Choosing the right credit card for you means considering the many options that are available and how to apply the benefits and availability to your needs.
You should understand how a credit card actually works before you jump into any agreements. When you are certain you can be financially responsible enough to get and use a credit card appropriately, you should consider the options available to get the best overall deal.
Credit cards can offer great rewards and benefits, but they can also cause trouble for those who do not use them responsibly. You need to know how to appropriately use these financial options to make sure you meet the requirements and do not incur additional, unnecessary fees.
From annual fees to late fees and interest rates, there are plenty of considerations before you sign-up for any credit card. Knowing the types that are available and how you can best use them can grant you a better understanding of the options.
Learn About Popular Types of Credit Cards
Credit cards can vary greatly in their costs and benefits, so it is very important that you understand the many options available and how they might suit your needs. There are options no matter what your credit history might be, as well as options varying in the level of benefits offered to cardholders. Review the popular options below so you know what types of cards might work for you.
Learn About Rewards Credit Cards
Rewards credit cards are specifically designed for cardholders to benefit from using the card, usually through cash back programs or through discounts on purchases. Some cards offer rewards for every dollar spent on the card, while others will offer rewards for specific types of purchases.
If your card offers rewards, always check to see if there are specific time periods with bonus rewards offered. For example, some cards will offer more rewards per dollar spent at gas stations or at grocery stores during certain months of the year.
Knowing when these bonus offers are available can help you to take advantage, especially if you have multiple credit cards offering various rewards programs.
These cards are ideal for those who will pay back their borrowed credit in full every month. This helps you to avoid typically higher interest rates while benefiting from rewards options.
Learn About Low-Interest Credit Cards
Low-interest credit cards are specifically designed so that those who cannot pay their balance in full every month also will not face high fees. Sometimes, a card will offer a low-interest introductory offer for the first six months or the first year. Other cards will maintain this lower interest rate level for the duration of your card membership.
Choosing a credit card with a low interest rate can be a good idea for everyone, but especially if you foresee large payments coming on a card that you cannot repay immediately.
Most low-interest cards do not offer great benefits or rewards programs, but you can still benefit from lower rates if you need additional time to pay.
Learn About Secured Credit Cards
Secured credit cards are good options for those with no or poor credit history who would not otherwise qualify for a rewards or low-interest card. Secured cards function more like debit cards, where you must deposit money into the account in order to then use the card. This offers a safe way to build your credit and to show lenders that you can safely borrow.
Considerations Before Getting a Credit Card
When getting a credit card, you need to consider the many aspects of card use that will impact you. This ranges from any annual fees you must pay to the interest rate you might face if you do not pay your balance in full.
It also includes considering the benefits available, so be sure to review all of the options and choose the right credit card for you. The following list can help you to think about each aspect:
- Credit Score: Your credit score will be an important factor in determining the type of card you will qualify for and what your interest rate might be.
- Financial Habits: If you can responsibly use a credit card, using it only for necessities that you will immediately repay, then your financial habits would suit a credit card long-term. If, however, you cannot carefully use a credit card and will not be able to repay what you purchase, then you need to be honest about those habits and try to stay as financially healthy as possible.
- Rewards Options: If you will use your credit card responsibly, then you can look into the best rewards program for you, based on how and where you spend your money. If you often use a certain brand, then looking into a credit card with that company can be beneficial. If you are not brand-specific, then a general cash back program might be right for you.
Before getting a credit card, you must be sure you understand all of the pros and cons so you can choose the best financial course for you. Knowing how a credit works, what types of credit cards are available and what to consider before applying can help you narrow down all of the options into a short list to potentially apply for when you are ready.
How to Apply for the Right Credit Card
Choosing the best credit card for you requires an honest look at your financial history and credit score, plus an understanding of how you can use that credit in the future. If you are prepared to apply for a credit card, then you need to compare a few options based on your qualifications and the benefits and costs of each. Comparing your top two or three choices can help you to narrow down the options to find the right one.
Before applying for a credit card, be sure to read the fine print so you understand all of the potential costs and benefits of each option. Know the fees and any potential penalties you might incur, and then be sure to choose based on a logical comparison, rather than any excitement over potential travel offers or other initial bonuses.
Applying for a credit card and being denied can have a negative impact on your credit score. This is why you should only apply for a card once you are sure it is the right choice for you and that you are fully qualified for that particular card.
