While using a credit card may be as easy as tapping a little terminal, choosing the right credit card can be difficult. After all every credit card is different, and offers different advantages. Not only that, but you need to keep in mind that credit cards are technically pre-approved loans that are given to you from a credit card provider, which can very quickly add up. Unlike loans however, if you pay off your balance every month, you are borrowing the money for free. Still, as tempting of an offer as that is, you should take the time to ask yourself a few questions before choosing one.
Do I really need a credit card?
For most of us in the digital age that is a definite yes. After all, buying things online at places like Amazon, or booking a plane ticket, can be difficult without one. You can always use your debit card, but there’s something a little more comforting about using a credit card to give you a buffer instead of giving places direct access to your bank account. Credit cards also make returns a little easier, and if you lose it, it’s much easier to cancel.
What Credit Card Protections Do I Need?
Credit card protections are basically insurance for the items you purchase using it. Some give extended warrantees, collision damage insurance on rental cars and travel insurance (including travel medical, flight delay, lost baggage and trip cancellation or interruption insurance). Most will protect you from scams and frauds, and block purchases they don’t believe you’ve made. Usually the more you pay for a credit card annually, the better these credit card protections are. It’s in your best interest to get the credit card with the protections you will use, otherwise you will be paying too much for it.
What Perks Do I Need?
From travel rewards to cashback, low-fees, in-store rewards, and more, there are many different types of credit card perks out there. It’s up to you which are more important. If you do a lot of travelling, a travel rewards card is probably the right choice, or if you shop at a particular store, get the one that offers rewards for shopping there. It’s fun to pick and chose, but make sure you are going to take advantage of them, otherwise it might not be worth it.
What Fees Am I Willing To Pay?
Not all credit cards are free, some have annual fees you will need to pay. As explained above, the more perks and protections your card has, the more expensive it will be. Ask yourself, how much are you willing to pay to get the perks you want? It might be in your best interest to look over the perks, and decide if you will take full advantage of them before signing up for the card. Unused perks is like letting food spoil; in other words a waste of money. Also keep a close eye on other fees, such as cash advances, late payment fees, credit overages, and foreign exchange fees.
What Network Is Best For Me?
Choosing between Visa, Mastercard and American Express can be tough. While American Express may offer more perks, it’s not always accepted everywhere because of the higher processing fees and transaction percentages they charge merchants. Some merchants don’t accept Mastercard, yet in others that’s the only credit card they accept because of a partnership they have with them. While there is no easy answer to this question, take a look at which places you shop more often to make your decision easier.
How Many Credit Cards Should I Have?
It’s always good to have a backup in case a particular card isn’t accepted, but you should never go overboard. It’s too tempting to carry a balance on them that way, and the more balances you have, the harder it is to pay them all on time.