Let’s Build Your Credit Card Confidence
We'll take a look at the current industry landscape and highlight important watchouts.
Did you know?
How do you find the right card?
The number of options can seem overwhelming . . . but these three questions may help simplify the process of picking the right card for you.
Will you pay off your credit card bill every month?
Really, this is the most important question.
Question one—Will you pay off your credit card bill every month?
About APRs
If you might not pay off your card in full each month (carrying a “balance”), you’ll really want to focus on how much you will have to pay in interest and fees.
The good news is that there’s a standard way to compare those costs: the “APR,” or annual percentage rate.
Credit card companies are required to disclose APRs for borrowing before you agree to use the card. Keep in mind, though, that sometimes cards have promotional APRs that expire after a set time period. So you may end up paying higher monthly carrying costs if you don’t pay off your loan during the promotional period.
Some credit cards, and even types of credit card issuers, offer lower-APR cards in exchange for other trade-offs.
If you’re already carrying a balance, a balance transfer may help.
A balance transfer lets you move an outstanding balance from one credit card to another, sometimes for a fee (usually less than 3% of your balance).
According to the Consumer Financial Protection Bureau, more than 95% of credit card solicitations in 2021 and 2022 featured a 0% introductory balance transfer rate.
In 2022, balance transfers totaled more than $53 billion.
Credit Unions
Credit unions are required to cap their credit card APRs at 18%.
Federal law, however, also prohibits credit unions from serving the general public. Credit union applicants must demonstrate they share what is known as a “common bond.”
Late Fees
If you might not pay on time, consider a card with lower late fees.
Different credit cards offer a wide range of different late fees, including no late fee at all.
Just keep in mind that late fees may actually help ensure you pay on time.
A lot of other consumer harms involved with paying late: Your month-to-month balance will go up; your APR may increase; and, most importantly, your credit score could fall, making any other credit you apply for harder to get and more expensive (and it could take years to repair your credit score).
How much time do you want to spend optimizing your benefits?
Question two—How much time do you want to spend optimizing your benefits?
Simplicity vs Complexity
If you pay off your credit card bill every month, credit card APRs and fees are less likely to matter to you. In that case, you can think about the kind of card benefits you want to get.
Some card benefits may require you to spend a little time considering different options and what specific rewards are optimal for your needs. The cards may require you to redeem reward points through specialty websites. They may rotate their reward points each month, so that different kinds of purchases earn more points.
Other cards may offer simplified benefits that are specifically designed for people who don’t want to spend any time thinking about their credit cards.
When you weigh the potential value of a credit card’s benefits, you should be mindful to account for the annual fee that card may charge.
What’s the right mix for you?
What are you looking for with this particular credit card?
Will it be your primary card?
Are there particular benefits that you're looking for based on your lifestyle and how you'd like to reward yourself?
Question three—What’s the right mix for you?
If you like to travel…
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