Key Factors to Consider When Choosing a Credit Card | St. Johns Bank
If you are looking into signing up for a credit card, it is vital that you do plenty of research on the topic before you commit to one. Credit cards can be a great way to build your credit, earn rewards such as cash back and points and get better control of your cash flow—but on the other hand, they can be a slippery slope to debt and high interest rate accumulation.
With so many credit cards on the market, there is a lot to look into if you decide that you are ready to open a new account. Below, we have assembled some key tips so you can be sure that you are choosing the right credit card for your needs.
What to Consider When Choosing a Credit Card
What are you opening the card for? Opening a new credit card can boost your credit all on its own, but inversely, closing a card can deal you a significant hit. If you are considering adding a card to your credit history, be sure you have a good reason why. Many people choose to open credit cards to boost their credit, accumulate flight miles or make big purchases on cards that offer 0% APR. All of these are valid reasons, but are worth thinking through as this will heavily impact what card is right for you.
What is the annual fee for the card? While many cards offer enticing perks and sign-up incentives, a lot of cards also require customers to pay an annual fee. If the perks are good enough, the fee may be well worth it for your situation—but it is important to make sure of that before you sign up and get on the hook for the cost.
What will my spending limit be? It may seem counterintuitive, but one of the ways you can show lenders that you are worthy of receiving loans and borrowed funds is by keeping your overall credit usage low—which is much easier if you have a credit card with a high spending limit. Regardless of your limit, you should always pay your card off in full each month, but having a higher spending limit can have a favorable impact on your revolving credit usage.
If you need help organizing your finances or deciding what card is right for you, we would be happy to help. Contact us today to learn more about all the banking services we have to offer.