How Low-Interest Credit Cards Might Help Save You Money
There are numerous benefits to having a credit card. These devices make it easy to make purchases you might not immediately have the funds for, and they’re convenient and simple to use.
Credit cards can also protect the money you have in your bank account. That’s because it is more difficult for a credit card thief to connect a credit card to your bank account than it is to connect a debit card to a bank account.
However, credit cards may worsen your spending habits if you are in a serious amount of debt.
It is easy to forget that purchases made with credit are not free. If you spend a large sum of money and do not always make your monthly payments on time, this can cause you more money over time. This, in turn, will also damage your credit score and may even lead to you going into debt.
In order to take advantage of having a credit card without falling into the potential pitfalls these cards bring, it is important to use your credit card wisely. It is also important to look for credit cards that offer low interest rates.
Although a low interest rate will not necessarily prevent you from spending too much money, having a low interest rate can keep your debt at a manageable level if you carry a balance from one month to another. In fact, there are even ways you can use a low-interest credit card to help you get out of debt altogether.
What are low-interest credit cards?
To gain an understanding of how a low-interest credit card works, it is important that you understand interest and how it works.
When you sign up for a credit card, you’re approved to borrow a certain amount of money with that card. Then, when you make a purchase on a credit card, that amount gets withdrawn from your credit limit. A credit card statement then shows you the amount you have used and the amount of credit you have left.
The amount you have used is considered your credit debt balance. Each month, a certain amount of interest will be added to your statement, if you don’t pay off your credit debt balance before its due date for that month.
The size of the interest fee you’re responsible for paying will usually depend on:
- The credit card company that issued your card. Credit card companies are responsible for determining the interest rate they will charge you for your card.
- The card you have. Certain credit card companies have cards that always come with high interest. Other cards come with lower rates.
- What you use your card for. If you use your credit card for cash advances, for example, you might need to pay a different interest fee than you would if you were swiping your credit card in point-of-sale (POS) machines.
Some companies require annual fees as well, which you must pay in order to continue using the card. Every company will have annual percentage rates (APRs), which are interest rates calculated by year instead of by month.
APRs vary significantly depending on the type of credit card you use, the benefits associated with the card, your credit score and more. For example, cards that offer cash back on certain purchases may have higher APRs. As a result, it is important to choose a card based on the features you find most valuable.
You may be able to avoid paying interest on a credit card altogether if you pay off your balance as soon as possible. This may be difficult to accomplish, especially if your total debt is equal to or more than 50 percent of your income.
Low-interest credit cards, therefore, can be very valuable because they will allow you to pay the minimum amount in interest while making progress on your debt.
Why should I have a low-interest credit card?
Low-interest credit cards may have a variety of perks that can lower the amount you must pay each month. These are designed to incentivize you to apply for a new card. Some perks of applying for a new low-interest credit card include:
- Interest rates that are lower than what you could find for any other card. A lower interest rate translates to fewer add-on costs. This is especially important if you need to carry a balance on your credit card from one month to another. If you have a good credit score and find a high-quality credit card company, then you may even qualify for an APR of 10 percent or lower.
- Long promotional periods. Many low-interest cards offer long promotional periods, during which you will not have to pay any interest on a balance you carry on that carry. You must still make payments to reduce your balance, but you won’t have to pay any additional fees on that amount.
Is a low-interest credit card a good option for me?
For many people who have manageable amounts of credit card debt, low-interest credit cards can be excellent tools to help them regain control of their finances.
Furthermore, if you plan to pay off your credit card bill each month, these low-interest credit cards can also be beneficial to you.
On the other hand, you may also consider getting a low-interest card if you cannot pay off everything immediately but are still willing to pay interest each month. Some low-interest credit cards are balance transfer cards, which will allow you to consolidate all your debt onto one card.
With a low-interest balance transfer card, you may receive better terms in your contract. These cards may also allow you to pay off your debt with 0 percent interest during a promotional period. If you have a plan to get out of debt and know how to pay off your balance before the promotional period ends, this can be an especially effective way to eliminate your credit card debt.
How do I get a low-interest credit card?
Different credit card companies offer their own low-interest card options. Therefore, you need to familiarize yourself with the options that are available to you. First, be sure to research different credit card companies to determine which offer suits your needs and your spending habits.
Then, contact the company online or by phone. Be sure to ask the provider about the lowest APR options available.
