5 things to consider when choosing a credit card
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It seems like everyone these days is trying to get you to sign up for a credit card. Whether at your favorite boutique in the mall, the big box store or your favorite airline, credit card offers seem to be everywhere you look. What is the right card for you? The answer might be at your local credit union.
What to look for in a credit card
Chances are you already have at least one credit card in your wallet. So, what are you looking for in this card?
- Will you pay the bill in full and just want some extra perks?
- Are you going to carry a balance or looking for a balance transfer?
- Is this your everyday card?
- Are you looking only for a credit card to have on hand in case of emergencies?
Once you know why you need a card, it is much easier to weed out those tempting-but-not-perfect offers.
The interest rate, or Annual Percentage Rate (APR), is one of the most scrutinized card features. And, for good reason! The APR on a credit card is the cost of borrowing on the card, if you don’t pay the whole balance off each month.
As a member-owned financial institution, Numerica Credit Union tends to offer better rates on credit cards and loans than most big banks. Since Numerica is not-for-profit, earnings are paid back to the member with better savings rates and lower loan rates.
If you are just starting on your financial journey or are repairing bruised credit, be prepared to have a smaller credit limit. Your credit limit is the amount of money that you can borrow up to. Be careful in thinking that a smaller limit is a good reason to get multiple credit cards. As you start to build credit, and establish credit trustworthiness, the limit will grow. Your credit score is also a determining factor in your limit.
Fees & Penalties
Making your payment early will help to avoid many fees and penalties. In fact, making payments on time can account for up to 35 percent of your credit score. Numerica has many options to make paying credit cards quick and easy, including our mobile app and online bill pay. Life is full of twists and turns and you may miss a payment. Understanding fees and penalties helps to understand the consequences of missing a payment before it happens.
If you are leaning towards a card with all the bells and whistles, don’t be shocked if there is an annual fee. You may feel that the fee is worth the amenities. Numerica offers several options to fit your needs.
For some credit cards, missing a payment can increase your APR, which can cost you much more than a late fee in the long run. Other common charges include fees for balance transfers or making a payment over the phone.
Whether you are looking for points to use for swag and air miles or a credit card with cash back options, incentives definitely sweeten the deal when it comes to choosing a card. Incentives are not a reason to overlook a high APR or to overspend.
Does you card have rewards that expire? Are there different point values for different redemptions? How about on earning points? If rewards are a deciding factor for you, make sure you understand how and when you accrue points and when they might expire.
Your credit score can affect not only the limit on the credit card, but your rate. Opening credit cards can also have an impact on your credit score. You don’t want to open a lot of credit at once. Each time you have your credit pulled, you can have a small dip in your credit. Having a variety of loan types, like a credit card and auto loan, reflects positively. Having ten credit cards, not so much.
If you are in need of a credit card or are looking at your options, come see us at your nearest Numerica branch.