The world is changing daily thanks to technology and the world of finance is not left out. Credit cards have been in existence for over 70 years now and keep getting more acceptability globally. This financial tool is so convenient to use but can also land one in a financial quagmire if not handled properly.
There are several myths and anecdotes about the evolution of this financial instrument. Click here if you would like to know some fun facts about the history of credit cards.
There are the proliferation of cards and issuing companies. This makes it difficult for one to just make a choice without due diligence. In this article, we will share tips that will help you make an informed choice so stay with us!
Steps For Selecting The Best Card For You
Everything that is successful in life follows due process. Therefore if you want your selection process to be successful and hitch-free, follow the simple steps shared below:-
Know Your Credit Standing
Before you embark on the journey of applying for any type of credit card, the first thing to do is to find out where you stand as per your credit rating. It is important to note that the type of card you qualify for depends majorly on your credit score. You stand a better chance of getting approved for a card that will give you the best perks and benefits if you have a high credit score. There are bureaus such as TransUnion, Equifax and Experian where you can check your score for a fee. There are also issuing companies that give their customers FICO scores for free. So whether you want to use a free or paid service, the important thing is to know your score first before anything else.
Now let’s assume that you check and find out that your score is less than what will give you the best deals, what can you do? There are 2 major things that you can do:-
- Find out the cause of the low score by checking your credit history/report. If you feel there is an error, ensure that you contest the error and have it rectified.
- If the report is accurate, look for ways to improve the score and this includes changing the way you spend and developing healthy financial habits.
Identify The Credit Card That Is Best For You
These financial instruments are classified mostly based on their advantages and disadvantages and the benefits they come with. Based on this, we can delineate these cards into 3 broad categories:-
- Cards that help you earn rewards
- Cards that enable you to improve or build your credit
- Cards that help you save money on interest
From the foregoing, we can categorically say that the best option for you will be based on the features of the card. The best card for you is one with features designed to meet your specific needs. Therefore you have to look at the 3 categories and determine which option has the features that will benefit you most.
- Reward Cards-Look at the type of rewards that the card offers and sees whether your lifestyle will enable you to make the most of the card. For example, a card that helps one earn rewards from miles travelled is useless to a person who doesn’t travel and has no intention or plans of traveling anytime soon. But a busy executive whose job takes him all over the country or world will benefit greatly from a travel card.
- To Build Credit – For newbies or students who don’t have any credit history, there are cards that will help them build their credit. So if you are a student, you can look out for students’ cards and if you’ve never had a credit card before, you can get a secured card. Secured cards require that you make a refundable deposit of at least $200. This amount will be refunded to you when you upgrade your account or close it on a good note (this means without any default).
- To Save Money On Interest – If you have credit card debts and you want to save money on the interest that accrues, you can look for a card with low-interest charges or intro 0% APR. Another option is a balance transfer card which helps you to pay off a debt that with high interest at 0% APR.
All these cards have varying terms and conditions which may change from year to year. If you are a newbie just looking to get a card in the year 2023, you need to ensure that you look out for the beste kredittkort i 2023 (best credit card in 2023). This would be determined by the prevailing interest rates and terms and conditions at that time.
Research Widely And Compare Options
There are many online platforms that offer you the opportunity to research available options and compare. As you go through the options presented, make sure you ask the right questions based on the 3 categories we discussed above.
Questions to ask include the following:-
- What are the terms and conditions of the card?
- What is the interest rate?
- What benefits do I stand to gain from this card?
- Will it help me build or improve my credit?
- How much do I need as opening balance for my account?
- Are the rewards on the card worth the annual fee? Or does the card come without an annual fee?
- Can I be upgraded as time goes on?
- What is the duration of the intro 0%APR?
- What is the balance transfer limit?
- What is my credit limit?
These are just a few of the questions to ask; what we are saying in essence is that you ensure that you have all the clarification you need before you even start the application process.
Start The Application Process
If you have taken your time for due diligence, this step shouldn’t be difficult. Ensure that you used the same parameters for your comparison. Never compare lemons with apples.
When you start the application process, bear in mind that absolute honesty is required as you fill out all the necessary forms. It would do you no good to falsify information. So be transparent and diligent to include all your sources of income and not just one stream of income.
It may be in your best interest to look out for issuing companies that allow pre-qualification. This allows you to know your chances of being approved before submitting a formal application. Bear in mind that once you submit a formal application, a hard inquiry is called for on your credit history and it goes on record.
This hard credit inquiry can lower your score by some points (you can raise it in a few months). But imagine that you have so many hard inquiries made on your account; it can do more harm than you can easily fix. But when you have a pre-qualification, all the issuer does is to make a soft inquiry which doesn’t go on your credit report.
So with this, you can get as many pre-qualifications as possible without hurting your score. This also allows your comparison shopping to be as accurate as possible.
Getting the best credit card for you can be as complicated or as easy as you want it to be. It all depends on how diligent you are to get the right information. We believe that the information we have shared here is a good start for your due diligence which will in turn help you make informed decisions.