. You can use a secured card just as you would a regular credit card and, by paying at least the minimum payment due on time every month, you can build your credit history. If you pay your balance in full and close your credit card account, your deposit should be returned.
I want to save on interest.
Opt for a card with a low introductory Annual Percentage Rate (APR) or a balance transfer option. The former allows you to charge purchases without paying interest during the introductory period.
If you’ve already accumulated debt, but want to pay it off, you might opt for a balance transfer, in which you move your balance from a high-interest card to a new one with a low 0% introductory APR. This could help you to pay off your debt during the introductory period at a lower APR. It’s important to read the fine print, however, and understand the terms of these offers, to keep track of when the introductory period ends and a higher interest rate kicks in and whether you will pay interest on new purchases you make on the card.
I want to earn rewards.
Credit card lenders offer myriad rewards to entice consumers to sign on with them. There are three main categories of rewards: miles, points and cash back.
- A miles-based card typically provides travel-based rewards and often allows cardholders to accrue miles with every purchase.
- A points-based card rewards users with points on purchases and offers an assortment of redemption options, such as hotels and restaurants.
- Cash back cards reward cardholders with a percentage of their purchases. If a cardholder spends $1,000 a month on purchases and has a 1% cash back rewards structure, his rewards account will be credited $10.
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By thinking through your situation and your financial goals, you’ll be prepared to make a better credit decision and to find a credit card that fits your needs and lifestyle.