5 Steps to Choosing the Right Credit Card

September 28, 2015

Connect Member

CFP®, CRPC®, AAMS®, Certified Financial Planner™ practitioner, Founder & CEO Financially Wise Women


There are a lot of credit cards out there, and it’s a weighty decision to choose the right one. Nobody sensible wants to rush headlong into a decision that involves their credit. How can you be sure that you are choosing the right credit card for your needs? The following five steps will help you make the decision.

1. Determine how you want to use your card.

Do you want to accumulate travel miles, cash back, or other rewards? Or are you most concerned with getting the lowest fees and rates? There’s no right or wrong opinion. Your first decision about the right credit card for you will depend on the answers to these questions. If you travel frequently, a travel rewards card can be a great choice. If you think there might be times when you carry a balance, choosing the card with the lowest interest rate is important.

2. Compare different credit cards before you apply.

Search for the best card based on what benefits are most important to you. Bankrate has a great search engine that allows you to filter credit cards based on your criteria of choice. You will want to take several factors into consideration when choosing a card, including your spending habits, the method of computing interest, and any other incentives offered with the card.

3. Learn the interest rate and fees associated with the card.

Once you have narrowed down your search, it’s time to get more in-depth with your choices. Does your potential card have annual fees associated with it? How about other charges, such as those for late payments? It’s important to be very clear about these things up front so that you aren’t on the receiving end of any nasty surprises down the road. You will also want to know the interest rate you will be charged if you carry a balance from month to month. Of course, you should focus on paying off your balance in full every month so that you aren’t charged any interest on your card.

4. Use your new credit card wisely.

Once you are approved, make sure you monitor your activity and pay off the credit card balance in full each month to avoid interest charges. You can set up an automatic payment to the card each month to make sure it gets paid off in full on time.

5. Use your points every year.

Make sure to check in every year and use any rewards you may have accumulated on the credit card for the year. According to a study by rewards points consultant Brian Kelly, whose blog The Points Guy helps people make the most of travel rewards programs, two in three Americans collect rewards points, but only 41 percent actually understand how frequent flyer programs work.

Hopefully these tips will help you find exactly the right card for you!

Brittney Castro is a member of the DailyWorth Connect program. Read more about the program here.