which item is important to consider when selecting a credit card?

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Most Important Factors to Consider When Choosing a Credit Card

Choosing the right credit card is a big decision. Here are some factors to consider before applying, so you get the most benefit from your new card.

Credit Card Basics

What to Consider When Choosing a New Credit Card

September 8, 2021 • 5 min read

By Louis DeNicola

At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.

There's a lot to consider when you're looking for a new credit card. Choosing the right one can depend on a card's features and fees, along with your personal financial situation and goals. Whether you want to stick with a card from your current bank or card issuer or look for the best one overall, keep these six factors in mind.

1. Credit Score Requirements

Credit card issuers don't necessarily have (or share) a minimum credit score requirement for each of their cards, but they may offer some general guidance. Certain cards may primarily be intended for people who fall within certain credit score ranges—whether that's poor or very good or somewhere in between.

The Experian CreditMatch™ credit card marketplace can show you recommended FICO® Score☉ ratings for each card. You can get your credit score for free from Experian to see where your FICO® Score stands and then apply for cards that align with your score. Or you may want to improve your score first, and then apply after it increases. Doing so can increase your chances of a successful application.

2. How You Plan to Use the Card

You'll also want to consider how you plan on using your new credit card.

For example, if you're going to use one card for everyday spending, a flat-rate rewards card might make the most sense. If you're willing to put in a little bit of work to make sure you're maximizing your rewards, you could try to get several rewards cards that offer complementary bonus categories. For example, you could get a grocery card for your grocery runs, a travel card for when you're getting away and a flat-rate rewards card for everything else.

If you plan on only using the card during emergencies, you might look for a card with a high credit limit, low interest rate and no annual fee.

Or perhaps you have a specific upcoming purchase in mind or want to consolidate and pay down debt. A card with an introductory 0% annual percentage rate (APR) offer on purchases or balance transfers might make sense.

3. Fees

Credit card fees can impact your cost for using the card even if you never pay interest. Some of the most important fees to consider are:

Annual fee: An annual fee isn't necessarily a bad thing, but it can definitely impact the value you get from a credit card. There are plenty of good options that don't require an annual fee, including some of the best credit cards for beginners, such as the Capital One Platinum Credit Card. When looking at a card that has an annual fee, consider the benefits that come with the card. Premium cards may have a high annual fee, but they can also offer benefits that more than outweigh the cost. If you think you'll end up taking full advantage of the card's benefits, it may well be worth paying the annual fee.Balance transfer fee: Balance transfer fees are often around 3% to 5% and can apply to every balance transfer. You may be able to save money by finding a card that charges a lower balance transfer fee.Late fee: Card issuers may charge a late payment fee if you don't make the minimum payment by the due date. There are a few cards that don't have late payment fees. But you can also avoid accidentally getting charged the fee by setting up autopay for at least the minimum payment amount.Foreign transaction fee: A foreign transaction fee may apply when making purchases outside the U.S. or shopping online if the purchase isn't in U.S. dollars. It's often around 3%, but there are also many credit cards, including many travel cards, that don't have this fee.

4. Annual Percentage Rates (APRs)

A credit card's APR determines how much interest accrues when you carry a balance.

You generally won't pay any interest on purchases if you pay off the card's entire balance each month. A card with a potentially low interest rate could be best if you intend to occasionally revolve a balance. For reference, the average interest rate on credit cards is around 16%.

If you plan on using the card for a large expense that you'll pay off over time, look for a card that has an intro 0% APR offer. Similarly, balance transfer cards can offer an intro 0% APR on balance transfers during a limited period.

Also, credit card cash advances may carry a separate (often higher) APR that applies even if you have a 0% APR offer for purchases and balance transfers.

5. Rewards

Rewards credit cards can offer you cash back, points or miles on every eligible purchase. Generally, a rewards card will use one of three earnings styles:

Flat-rate rewards cards give you the same rewards on every purchase that can earn rewards.

