Mirror, mirror, on the wall, which is the best credit card of them all?! Choosing the credit card that’s right for you is a big deal. There are soo many options out there, it’s easy to get distracted by the frills that they all offer. Warning, this is going to be a longer post than usual, so you can skip to the parts that you most want to read about.
Standard credit cards usually do not charge you a fee to use the card. Usually if there is a high benefit to a specific credit card you probably get charged an annual fee start at $29 and up.
Balance transfer cards offer you a promotional interest rate and/or a fee to transfer your credit card balance to that specific card. Then you are given a specific time period in which to pay off the amount on that card. This can range from 3months to 12months. However, if you do not pay off the balance by the end of the given period, you will be charged the interest of the original transfer amount. These types of cards usually have an interest rate that is higher than 19.99%. Sometimes standard cards will offer this so that you will transfer another card’s balance.
These cards usually have interest rates below the average 19.99% interest rate on purchases. Sometimes that includes prime + a percentage, or interest rates could range between 6.99%-16.99% depending on the bank.
A Cash Back or Dividend card allows you to get a certain amount of your money back when you make purchases. This can vary between 1%-10%. How much you get back often depends on where you’ve shopped (e.g. grocery store, gas station, etc.).
Travel rewards are exactly what you think they are. When you use a specific card you can collect points that can go towards air travel (e.g. Aeroplane, Air miles, American Express etc.) Depending on the bank and the card, you can use your points to redeem other items from a special rewards website. Most banks have either their own version of a travel card, or they partner with another travel points company.
A few benefits of these cards is that they may include: travel insurance, trip cancellation insurance, mobile device insurance, or extended warranty on products bought with the card. The annual fee is often high, but that is sometimes waived the first year of using the card.
Some grocery stores offer a points system for when you shop within their grocery chain. There is one particular store that has an amazing points program, which I shall leave name less. You can use this card at any store, also including any one of their chain grocery stores, drug stores, clothing stores, and at specific gas stations. Unfortunately, you can only collect points at the gas station and not redeem points for gas.
What’s also great is that not only can you get points from purchasing specific items through the app, but you can also get points just by using the credit card. There are soo many ways to rack up points, and boy do they rack up fast! Often cards like this have an average interest rate of 19.99% and sometimes no annual fee.
If you’re a student, try not to get suckered into getting a free t-shirt just for signing up for a credit card (Don’t do it!). Especially if you are not familiar with how to use a credit card yet. Most banks have student credit cards that allow you to begin developing a credit history even if you have a low income.
When I set-up my first credit card I kept the limit low and asked my bank to not send me any promotional offers to raise my limit. I did this so that I wouldn’t get carried away. The downfall to this was that when I WAS ready to raise my limit, it took about a year before they started to send me offers. Keep your balance low so that you don’t get yourself into a ton of debt.
These are cards that some major brands offer when making large purchases. Some home improvement, furniture, and department stores allow you to make equal monthly payments with 0% interest charged during a specific time period when you spend over a certain amount on a purchase. However, if you do not pay off your card by the end of that allotted time period, you will be charged the interest amount of the original purchase. These types of cards also have a high interest rate of about 25%. Think long and hard about it before you sign-up.
Here are some of the key questions you need to consider when choosing a credit card:
My Credit cards:
I started off with a student credit card when I started university. It was a basic card, with no benefits or rewards. I then converted it into a student travel card, which had no annual fee, but still allowed me to build points towards travelling. Just before I started my second degree I got another credit card which had reward points that were specific to movies.
My most recent credit card is a balance transfer credit card. It has a 0% interest rate for balance transfers, but charges a small fee for the transfers. And that’s all I use that card for. It doesn’t even leave my the house.
My Husband’s credit cards
He has a travel card similar to mine, two home improvement store cards (that are only used for those purposes) and one for grocery points.
We were very strategic about the cards we chose, so that we could get the most out of our rewards. The rewards card that we are using that has the greatest benefit right now is our grocery card. At least once a month we are using points to pay for groceries, which helps us keep our grocery bill low. The travel card is used for shopping, and paying certain bills.
You would be surprised how quickly you can rack-up travel points depending on the card you have. The points I ranked up on my travel card bought my plane ticket for my summer vacation back in 2019. All I had to pay for was the tax, which was $200. Compare that $200 to my ticket which would have been $1000. If you like to travel a lot, a travel credit card is worth the research.
If you would like to chat about choosing the right card for you, send me an email and I would be happy to give your suggestions based on your situation.
Be sure to use these tips to help you #LevelUpYourWealth
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