You’re probably constantly inundated with credit card offers.

A credit card is a fantastic credit-building tool that can also make shopping, especially online, more convenient and secure.

There are hundreds of credit cards available, which makes shopping around to get the one that suits you best daunting. Don’t just pick the first card you’re offered. Choosing the wrong credit card could cost you more than you expected, or you could miss out on useful features.

So how do you select the right credit card for your financial goals and situation?

For starters, know why you’re going to use it. This could be anything from shopping online and spreading the cost of a purchase to using your card abroad and earning rewards. 

This article tells you what to look out for when choosing a credit card.

Introductory Interest Rates

Most credit card issuers will charge you a small or 0% interest when you start using the card and then increase the rate after a certain amount of time.

This offer usually covers things you purchase, balance transfers, or money transfers. During the interest-free period, you can benefit from considerable savings compared to carrying a balance on a high-interest credit card.

If you are comparing credit cards, consider how long the introductory rate lasts and the interest rate it increases at the end of the introductory period.

Take note that the best introductory rates credit cards typically require good/excellent credit.

Annual Percentage Rate (APR)

APR is the cost of borrowing on a credit card in the event that you do not pay the whole balance off every month.

The APR on some credit cards can be pretty high, sometimes in the 15- 20 percent range, which is significantly higher than the rate on other kinds of consumer debt, such as personal loans and mortgages.

Comparing the APR for different cards will help you choose the cheapest one. This is super beneficial for comparing credit cards, but it should not be the only thing you should be considering.

Remember, you can avoid APR entirely if you pay your statement balance in full each month.

Annual Fee

Some cards charge an annual fee every year (a few even have monthly fees) for using the card.

This fee is added to the amount due, and you’ll have to pay interest on the fee as well as on your spending, lest you pay it in full.

Since there are a plethora of options available, it’s better to go for a card that charges no annual fee. 

Ensure you read the fine print carefully because some credit cards begin charging an annual fee from the second year.

Other Fees and Penalties

Annual fee isn’t the only charge you have to watch out for.

Your credit card company will usually charge you for late payments, cash advance, balance transfers, going over your credit limit, or using the card abroad.

Over-the-limit and late fees are easy to avoid by simply adhering to your cardholder agreement. But some, like using the card abroad when you travel, you can’t avoid it. 

Understand what you’re getting into before picking a card. You can do this by confirming in the credit agreement what other charges apply to your card. Fees usually get an entire page.

Rewards (Cash Back, Loyalty Points, Air Miles, Concierge Services)

Rewards are one of the best things about credit cards.

It’s important that you choose a credit card that earns beneficial rewards based on how you routinely spend your money – groceries, gas, streaming services, dining out, etc. If the rewards are not useful for you to spend or alter your spending in any way, they really don’t matter. 

Go for cards that offer direct discounts or cash back at the retailers you already use. Cashback is where money is refunded to your card, depending on how much you spend.

Loyalty points add up depending on the amount you spend and you can then use them to pay for goods and services. Sometimes these purchases are in particular shops. Look at how and where the rewards can be used and consider how likely you are to use them. 

Conclusion

Choosing a credit card is a key decision. The card you pick should be affordable, help you build a positive credit history, and ideally reward you for your spending.

Once you make your choice, apply for the credit card on the issuer’s website and wait for approval.

However you choose to use a credit card, the important thing is whether you’ll be able to pay off what you owe every month.