choosing a credit card | blog.firstffcu.com

Although picking a credit card isn’t as big of a decision as buying a house or car, choosing the right credit card to add to your wallet isn’t a decision that should be taken lightly. You might have an idea of the cards that are out there as a result of receiving offers in the mail, or you might just be embarking on your hunt for “the one” – your dream credit card, that is. Either way, the number of options available to you might be overwhelming. Just like the cliché saying goes, there is a credit card out there for everyone – you just have to find it. Here are some steps to help you find a credit card that fits your lifestyle.

Check Your Credit Report

Although report cards as you know them stop after high school, a credit report functions like an “adult” report card. A credit report is a snapshot of your credit situation today and your credit history over time, such as your current loans and how well you’ve done paying those loans on time. Just like your parents might have rewarded you for bringing home a satisfactory report card, credit card companies reward you for maintaining a good credit history by qualifying you for credit cards with better perks. There are various ways to check your credit score and once you do – you’re one step closer to identifying what credit cards you may qualify for. Check out our Guide to Understanding Your Credit Score to understand what factors make up your credit score and how to maintain or improve it.

Identify Which Credit Card Will Help You Meet Your Needs

Once you know your credit score, you can better assess what type of credit card will best meet your needs and what you can reasonably expect to get approved for. According to NerdWallet, there are three general types of credit cards:

Cards for those with limited or damaged credit history: Some credit card issuers offer credit cards for young people over age 23 who are looking to establish credit history. These credit cards are often easier to get qualified for and typically have lower credit limits. Secured credit cards may be an option if you have no credit or poor credit. To compensate for the added risk, the credit card issuer will take an initial deposit from you which sets your “credit limit.” Your deposit is not used to pay for your purchases – the deposit is there for the card issuer if you don’t pay your bill. If you exhibit good behavior, such as paying your bill on time each month – the issuer may upgrade your account to an unsecured credit card with no deposit required.
Cards for those who value low interest: Cards with introductory 0% APR periods or ongoing low APRs are usually better options for those who expect to carry a balance, have an unpredictable income, or who expect to make large or emergency purchases.
Cards for those who value rewards: Rewards credit cards are generally well-suited for those who intend to pay their balance in full every month and not incur interest. That’s because rewards credit cards generally have higher APRs, but provide benefits like sign-up bonuses and points, miles, or cash back on purchases.

It’s important to examine your values and spending habits to determine which credit card type would be the best fit for you.

It’s Time for a Vocabulary Lesson

You are setting yourself up for success when it comes to using your credit card responsibly if you understand important credit card terminology. Although there are more comprehensive lists of credit card terminology, here are a few terms to get you started.

Annual Percentage Rate: Usually referred to as APR, this is the interest rate you are charged if you carry a credit card balance each billing cycle – if you don’t pay your balance off in full.
Credit Limit: The maximum amount of money you can charge to your credit card, set by your credit card issuer. This is a ceiling, as you typically can’t spend more than your credit limit without incurring penalties.
Minimum Payment: The smallest amount you can pay on your credit card bill each month to keep your account in good standing. Failing to make this payment typically results in late payment penalty fees.

Apply for the Credit Card That Fits Your Lifestyle

Once you’ve done your homework and are confident in your decision, it’s time to apply for your credit card of choice. Depending on the type of credit card you decide on, ensure you understand all of the terms and benefits to make the card work for you. For example, if you applied for a credit card because you liked their introductory cash bonus offer – make sure you understand the amount you have to spend by the deadline to ensure you qualify for the cash bonus.

If your credit card research has led you to First Financial, rest assured we have a credit card to fit any lifestyle. Whether you’re looking for a no-frills credit card with a lower interest rate, a credit card that’s a stepping stone, or a credit card that rewards you – we have various options that put your needs and wants first.* You can apply online 24/7, or call our Loan Department at 732-312-1500, Option 4 if you have questions.

*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.

Believe it or not, there isn’t a “one size fits all” credit card rewards program. For every card on the market, it seems like there are hundreds of different ways to earn rewards.

With all the options, the research can be overwhelming and you might not know where to start. Have no fear, because we’ve come up with a few ways you can choose the right credit card rewards program for you!

Is a rewards card right for you?

That’s the first question you need to ask yourself. A rewards card isn’t right for everyone. Here’s a handy checklist to help you decide whether or not a rewards credit card is a good fit for you:

You have a good credit score. Most card issuers are looking for consumers who have a FICO score of at least 670. Of course, a higher credit score will help you get a lower interest rate, but a that mid-600 range will get your foot in the door. FYI, the higher your credit score, the more lucrative rewards programs you’ll most likely have access to.
You can pay off your balance every month. Rewards cards sometimes have a higher-than-average interest rate. When you carry your balance over each month, you could end up paying more in interest charges than you earn in rewards.
You can maximize the value of your rewards. A rewards card can cost you money if you don’t maximize your reward-earning potential. If you don’t earn enough points, you can actually lose money if your card has an annual fee.

Now that you’ve determined if you could benefit from a rewards card, let’s talk about choosing the card with the program that best suits your lifestyle and spending habits.

Choosing the right card.

There are three main things to consider when choosing a card: your spending habits, personal preferences, and your credit score. If you don’t look at your spending habits and personal preferences, you could end up spending a lot of money and racking up rewards that aren’t right for you.

Let’s say you have a large family and your primary expenses are groceries and gas. It would make sense for you to have a credit card that offers bonus rewards on those types of purchases. But, if you’re single, have a small grocery budget or don’t have a car, those rewards wouldn’t make sense for you.

Use your cards for everything.

The more you use your card, the more rewards points you’ll earn. But, don’t let that be an invitation to start spending money on things you don’t need. Instead, use your credit card in place of cash or your debit card whenever possible.

Start looking for everyday situations where you can use your credit card instead of another payment method – gas, groceries, food, etc. But, always make sure you only spend what you can pay off every month.

What if a rewards card isn’t for you?

Rewards cards aren’t for everyone, and there’s nothing wrong with that. Maybe your credit score isn’t in the right range for a rewards card at the present time, or maybe you’re not interested in using your card to gain rewards. Maybe you’re just looking for a credit card for emergencies only.

Let us help you find the right card for you! Check out our website, stop by and talk to us or give us a call so we can answer any questions you may have. Or if you like what you see, you can apply online 24/7!