Selecting the Best Credit Cards for Your Lifestyle

Did you know the average American consumer has somewhere around 2.5 credit cards in his or her wallet? There are definitely exceptions to that rule, as a lot of people see these little pieces of plastic as financially irresponsible and not worth the trouble. However, the benefits and security provided by a good credit card are undeniable, and anyone who likes making savvy financial moves can put one or two credit cards to very good use.

The question is, how do you choose a credit card that meets your needs? Virtually every corporation has a corresponding card, and none of them misses an opportunity to pitch its product. Sifting through this mess takes some effort, but it’s all worth it when you find a card that pays dividends.

If you’re going to understand credit cards and learn what are the best for your finances and which will leave you wanting, you need to start by knowing what to look for. This has to do with personal preference as well as financial standing, so I’ll try to run down some credit card basics you need to know.

Reward Yourself

Since this process can be tedious, I encourage you to start with the fun part. In exchange for everyday spending, what do you want to get in return? There are the usual suspects to choose from, such as:

●       Airline miles

●       Cashback

●       Hotel rewards

●       Merchandise

The rewards program you choose shouldn’t just be a passing fancy. A friend of mine once signed up for a Disney rewards card because his daughters were in the midst of a Beauty and the Beast phase. The result was an annual fee, a high interest rate, and a whole lot of unused Disney Dollars that were only redeemable at the park. Figuring out how a rewards program dovetails with your ordinary spending habits is a large part of how to choose a credit card.

This is a decision you can’t take lightly, and you must – I repeat, MUST – consider all angles before settling on a card. Paying $150 annually to earn $100 cashback is not a smart choice. By the same token, sometimes it’s better to pay an annual fee than it is to deal with an astronomical APR. You have to think about the expenses you’ll pay in relation the rewards you’ll receive. You also need to be honest with yourself about how and when you’ll cash in on those rewards.

When you find a rewards program that makes sense for you, the best credit cards can deliver excellent results. If you fly a certain airline regularly, you can earn multiple free flights each year. Lots of cards offer extra points for gas purchases, which goes a long way for people who commute to work. Credit card companies want you to like your rewards so you’ll use the card more. With a little bit of research, you can find a provider that offers very real and useful benefits, but remember to weigh these against the credit card basics that don’t count in your favor.

Smart Financing

Sadly, credit cards aren’t all fun and games. If you’re going to get the most out of a card, you have to look beyond the rewards, check the fine print, and understand credit cards in general. Before hitching your wagon to a certain card, ask about the following features:

●       APR grace period

●       Balance transfer fees

●       Credit reporting

●       Additional fees

Creditors love enticing consumers by offering zero APR and free balance transfers, and sometimes the perks seem too good to be true. These hooks definitely come at a price down the road, so you need to know exactly by how much the APR shoots up once the introductory period ends. If the terms go from decent to awful after six months, it’s worth finding a better option.

If this is your first plunge into the world of plastic, it’s worth confirming that the credit company reports your spending to a major credit bureau. Secured cards that require a deposit often don’t coordinate with scoring companies, meaning you can’t use that card as a means of improving your credit score. Most people don’t consider this issue when asking themselves how to choose a credit card that gives them the greatest benefits. It’s very frustrating to waste time and money on a credit card that isn’t helping your financial standing.

Lastly, as you try to distinguish the best credit cards for your situation, learn about every single fee you might have to pay. Ask about opening costs, overdraft fees, cash advance charges, and annual service fees. Some of these credit card basics are obvious, others are more obscure. Most of the time, credit cards with too many fees aren’t worth whatever rewards are offered in exchange.

You’re the Boss

Credit card companies make money hand over fist. Between interest payments, fees, and merchant charges, it’s almost obscene how much cash these companies bring in. Each time a consumer swipes a credit card, the issuing company takes a cut. I try to keep that in mind when a bank hesitates to give me what I want. It might not feel like it, but you have leverage and you should use it whenever possible.

The annual fee is a good place to start. With good enough credit, you shouldn’t have a hard time getting providers to waive this fee. The biggest earnings for these companies don’t come by way of annual fees, and when push comes to shove, they’ll waive this charge if it means they get to keep your business. Plenty of other companies would love to steal you as a customer, so you can feel free to play hardball from time to time.

This tactic works with APR as well. Again, you need good credit if you want to throw your weight around. As long as you’re not a high-risk client, it never hurts to request a reduced interest rate. You might be declined, but you might also save yourself a few hundred dollars a year. When negotiating, understanding credit card basics helps a lot. You don’t want some discount if it’s only going to be offset by higher fees in another area.

If you’re skeptical about credit cards in general, that’s probably a good thing. Lenders aren’t always on the level, and many Americans had to learn that lesson in dramatic fashion. However, when you know how to seek out the best credit cards and put the benefits to use, you’re able to take advantage of a powerful financial tool. With the right card and responsible money management, you can turn your spending directly into savings.

Make it happen!

Taylor & Megan Kovar

The Money Couple