Make sure you then read through the terms and conditions of the credit card before you apply. Depending on the card, you may be able to apply in person at a bank branch, or you may have the option to apply online.
Credit Cards That Typically Have Low-Interest Rates
Learn About Business Credit Cards
There are many different types of credit cards with terms and conditions that are easy to understand.
However, many consumers do not understand the terms and conditions of a business credit card. In addition, many credit card holders may not know when they are allowed to use a business credit card and when they are not. These cards operate in the same way as most credit cards, though they are slightly different.
Many small business owners and sole proprietors use these cards for business expenses. This makes it easier to keep track of company purchases versus personal purchases and may result in higher tax returns at the end of the year. There are other advantages to business credit cards as well, which are explained below.
An Explanation of Business Credit Cards
A business credit card may be used by a company to make work-related purchases, rather than having an employee purchase items on a personal account and then be reimbursed. It may also allow a larger company to make big purchases, which it would not be able to do on capital alone.
Credit cards are also an alternative to large business loans. Purchases made with a business credit card may positively impact a company in a variety of ways. The credit card may also help an organization manage all its business expenses and keep them in one place.
It is important to understand that business credit cards are not the same as corporate credit cards, though both may be used to make business-related purchases. Individual employees are usually responsible for the expenses on a business credit card.
This may increase a company’s efficiency and help it keep track of how each purchase benefited the organization. In contrast, CEOs are responsible for corporate cards. Corporate cards are typically only used by larger companies to make transactions with a specific bank.
Another benefit of business credit cards is that they give companies the opportunity to improve their credit histories. Having a good credit history may be crucial to an organization’s success.
The company in question simply has to pay off credit expenses on time. Then, it may show its lenders and investors proof of good credit, reliability and responsibility. A business that has a bad credit history could hurt itself, because investors may not want to take a risk on that company.
The Important Differences Between Business and Personal Credit Cards
If you have a business credit card and a personal credit card, it is crucial that you understand the difference between them and do not confuse your purchases. Having a good understanding will also allow you to select the credit card type that best suits your business.
Below are a few of the most important differences:
- Business credit cards only affect business credit, and personal credit cards only affect personal credit. A business is still liable for bad credit, but employees within the company will not be personally affected.
- Certain business credit cards provide companies with organizational tools and other perks. For instance, you may be able to organize your purchases with an online system. An online system typically allows you to see all your records in one location, systemize your receipts and more. You may also be able to have several business credit cards printed so that your employees do not have to share a single card.
- The benefits of a business credit card are different from those of a personal card. A personal credit card may have benefits such as cash back on qualifying purchases, airplane miles and points. A card for business typically has benefits that relate to the company as a whole. For instance, your organization may qualify for advertising and shipping discounts, a lower monthly WiFi bill, discounted phone services and certain office supplies.
There are other differences between the two types of cards, the most important being that business credit cards may be very worthwhile for your company’s credit but not for your personal credit. Keep in mind, however, that wanting to separate personal expenses from business expenses is reason enough to obtain a business credit card.
How to Obtain a Business Credit Card
The first step to obtaining a business credit card is to research multiple providers and find the card that best suits you and your company. During this process, it is important to take your company’s business situation and spending habits into consideration.
Keep in mind that no business credit card is perfect, and some credit card features may become disadvantages in the long run. However, you may be able to find a card that offers most of the features you are looking for.
Some especially useful perks include no annual fees, longer promotional periods with a 0 percent introductory rate and high credit limits, which will allow your company to make large purchases. Your business may also benefit from lower interest rates, though a lower interest rate is not guaranteed.
Once you find a card that you think will work for your company, you must provide the credit card company with important information about your business.
This includes the name of your business, the services your business provides, the company’s contact information, Employer Identification Number (EIN), the number of employees, revenue information and how much the company spends on average in business expenses.
You may also be required to submit information about yourself, such as your position within the company, Social Security Number (SSN), contact information and household income. Make sure that this information and the company information is accurate, as it will determine the card’s interest rate, perks and credit limit. You will also need to submit a signed guarantee which makes you liable for any debt the company does not pay back, in the event that it goes out of business.
If your company is approved for a business credit card, you can expect to receive the new card in the mail. You may then activate the card and begin using it for business expenses.
It is very important to keep track of which employees have cards, what they are using the cards for and how much these expenses help your company. You do not want to have unnecessary expenses on your card, especially if your company is required to pay a higher interest rate than normal.