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How To Choose Your Next Credit Card

Getting a credit card can be a thrilling new experience for many people. The ability (and responsibility) to spend money you don’t yet have and build your credit score is part of being an adult for many young people. Taking out a credit card is an excellent option for anyone looking to establish a responsible credit history that will allow them to qualify for loans or mortgages at affordable rates.

However, if you’ve never used credit before, you may not know what to look for when going about selecting a credit card. Certain credit cards offer better deals and interest rates than others, and which card you should choose will depend heavily on what you plan on using your card for. Here are a few things to consider when choosing a credit card:

Travel Credit Cards

Do you love to travel? Travel credit cards earn you rewards on everyday expenses that you can then redeem toward free travel. If you’re a frequent traveler, you may want to consider getting a travel credit card to earn benefits such as free stays at hotels all over the world. Using your travel rewards card for most of your purchases (and paying them off on a monthly basis) will help you earn miles quickly and qualify for more rewards.

A travel credit card may be the best option provided you can afford to travel and can pay off your balance each month. To choose the best travel card, first decide what type of travel you want to book. If you’re planning on flying a lot and want to earn airline miles, select a co-branded airline card or a card that lets you transfer points to frequent flyer programs. If you prefer to travel by car, a hotel credit card or one that lets you redeem points for hotel stays will be the better option.

Whether or not you want a flexible credit card or one that’s co-branded with a certain airline or hotel chain will depend on whether or not you need flexibility when traveling. While selecting a co-branded card may offer benefits such as a signup bonus or lower/no annual fees, you may want the flexibility to travel with different airlines and stay at different hotels. Compare the travel perks between cards to decide what works best for your travel needs.

Credit Cards for Poor Credit

If you’re taking out a credit card with the goal of slowly but steadily rebuilding your credit after it’s taken a hit, you’ll want to select accordingly. A good credit card can help you clear away the wreckage of your credit history and allow you to qualify for better interest rates in the future. The best credit cards for people with bad credit are easy to qualify for, have no annual fee, and report your credit history to the three credit reporting agencies.

There are two types of credit cards: secured and unsecured. A secured card requires a deposit, the amount of which is also your credit limit. An unsecured card is harder to qualify for, but gives you a line of credit that you can borrow against without putting up collateral. Try seeing first if you qualify for an unsecured credit card so that you don’t have to pay the deposit. If you have to go with a secured card, use that until you can qualify for an unsecured and get your deposit back.

You may want a credit card for bad credit if you have a credit score below 650, as that is usually considered the dividing line between fair and poor credit. A credit card may be your best option to improve your credit score to achieve financial goals such as renting an apartment without a cosigner or taking out a mortgage.

When rebuilding your credit with a bad credit credit card, make sure to make your monthly payments on time, keep your balances low, and keep a close eye on your credit score for improvement. Taking out a credit card to improve your credit will only do so if you use it responsibly; missing payments or going over your limit will only further damage your credit.

Credit Cards for College Students

If you’re a college student looking to build a credit history from scratch, a good student credit card can help you do just that. The Credit Card Act of 2009 states that any student between 18 and 21 can qualify for a credit card if they have someone willing to co-sign or if they can submit proof of income sufficient to pay the balance. The type of card you can get depends on your credit profile, so if you don’t have a credit history you’ll need a parent or another adult to cosign.

Secured credit cards may also be an excellent option for college students, helping you establish a healthy credit rapport with your bank. The best credit cards for college students offer forgiveness for the fist late payment, cash-back bonuses for maintaining your GPA, and rewards for expenses such as food, gas, and school supplies.

The best way to use your student credit card is to only use it for things you can already afford. If you pay off your credited purchases on time and in full, you can take advantage of the rewards programs without worrying about high interest rates or penalties for late payments. Consider using your credit card for everyday purchases to ensure you’re using your card regularly without buying things you can’t afford.

Once you know the type of credit card you want to get, compare the benefits of each different card. Try and find a card that offers you multiple ways to redeem rewards instead of only letting you redeem them for statement credits. Choose a card with a longer 0% APR period and one that has low interest once the introductory period is over. If you shop around enough, you’ll find a card with the right benefits for you.