Choosing a Credit Card
This page is for those out there that have not or are not prone to racking up big balances on your credit card. It is also for those of you that have good credit and a credit card balance of $5000.00 or less that are looking to payoff your balance.
There are so many credit cards out there. Most of us just get one and this is what we use. Yet with a little homework you can actually get a card that is more appropriate for your needs and lifestyle.
Credit Card Do's and Dont's for folks that Payoff Their Monthly Balance
- DO NOT get a credit card that has an annual fee. There are just too many choices out there to be paying an annual fee.
- If you are getting a new credit card to replace one you have had for a few years or more DO NOT pay it off and cancel it. This can actually lower your FICO score. Pay off the balance and stop using it. This will actually help your FICO score.
- DO shop for a credit card that best fits your lifestyle. If you like to travel get one that gives you miles. If you use a card to make purchases for common things like groceries and gas get one that gives you cash back. I am assuming here that you pay off your balance at the end of each month.
Credit Card Do's and Dont's for folks that have a balance of $5,000 of less
- Assuming you have a high interest rate on your current card, and assuming your goal is to reduce credit card debt, first pay off your existing card. I would recommend doing this for at least 3 to 6 months. Make at least double your monthly payment. If you do use the card for purchases you need to pay those purchases off at the end of each month.
- If you DO use the card for purchases you need to pay those purchases off at the end of each month.
- DO NOT get a new credit card until you have paid your existing one down. Feel free to research new cards during this time.
Low Interest Rate Cards
The days of easy credit are hopefully behind us (not!). If you have good credit and carry credit card balances you may want to Google "low credit card rates" to see if you can find a deal. Do not go for deals that offer a low interest rate for an initial time period. Such type of deals usually jack up the rate to a crazy percentage. You can also call your credit card company and try to get a lower rate. Keep in mind that getting a new credit card or changing credit card companies could lower your FICO score temporarily.
Credit Cards that Pay Cash Back
As a consumer making purchases on your card offers you an added degree of protection for your purchases. If you are very disciplined with your money and do not carry credit card debt you may want to consider a credit card that pays you back cash. There are a number of cards that will pay you back as much as 3% for gas and grocery purchases and 1% for all other purchases. This can translate into a lot of money in a year.