What is the ideal credit card for me?

Will you pay your balance in full each month?

If you think you’ll be able to pay off your balance in full each month, using a credit card can be a great way to reap special benefits and rewards, such as collecting cash back or rewards points, and taking advantage of perks like complimentary travel insurance, shopping coverage and airport lounge access.

Ideal credit cards for those who pay off their balance in full each month include cash back credit cards, rewards credit cards and travel credit cards.

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Do you think you’ll carry a balance from month to month?

If you think you’ll struggle to pay off your credit card balance in full each month, look for a credit card with a low interest rate on purchases. If rewards are not of great importance to you, you can find a good no frills low rate credit card between 8.99-15.99%.

With a low rate card, you should still do your best to make your payments in full each month, but if you can’t, you won’t be stuck paying a high interest rate.
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Are you already in some credit card debt?

If you already have some credit card debt, you may be interested in a low or 0% interest balance transfer credit card. These credit cards allow you to consolidate some – or all – of your credit card debt onto one card.

For a select period of time (usually six to 10 months), you’ll also get a low or 0% interest rate on your transferred balance. While this can save you a substantial amount of money that you’d pay towards high interest, you’ll need to attempt to pay off your entire balance, or as much as possible, before the promotional period ends.

Once the promo period ends, your debt will incur interest at the higher revert rate. You’ll also want to watch out for any balance transfer fees, which usually sit between 1-3% of your transferred balance amount, however some cards come with no transfer fees.

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Don’t think you’ll use your card much?

If you don’t think you’ll use your credit card very often, it might be in your best interests to apply for a no annual fee credit card. While premium credit cards with the best perks usually charge an annual fee, there are some no annual fee cards on the market that offer rewards and other perks.

If you intend to use your card a lot though, paying an annual fee usually pays for itself when you take advantage of any rewards or benefits.

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Cash advance interest rate

Cash advance transactions can be very draining on a credit card since the fees and interest rates are very high and are typically charged from the day you withdraw the funds – there is usually no grace period with cash advance transactions.

Don’t count on using your credit card to get money out of the ATM every time you need it. Have a debit card at your disposal to withdraw cash during these times. In addition, you’ll want to find out what other types of transactions are considered cash advances.

Purchase interest rate

Purchase rates for regular cards typically sit around 19.99%, while low rate cards might have purchase rates as low as 8.99%.

If you struggle to pay off your balance in full or want to purchase something big on plastic and will need a few months to pay it off, a low purchase rate might be high on your list.

Annual fees

The ideal card for you may not be one without an annual fee. If you’re going to be carrying over a balance for a month or two, you may want to get a card with an annual fee since the interest rate on these cards is usually lower than cards without an annual fee.

On the flip side, if you don’t think you’ll use your card much, opting for one with no annual fee might be a good choice.

Other fees

Watch out for other fees including late payment fees, overlimit fees, foreign transaction fees, currency conversion fees and more.

It’s possible to avoid all of these fees by paying your bill on time, staying well under your credit limit, opting for a card with no foreign transaction fees and always paying in the local currency when purchasing goods or services overseas.

Rewards

You may have to pay more for a rewards credit card, whether it’s with a bigger annual fee or higher interest rates – or both. It may seem like a good deal at first, but it may not be the ideal card for you.

If you’re looking for a rewards card, make sure that you check out the available features and benefits in relation to the annual fee to decide whether it will cost you more to own the card than the benefits you get out of it.

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Restrictions

When it comes to rewards programs and signup bonuses, there are often restrictions. You’ll want to inquire into rewards points expiry dates, any blackout dates, rewards program fees and any spending requirements that you’ll need to meet in order to receive your bonus points or miles.

In addition, balance transfer offers usually have restrictions such as limits on how much you can transfer and deadlines as to when you can apply for the introductory balance transfer offer.