By Matt
If you’re looking for a credit card to make everyday purchases, you may be finding yourself overwhelmed by the variety of options available on the market. With over three billion credit cards in circulation worldwide, credit has become the first choice at the cash register for an enormous, and growing, percentage of people. But how can you determine the best credit card for everyday use? You will have to take an honest look at your financial situation and spending patterns to find the optimum card for you.
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The cost of credit
Credit use by definition has an inherent cost. Issuing credit is not charitable work. Credit card companies advance funds to their customers in exchange for interest payments. However, if you are smart about your credit use, you can have free access to credit, and even earn rewards for making purchases. How is this possible?
- Avoid carrying a balance. As long as you pay your monthly balance in full you will not incur any interest charges. If you carry a balance, you will be subject to high interest rates, anywhere from 10% to 22%.
- Find a card with no annual fee. Some institutions charge for the privilege of carrying their card in your pocket. Annual fees can range from $50 to $150. Do some shopping around and you should be able to find a card that waives the annual fee.
- How can credit be free? Even if they’re not making money off of you, credit card companies make money every time your card is swiped by charging a transaction fee to the retailer.
Three top credit card features
- Accessibility – Make sure your credit card is as universally accepted as possible. The big three names in credit are accepted virtually everywhere.
- Rewards – You should be able to find a credit card that will offer rewards for spending. Rewards are typically calculated based on a percentage of your purchases and are conveyed as points, which can be converted to travel or other products, or as a cash back redemption. Find a card that offers premium rewards at your favorite retailers in order to maximize rewards.
- Low APR – This is a consideration if you are carrying a balance. Your APR (annual percentage rate) will determine your cost for carrying that balance. You will save hundreds of dollars if you can get an APR closer to 10% rather than 20%.
Your credit score
Credit score goes a long way in determining the best credit card for everyday purchases. If you have a poor credit score, you may only qualify at high interest rates, or you may not qualify at all. If you don’t qualify for a card with attractive benefits, then other payment methods might be preferable. Build up your credit by paying down debt and clearing monthly balances. Avoid making too many credit applications as each time your credit history is accessed it has a negative impact on your overall score.
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