Are you part of the 22 percent of the U.S. population without a credit card? Whether you’re just starting out with building credit or you’re recovering from past issues, eventually you’ll want to get at least one card in your name.
Having a credit card is important for emergency situations and using one responsibly can help build your credit history and improve your credit score. Not sure how to pick a credit card that’s right for you? Here are five of the most important things you need to watch out for.
1. Interest Rates
When you’re trying to find the best card, the annual percentage rate (APR) is one of the most important factors. This number determines how much it’s going to cost you to borrow the money. Remember that if you don’t have a great credit score, you might not get the rate that’s advertised. Always confirm the rate before you start using your new credit card.
2. Perks and Rewards
If you’re planning to travel on a tight budget, a good rewards card can be a lifesaver. These cards usually offer cash-back, travel rewards, or other benefits in exchange for you using your card. When making your choice, look for benefits that fit with your lifestyle. If you’re more of a homebody, a cash-back card might make more sense.
3. Annual Credit Card Fees
When looking at credit card features, remember that if it seems too good to be true, it probably is. Cards with a lot of great rewards and perks often come with a hefty annual fee. This isn’t always a bad thing, but you’ll want to weigh the cost and benefits before jumping in.
4. Balance Transfer Fees
Transferring balances from a high-interest-rate card to one with a lower or even zero-percent rate might seem like a good idea. However, before you make the move, ask about balance transfer fees.
You’ll want to consider the current rate, the new rate, how fast you think you can pay off the balance, and how much the transfer costs. Only make the move if you’ll save money on interest after paying the transfer fee.
5. Sign-Up Bonuses
One mistake to avoid is picking a credit card purely for the sign-up bonus. Many cards offer a large number of points or miles when you sign up but are only doing this to entice you.
If you’re sure you can use the card responsibly and the other features of the card line up with your goals, then go ahead and consider it. Otherwise, resist the temptation and keep looking until you find a card that offers the features you need.
Learn How to Make Smart Financial Move!
Now that you know how to choose the perfect credit card, you’re ready to start making smarter financial moves. Stay on top of the latest money-management tips and tricks by bookmarking the Beauty Army Money and Finance page. We’re always adding new information, so make sure to check back soon!