It’s important to know which credit card is right for your lifestyle. You might think it doesn’t matter which type of credit card you carry in your wallet, but most credit cards cater to a particular spender. The credit card you choose can say a lot about your spending habits, and choosing the wrong credit card can be financially detrimental.
It’s no secret that credit cards charge fees and interest, which is basically the price you pay for the convenience of buying now and paying later. But just because both features are common to most credit cards, don’t assume all credit cards are alike. Sure, they fulfill a basic, simple purpose — the ability to buy now without cash. However, to get the most out of your credit card experience, you need to closely evaluate your credit needs and spending habits, and then choose a card based on your unique needs.
Depending on who you are and what you buy, one of these five credit cards might be the perfect fit for your wallet.
1. Which Credit Card is Right for the Frequent Traveler?
Regardless of whether it’s for business or pleasure, if you hit the friendly skies more than a few times a year, you’re a frequent traveler by most people’s standards. And like the majority of travelers, you probably use a credit card to book travel reservations. But while you can use any credit card for booking travel, it pays to have a credit card that’s tailored specifically to the frequent traveler, especially given the high cost of travel nowadays.
Banks that have travel credit cards partner with airlines to offer you the best travel perks. Cardmember benefits vary by card, so you’ll need to compare cards and choose one that’s right for you. Benefits might include signup bonuses if you spend a certain amount with the card in the first 90 days. You can earn miles for every dollar you spend, which can be redeemed for air travel, hotel reservations, car rentals, and anything else travel-related. You may also be eligible to check one or two bags free each time you fly, and you might receive free upgrades on flights and priority boarding, which lets you board the plane first ensuring you’ll find overhead space for your carry-on luggage. Additionally, some travel credit cards don’t charge a foreign transaction fee, which means you can use your card in another country without getting hit with expensive surcharges to convert foreign purchases into dollars. If you’re a frequent traveler wonderinging which credit card is right for you, go for one with travel perks.
2. The Big Spender
Many money experts caution against using credit cards on a regular basis. But at the end of the day, you have to decide whether you want to use a credit card or not. And if you’re a big spender — someone who spends hundreds or thousands with a credit card each month — you need a card that rewards you for purchases.
Your best bet is a cash back credit card offered by many credit card companies. With these cards, you can earn 1% cash back on every single purchase, and up to 5% cash back on a variety of rotating categories, such as dining, gas, groceries and entertainment. A rewards program might be a good fit if you use your credit card for everyday purchases, and if you pay off balances in full every month. Some reward cards let you earn points for each purchase, which are redeemable for gift cards, merchandise, travel or statement credit.
3. Which Credit Card is Right for the Debtor?
Credit card debt is like a nagging headache. No matter what you do, you can’t seem to get rid of it. You might know this feeling if you owe thousands of dollars. Most likely, your credit card company doesn’t make it easy to get rid of your debt. If you have a high interest rate and you’re only paying the minimum, a large portion of your monthly payments probably go toward new interest charges. But if you transfer your existing balance to a credit card with a 0% introductory rate, you might make headway.
These credit cards are typically only available to people who have good credit, so it’s important to pay your bills on time every month. You can enjoy 0% interest for 12 to 18 months depending on the card. If you don’t add any new charges, and if you can devise a plan to pay more than your minimum each month, you might be able to pay off your card within this introductory rate period.
4. The Credit Newbie
When you’re first starting out with credit, it can be so hard to know which credit card is right for you. If you’re trying to build your credit history, you know better than anyone else how challenging building credit can be. It takes credit to build credit, but if you don’t have a credit history, many credit card companies will reject your application. In this case, you’re better off applying for a secured credit card. These credit cards require a security deposit, which starts around $200 but can go as high as $2,000. Your credit line is based on the amount of your security deposit. So, if you give the bank a $1,000 deposit, you’ll receive a card with a $1,000 credit line. Secured credit cards don’t require a credit history. Since your credit score doesn’t matter, it’s the perfect card if you’re looking to build or rebuild credit.
You can find secured cards through credit unions and you can also use services like Self that offers credit builder programs.
5. Which Credit Card is Right for the Simple Spender?
Reward programs and credit card perks make the credit card experience more enjoyable — but what if credit card rewards don’t excite you? Maybe you prefer a simple no-frills credit card to have in your wallet just in case of an emergency. A credit card can be a financial backup plan providing extra cash when you need it. But if you don’t need all the bells and whistles, a good option might be a no-frills or plain vanilla card. This is a basic credit card that doesn’t feature a rewards program and has limited cardmember perks. Since these credit cards don’t offer many extras, they usually have low rates and no annual fees.
So, which credit card is right for your wallet? Whether you’re building credit or looking for a simple credit card, know that there’s something for everyone. The key is doing your research, understanding your needs and applying for the credit card that’s best suited for your situation.
Before you begin applying for new credit, check your credit score for free, then read our article on how your credit score is calculated. Use apps like Credit Karma to help you see where your score falls within the range.