Finding A Credit Card That Works For You

For most of us, barely a week goes by without getting a credit card offer, either through the mail or online. If you are thinking of applying for 1 of these offers, there are several key issues to consider when deciding which is right for you. All card offers will advertise benefits. Finding the mix of benefits that fits your needs is the key. Let's discuss a few of the things you should be aware of before you do any applying.

What Do You Need The Card For?

This is the first and most important question you should ask yourself. Your answer will help to decide just what type of card and what incentives will work best for your needs.

For example, if it is for business use, look for a card that offers cash back for business purchases or a membership to a discount buying club. Most companies will offer a low introductory rate for a specified amount of time, but you need to know what the rate jumps to when that time has expired. It might work better for your business if you find a long-term, more moderate interest rate than having to change cards every few months to keep your interest rate in check.

If the card is for personal use, decide what your plans are for this card. If you plan on using it instead of cash and checks throughout the month, but plan to pay it off each month, know what the card's grace period is and what happens if you miss it. Pick a card that offers reward points even if you don't carry a monthly balance. This can be a great way to rack up the frequent flyer miles, as long as you're disciplined enough to use it this way.

Know The Interest Rate

Many card companies will offer an initial interest rate that is quite low, sometimes even 0%, for a designated time period. This rate usually applies to both transferred balances and new purchases. What you need to know is what happens when the introductory phase is over. Will the interest rate skyrocket? Will the interest rate be more moderate if you have a good payment history? Look for hidden costs such as an annual fee or a cash advance fee. These are important to know if you plan to use your card to your advantage.

Evaluate The Incentives

Many cards also offer a long list of incentives with their application offer. Although many of these are nice, usually you have to use your card a great deal to get them. This can become a kind of trap. You know -- buy more to save more. If you're going to use your card anyway, then you might as well have something to show for it. Look for cards that offer incentives that interest you, and that you would actually use.

Credit card selection is a cross between a candy store and a jungle. Make wise decisions and you'll get a sweet deal. Otherwise, beware -- you might get eaten alive.