A credit card is a great financial tool that comes with a lot of benefits. If used properly, it can really help your finances.
One way that credit cards do this is by improving your credit profile. Revolving credit is a big part of your overall credit score and if you can show that you can manage it effectively, your score will rise.
Another benefit is that they help you manage your expenses and track your spending. Instead of paying cash, you can pay with a credit card. It is safer and, at the end of the month, you will receive a statement detailing how you have been spending money. This will allow you to identify and change wasteful spending.
Lastly, although there are more benefits, a credit card helps you avoid risk. Instead of using your bank debit card to pay at risky locations such as gas pumps or restaurants, you can use a credit card. This protects your banking information from identity theft.
Now that you see just a few of the benefits, let’s take a look at how to find the best card for you and your situation.
Finding the Best Credit Card for Your Needs
As a credit card holder, you probably already know the basics of what to look for in a credit card. There are many factors that make up the best credit card and they will vary from person to person.
The first thing to consider is what type of credit cards you are looking for. Are you looking for a travel rewards card? A cash back card? Or maybe a balance transfer one?
You should also be aware of the fees that come with any credit cards and how they compare to other cards. Keep in mind that just because a card has good features, it might not be a good overall deal. The annual fee, for example, could negate the savings or benefits that you receive.
Popular Types of Credit Cards
If you are on the fence about the type of credit card rewards you are looking for, let’s go over your options. Here are the most popular choices for well qualified borrowers.
Cash Back Cards
A cash back credit card is a type of credit card that offers consumers rewards in the form of cash, which they can use to pay down their debt or towards another purchase. The cardholder will earn a percentage of what they spent on purchases made with it each month.
The most basic of cash back cards will have a 1 percent return, but some will go as high as 5 percent cash back. Keep in mind that the higher percentage cash back offers are usually for limited categories like restaurants. Also, many cash back cards will have an annual fee which can be hefty. Make sure that you will benefit enough from the cash to offset the annual fee.
Airline Mile Cards
Airline miles are a valuable commodity when it comes to booking domestic and international flights. Airlines often offer premium services such as extra baggage and free checked bag. Because of this, many companies have introduced credit cards to help their customers earn airline miles easily, which can then be redeemed for travel rewards.
The great thing about airline mile cards is that they often come with an immediate mile bonus. Generally, if you charge a certain amount of money within a short time of opening the card, you will be given thousands of free miles. A big perk if you are traveling soon.
A discount credit card is a type of credit card that gives you a certain percentage off your purchases. They’re ideal for people who want to buy lots of things and don’t want to pay full price.
Most of these cards will be very limited in the discount that you receive, so they will appeal to far less people than other types of credit cards.
Choosing A Credit Card With Bad Credit
All of these reward and cash back cards are great, but what if you have bad credit? Are there any rewards available for those with lesser credit profiles? Yes, but your options will be much more limited. Let’s take a look at some of those options, many of which will depend on your credit score.
No Deposit Credit Cards
If you have poor credit, just getting a car that does not require a deposit will be a big benefit to you. There is nothing worse than having to put a 500 dollar deposit down just to get 500 dollars in credit. There are plenty of these credit cards available, even if you consider your score to be fairly bad.
One such company that offers this service is Credit One. They are a true sub prime lender, but they can help you re-establish your credit. These cards will almost always come with an annual fee however, so keep that in mind.
Cash Back Cards
If your credit is fair, a cash back card still might be available to you, but the benefits will be less than someone with perfect credit might get.
With bad credit, most cash back cards tap out at about 1 percent. While not a lot of money, every little bit helps. Use this money to pay down purchases or to treat yourself.
Other Reward Cards
With bad or even poor credit, you are very limited in rewards. It is rare to find a card that offers such things as airline miles, purchase discounts or high levels of cash back. For these types of rewards, you will need to work on your credit profile until you get into the good to excellent range.