Before you apply for a credit card, you should determine what you hope to get out of your card. Here are some steps that can help you choose the right credit card for your needs.
- Consider your spending categories. Choose a credit card that offers the most rewards for the categories where you typically charge.
- Consider ease of redemption. Many cards offer large rewards on paper, but fall flat when it comes time to redeem. Make sure the rewards you earn are ones you can actually use and provide good value.
- Do you plan to carry a balance? If you plan to carry a balance on your card, you should consider a credit card that offers a 0% intro APR on purchases or balance transfers for a limited time. Just make sure you know and understand the ongoing variable APR since your regular APR will kick in after the promo period. You might also seek out a low APR card if you regularly carry a balance.
- If you travel regularly, consider a card with an annual fee. You may have noticed that our list is noticeably light on travel rewards cards. If you want a specific airline or hotel rewards currency, take a look at cards that have a flexible currency such as Chase Ultimate Rewards® or Membership Rewards®. In general, no annual fee cards lack tangible benefits like checked bags or elite status. If you are a brand loyalist, it may be worth paying an annual fee to get perks you can use.
- If you have high spending in specific categories, consider a premium card that offers even more rewards. If you spend a large amount in one category, it may be worth paying for the annual fee version of a card that gets you more rewards. But do the math to see if it’s truly worth it.
Who should get a no annual fee credit card?
If you’re going to apply for a credit card, applying for one without an annual fee should be the default choice. If a certain card’s annual fees make sense for you and you know the financial benefit will outweigh the cost of an annual fee, it may be worth paying for an annual fee card—but with several key caveats.
Consider the cost of the benefits of an annual fee card. One important question to ask: Can I find these benefits using a combination of other no annual fee cards? If you can achieve the same or better rewards earning using multiple no annual fee cards with various bonus categories. Can you find the same benefits or protections using a selection of other, less-expensive cards, if so the primary reason to apply for an annual-fee card would be one of convenience. Is the price worth the ease of use?
Applying for a credit card is an important financial decision with consequences and responsibilities attached. If you don’t trust yourself to limit your spending to what you can reasonably pay for before interest accrues, a credit card may not be a good fit for you right now.
Pro Tip
If you don’t expect to be able to pay off your credit card in full each month, the additional benefits and rewards offered by a credit card don’t matter. Interest charges accrued will quickly outweigh any value from earnings on spending. If this sounds concerning, you should consider a card with an introductory 0% APR period and get your debt paid off first.
