As with other aspects of financial adulting, choosing the right credit card depends on your goal. Is it to improve your credit? Pay less interest? Earn cash back or travel rewards on purchases?
Knowing your credit score will help you decide which card you’d most likely be approved for. How to Get Your Credit Score. Don’t employ a “shotgun” approach and apply for multiple cards, because each application will generate a hard inquiry, which can hurt your credit score. Soft inquiries – checking your own credit score, employment background checks, and pre-approval for credit card offers – don’t affect your credit score.
If you expect to carry a balance on your card, your goal should be getting one that has a lower interest rate. If you’re building or rebuilding credit, you should plan on paying off your bill each month and using no more than 30% of your available credit; the interest rate is less important. If you plan to transfer a balance from an existing credit card, compare offers from several cards to see how long and how low the introductory rate is, and what the ultimate rate will be. If you want cash back or travel rewards, read the fine print; you’ll most likely need to pay off purchases to earn the rewards.
In deep credit-card debt? Consider your options before you contract with a company to “settle” your debt for you. You will probably end up paying less to resolve the debt, but you’ll actually be paying in other ways – the settlement company’s fee, plus the stain on your credit report because “settled” or “discharged” isn’t the same as “paid.” See what you can work out with your credit card company first.
Filing for bankruptcy also has its price. It can remain on your credit report for up to 10 years, depending on which option you file. And it doesn’t cover student loans, so you risk defaulting – another hit to your credit score.
What do spiders, heights, and credit cards have in common? They’re all things that some people fear. Though we can’t help you with tall buildings or creepy crawlies, we can teach you how to get over some common credit card fears.