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Source : www.experian.com

Choosing and applying for a credit card

Information on what to look out for when choosing and applying for a credit card.

Choosing and applying for a credit card

This advice applies to England

This page tells you what to look out for when choosing a credit card including comparing cards. It tells you what happens when you apply for a credit card and what you can do if your application is refused.

Choosing a credit card

There are hundreds of credit cards available, so shop around to get the one that suits you best.

Start by thinking about what you want to use the credit card for. This could be to buy things on line or on holiday, to pay your bills or to spread the cost of a purchase. However you choose to use your card, the key thing is whether you will be paying off what you owe every month or spreading repayments over a period.

If you can pay the balance off in full and on time each month, you can take advantage of the interest free period. In this case, the interest rate may not be so important but you may want to look at cards with other incentives like cash back. Even if you think you will be able to pay the balance in full each time, it’s worth planning what you’ll do if you can’t.

If you want to use the card for borrowing and you won’t be paying off the balance each month, you will usually have to pay interest. In this case, you may want to choose a card with a lower interest rate. Don’t forget to make sure you can afford a regular repayment.

For more information about how to choose credit, see Getting the best credit deal.

If you’ve applied for credit cards before

Applying for too many cards or regularly switching cards can affect your credit rating. Each time you make an application it’s recorded on your credit file. Your file will also show if an application is refused. When new providers check your credit file, it can look like you have lots of cards already or that no one else wants to lend to you.

Find out more about your credit rating and how lenders decide to give you credit.

If you’re struggling to pay what you owe on a credit card, find out how to deal with the debt.

Checklist of what to look out for when choosing a credit card

Here’s a checklist of some things to look at when you choose a credit card:

Annual Percentage Rate (APR). This is the cost of borrowing on the card, if you don’t pay the whole balance off each month. You can compare the APR for different cards which will help you to choose the cheapest. You should also compare other things about the cards, for example, fees, charges and incentivesminimum repayment. If you don’t pay off the balance each month, you will be asked to repay a minimum amount. This is typically around 3% of the balance due or £5, whichever is higherannual fee. Some cards charge a fee each year for use of the card. The fee is added to the amount due and you will have to pay interest on the fee as well as on your spending, unless you pay it in fullcharges. Check in the credit agreement what other charges apply to the card. You will usually be charged for going over your credit limit, for using the card abroad and for late paymentsintroductory interest rates. This is where you start off paying a low rate of interest or none at all. The rate then increases after a certain amount of time. For example, it could increase after six months or from a certain date. You’ll often see an introductory rate for balance transfers. If you are comparing cards, look at how long the introductory rate lasts as well as the interest rate it changes to at the end of the introductory periodloyalty points or rewards. The points add up depending on the amount you spend and you can then use them to buy goods. Sometimes this is in particular shops. Check how and where the rewards can be used and think about how likely you are to use themcash back. This is where you get money refunded to your card, depending on how much you spend. Check that you are likely to qualify for the cash back. For example, it may only apply if you pay your balance in full each month. A lower interest rate may be a better deal.

For more information about APR, see Getting the best credit deal.

Comparing cards

Key information you should get

When you are given information about a credit card, it should include a summary box with standard key information about the card. This should include the interest free period, interest rate and other charges. This is so that you can easily compare different cards.

You can find more information about the credit card summary box including an explanation of what all the terms mean, on the UK Cards Association's website at: www.theukcardsassociation.org.uk.

Using a comparison website

You can use a comparison website to see what different credit card providers are offering. This can help you choose the right card for you. There are lots of comparison websites and not all credit cards will be shown on all sites. So you may need to look around for a particular product.

You can find details of some comparison websites in Further help and information.

Applying for a credit card

You can apply for a credit card:

on line by post by phone

at a bank or building society.

You will have to fill in a form and the credit card provider will check your credit record with a credit reference agency, to see if you are credit worthy.

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Source : www.citizensadvice.org.uk

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