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It can be difficult to pick a credit card that best suits your lifestyle and needs. And on top of that, high interest rates and fear of hidden costs tend to scare many people off. But when used the right way, credit cards offer perks that can earn you free travel, cash back rewards, or lower interest rates on existing debt.
It's important to know the pros and cons before picking a card, so to help you choose the best option, CreditCards.com offers the top four categories for credit cards.
1. Travel reward cards
The idea of earning bonuses for just spending a minimum requirement on your card is an attractive one. Travel or rewards credit cards can offer sign-up bonuses ranging from 10,000 to 75,000 points or more within the first few months of opening your account. Plus, you'll get anywhere from 1 to 10 points on purchases you're already making regularly. These points add up quickly and can be redeemed for other travel rewards like flights, hotels, or cruises. Look out for limited time offers or sign-up bonuses, which could help justify an annual fee
What to Know:
- You can use points to splurge on a flight upgrade.
- Some cards come with perks such as priority boarding, elite status, or free checked luggage.
- These cards typically come with higher-than-average annual fees and interest rates. Be sure these expenses don't cost more than the value you'll earn from membership.
2. Balance transfer cards
Depending on what situation you're in, balance transfer cards could save you hundreds of dollars on interest each year. They let you transfer a balance from a high interest credit card you already own to a new card with a lower interest rate. CreditCards.com's top pick this month offers a $0 balance transfer fee. This savings alone could save you a lot of cash, given that most banks charge 3-5%.
What to know:
- Most banks offer cards with an intro balance transfer rate of 0% for 12 - 21 months.
- Take note of what the standard interest rate will default to after your intro period ends. You don't want to end up with a card that has a higher interest rate than what's already in your wallet.
- Keep an eye out for special offers. Sometimes, you can find a card that waives the fee if you transfer a balance within the first 60 days of opening an account.
- Balance transfer products are typically pretty basic; don't expect new customer bonuses or flashy rewards.
3. Cash back cards
Cash back cards let you earn rewards for purchases you make. They're a good choice if you like statement credits linked back to your account, and receiving cash rewards. Prime categories like gas and grocery can earn you up to 5% back. Many of these cards also offer sign-up bonuses. One popular bonus right now is $100 cash back after meeting a spending requirement within three months.
What to know:
- Some cards offer a fixed rate of 1% or 2% cash back on all purchases, while others offer 5% cash back in rotating categories.
- Like travel rewards cards, many cash back cards will carry an annual fee and a slightly higher interest rate. Make sure you'll use your card enough to justify any added expenses.
4. Low interest cards
Low interest credit cards offer either a low introductory APR for a certain period or a single low rate APR. These cards can be useful if you know you'll be carrying a balance. On top of that, low interest credit cards could help out with purchasing equipment for a DIY home improvement project, wedding expenses, or any other purchases.
What to know:
- Before using a low interest card, read all the terms and conditions of the introductory rate so you're not surprised by fees or accumulated interest.
- Cards may offer 0% on purchases for up to 21 months, which can be a great tool for those looking to pay off a large purchase over a period of time.
- Make sure you pay your bill each month. Missing a payment means losing any promotional APR period.
If you're still unsure, CardMatch by CreditCards.com can help by matching cards to your credit profile to make the process less overwhelming and time consuming. Matched cards are sorted by type, which helps you save time by narrowing down your list. An important thing to keep in mind is that CardMatch is not an application for credit, so your credit score will not be affected.
Click here to find out more about the right credit card for you.
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