Five Smart Credit Card Choices

When used correctly, credit cards can be a tremendous asset to your financial well-being. While numerous people abused credit cards and get themselves into trouble with money, you can build a fantastic credit score and you will be recognized as a responsible person with your money. If you pay your credit card bill each month and never owe money on it, you will never have trouble getting a loan for a car, a home, or your child’s college education. Set yourself up well by using a credit card properly. Use these five tips when you want to choose the right credit card for you.

1. Decide whether you want to carry a balance or pay a bill in full each month. If you always pay your bill in full on time, you will never be charged interest rates on your card. If you will be carrying a balance, however, you need to look for the lowest interest rate that you can have. You don’t want to pay a lot of money at the end of each month in interest just to keep yourself in good credit.

2. Find a card with no annual fees if you pay your balance in full each month. These cards also often offer cash reward bonuses for certain purchases. The credit card companies want to reward people who pay their balance on time every time each month, so if you’re one of those people, you get to take advantage of everything that they will offer you.

3. Find the card that fits your needs perfectly. Many people use credit cards only to buy gas for their cars. You could try to get a gas credit card, which will reward you for purchases related to auto expenses. Other people enjoy using credit cards while traveling, and they can get credit cards that will offer travel bonuses.

4. Understand the terms of the credit card application you’re interested in. When you fill out an application for a credit card, look for interest rates below 11 percent. Also, don’t sign up for a credit card that charges annual fees. There are plenty of cards that won’t do that. Look for reasonable terms on balances transfers or cash advances. Finally, don’t accept a credit card with crazy penalty terms. Know the causes of your credit card penalties before applying.

5. Don’t fall for sign-up bonuses. You don’t want a card that will only help you one time but leave you a sitting duck in the future. Think of choosing a credit card like you would be buying a tool. You want that tool to work for you now, in 5 years and in 10 years. The credit card is the same way. It is a relationship that you want to benefit from for years down the road.

Credit cards can get people in loads of financial messes, but they can also give you an undeniably great credit score. One of the biggest aspects that loan providers will look for is how you use a credit card, and if they see that you’ve always paid a full balance, you will get approved for loans without hassle. Financial freedom can result from healthy credit card practices.