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How to choose the right credit card for you

Here's what you need to consider when getting a credit card. Source: Getty
Here's what you need to consider when getting a credit card. Source: Getty

Choosing the right credit card can be the difference between earning a free flight or paying a high annual fee with nothing to show for it.

With many different credit cards (each with many different features), choosing the right card sometimes feels like solving a Rubik's cube blindfolded.

Here are a few simple steps you can follow to choose the right credit card for you.

Step 1: Decide which credit card type is most valuable to you

First, decide on what you really want from a credit card.

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Do you want to earn cash-back for everyday shopping? Earn flyer points for a free flight to London? A low purchase rate or transfer your current credit card balance to a card with 0% APR? No annual fees? Or do you want a card with a combination of options?

Once you’ve decided on what kind of card you want, the next step is to see what’s available.

You can find a list of cards by searching online at credit card search sites, such as Kredmo or seeing what’s available from your bank.

Step 2: Choose the right type

Rewards points, travel points or cash back?

Check: What kind of card you need depends partially on your spending habits. First rule, is that a points or cash back card is right for you if you pay the balance off in full every month.

In general, you should spend at least $2,000 each month so you can build up enough points to outweigh the annual fee.

Annual fees for Rewards cards do vary, so choose a card with a fee that’s less than the rewards you'll reap.

Low interest rate?

Check: If you can only make the minimum or partial payments to your balance each month, then a low interest rate card is likely your best option.

Those who don't pay off their full balance each month get hit with interest and should keep interest rates as low as possible.

A standard credit card can sometimes charge double the interest than that of a low- interest card. That's a whole lot of interest, especially for on a card with a high balance.

If you’re planning to make a big purchase, like a TV or refrigerator, then a low- interest credit card with a 0% purchase APR can be a good choice for you.

No annual fee?

Check: Do you rarely use a credit card or keep a very low balance, and pay it off full balance every month? If the answer is yes, then having a no annual fee card is probably the right choice. If you want a card just for emergencies or don’t need any special perks, then a no annual fee card is perfect.

Reducing your credit card debt?

Check: Paying off credit card debt can be difficult. If you're struggling to pay off your balance, then choosing a card with 0% APR on balance transfer can really accelerate your payoff date.

You can often find balance transfers offer for 0% APR for for 24 months.

These offers give the cardholder a break on paying interest charge each month. Instead, those monthly payments will go toward the principal balance and not monthly interest.

Step 3. Look for Useful Benefits

Travel Benefits

If you enjoy traveling, select a card that comes with travel benefits. Extra include, travel insurance, travel credits, airport lounge access, concierge services and no foreign transaction fees. Having benefits that you’ll use or would have paid for makes the card a real winner.

Shopping protection benefits

Whether you’re buying something in-store or online, locally or abroad, knowing you’re protected can be a big relief.

Frequent or sporadic shoppers can both benefit from refund protection, purchase protection, extended warranty or best price guarantee.

Mobile payments and more

Mobile payments are becoming more and more popular. Whether you have Android, Apple or , Fitbit, you can connect a credit card to your device. Make sure that your credit card works with Apple pay, Google pay, Samsung pay, Fitbits and more.

Other extras include complimentary or discounted hotel stays, access to entertainment events and more.

Step 4. Compare Credit Cards and Check for Bonus Offers

Comparing available credit cards is so important. Offers and cards change regularly and it can be hard to keep up.

That’s why doing research is so important. If you’re stuck between two cards, a good way to decide is to compare their bonus offers.

For example, scoring a 200,000 bonus point offer is huge. It can equal a few extra round-trip flights or simply more cash back. For low interest rate seekers, look out for a 0% purchase offer or balance transfer offer.

Avoid These Mistakes When Choosing a Credit Card

  • Shop around and compare credit cards. Try not to jump on the first card that looks exciting.

  • Avoid choosing a rewards credit card with an annual fee that's more than the value you get back.

  • Some rewards cards waive annual fees for the first year, so it's easy to forget about the fee. When the fee comes due, you should call and cancel the card if the benefits don't outweigh the fee

  • Don't forget to check the extra benefits, like travel insurance, price protection and extended warranties. Having a credit card with these perks can save you money.

  • When choosing or comparing balance transfer offers, remember to check the balance transfer fee and the reverted interest rate. The balance transfer fee is a fee that you pay for requesting a balance transfer, usually between 0% - 3%.

Ian B is the President of Kredmo, an online company that provides an easy way to find the best credit cards with features people want.

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