How do you find a credit card? How do you find one that will fit your needs and match up well with your habits? Choosing a credit card can be tough with all the options available to you. One thing is for sure though. You don’t want the credit card companies telling which card to use. Being intentional about your choice will end up producing the best result for you.
I’m currently researching credit cards. I need to find a credit card for Mrs. PT and I to use for daily spending. We’re hoping to find a cash back credit card that will allow us to build up cash back points at above the 1% level for groceries, dining out, and gasoline. I’m also looking for a new credit card for my business. I recently formed an LLC and plan to treat my business and personal income separate for tax purposes. Having a separate card will help me to draw that distinction a bit easier.
So how do you go about finding the best card for you and your situation? Here’s what I do:
- Stick to My Principles
- Know My Needs: Short and Long-Term
- Weigh the Various Factors
Let’s dig into those a little bit deeper.
Your Personal Credit Card Principles
When you’re dealing with credit cards, or any financial product for that matter, it’s good to have a set of principles to fall back on. I sometimes call it my “philosophy on credit cards”. Your principles will help you establish a bare minimum for accepting a credit card. Some principles I have when it comes to cards are: use cards with no annual fees (unless there is strong evidence to get a fee card), interest rates don’t matter because I pay them off each month, and avoid all retail store cards.
If you don’t trust yourself with credit, then by all means skip credit cards and keep using your cash, debit cards, or a charge card. Some people like to keep it simple and have just one card. They value simplicity versus optimization. Others find it valuable to have multiple cards. One for different types of situations. Only you know your credit card principles. Use those to help guide your choice.
Know Your Credit Cards Needs
The next step is to take a quick inventory of your needs for this new credit card (cards). Where will you use the card? How often? Will your situation change from year to year?
For us, we see the long term value in a “daily spending” type card. One that will give us cash back for regular purchases (fuel, groceries, etc.) on a consistent basis for many years to come.
If you travel a lot and plan to use your credit card for travel needs, you probably have a different set of needs than that of someone who’s looking to use a card for daily spending.
If you simply need a credit card in the short term to do a 0% balance transfer, your needs are going to be completely different.
It’s also valuable to think about your long-term needs for a card. You can always cancel a card after your short-term goals are met. But if you can combine a card’s value in both the short and long-terms, then you’ve really got a great card. A good example of this is a balance transfer card that has a nice reward system. Once you’re done with the transfer then you can use it as a reward building card.
Weight the Credit Card Factors
Now that you’ve considered your principles and understand your needs, both short and long-term, you are free to compare credit card offers based on various credit card factors.
The factors to include in your analysis could be some combination of these:
- Where the card will be accepted (American Express vs Visa/Mastercard vs Discover)
- Annual Fee
- Interest Rate
- Reward Points Percentage
- Type of Rewards
- Sign Up Bonuses
- Reward Points Thresholds
- Balance Transfer Period
- Balance Transfer Fee
- Promotional Interest Rate
- Promotional Interest Rate Period
- Foreign Currency Exchange Rates
I’m sure I’ve left out a few, but those should get you started. Slap the relevant factors down on a spreadsheet or notepad and evaluate the cards available to you. Once you’ve performed the 3 steps above you should be in a comfortable spot to make a decision on a specific credit card.
What credit cards do you use and why?
Photo by Brooks Elliott