Small Business Brief

Financial Services

Choosing Credit Cards: How to Pick the Best Card for You

The majority of Americans have at least one credit card. In fact, the average number of credit cards is 3.4 per cardholder.

Whether you’re looking for a personal card or a credit card for your business, there’s plenty of choices. In fact, there are so many options available might be one reason people opt to have more than one credit card.

If you’ve asked yourself, “What kind of credit card should I get?”, this guide is for you. In it, we’ll go over the major aspects of choosing credit cards that fit your needs. With this step-by-step process, you’ll have an easier time picking your first card or your next card.

Check Your Credit Score

The first thing you should do is find out whether you’ll be eligible for a credit card. Your credit score is a major factor in determining whether you’ll be able to get a credit card.

While most people can get a credit card, their credit score may affect the type of card they’re able to get. It may also affect things like the credit limit or the interest rate applied to the card.

If you already have credit cards, think about how you use them. Do you pay them off every month, or do you carry a balance? If you have credit card debt, it will negatively impact your credit score.

If you have several cards you carry balances on, you might want to consider another card to merge your debt. It could also lower the interest you pay on what you owe.

By contrast, if you pay your credit card off on time every month, your credit score will likely improve. You may also want to consider a card that offers rewards, such as points or cash back incentives.

Ask What You’ll Use the Card For

The next step in choosing a credit card is asking, “What kind of credit card should I get?” There are a few different reasons you might be considering a credit card. Ask yourself what you plan to do with the card.

Are you going to:

  • Improve your credit score, consolidate debt, or transfer a balance?
  • Use the card to manage your small business expenses?
  • Get rewards for purchases you already make, such as groceries or travel?
  • Keep the card as a back-up for emergencies?

Knowing what the primary use of the card is will help you when you pick a card. For example, if you’re looking at getting an emergency credit card, you want one with no annual fee and low interest. You may not need a very high credit limit on this card.

If you’re thinking about a credit card for your small business, you may be less concerned about annual fees. What you pay to hold the card may be an eligible business expense for tax deductions.

Do Careful Research When Choosing Credit Cards

The next step in how to pick a credit card is to do some comparison shopping. There are many lenders out there, and almost all offer more than one option for credit cards.

For example, this page includes a list of available Citi Bank credit cards. You can see there are many options, even from one institution. There’s a card to fit almost every purpose.

This is why it’s so important to decide on the purpose of your card before you start comparing options. If you choose a rewards card from one institution, compare it to other rewards cards. Comparing a rewards card to a card designed to help rebuild credit is like comparing apples and oranges.

When you look at the offers from different institutions, you’ll want to ask some questions. Think about:

  • How long any promotional interest rates are offered
  • The costs of having the account, including the annual fee
  • How fast you can earn rewards with a rewards card
  • The value the card represents to you

Costs and promotions vary between institutions, so you’ll want to check the terms of any offer. Imagine one institution offers 0% for six months, while another offers a rate of 0.99% for the first year. You have to ask which one will actually save you more in the long run.

You may also want to consider the reputation of the credit card company backing the card. For example, American Express is known to charge high fees. As a result, many small businesses don’t accept it.

Apply for the Credit Card

You may decide on several credit cards that are appropriate for your needs. While you may think it’s a good idea to apply for all of them and see what comes back, it’s a better plan to apply one at a time.

First, there’s a good chance you’ll be approved for your card of choice. If your credit score is good, you likely won’t encounter any trouble.

Applying for too much credit at the same time can cause a temporary dip in your credit score. If you apply for several credit cards at once, there will be multiple queries on your file. This can cause creditors to be leery, and your score will take a tumble.

It will recover, though, so your best bet is to apply for your card of choice. If you’re denied, you can then move on to your second pick.

If you’re having trouble getting approved for a credit card, there could be an issue with your credit score. People with no credit history or limited histories can try a credit-building loan to improve their scores. This can also be helpful for someone with bad credit.

Get a Credit Card to Fit Your Needs

Now that you know how to choose a credit card, you can make better selections for your needs.

Choosing credit cards isn’t the only financial skill you need when you’re running a small business. If you’re looking for more advice on how to raise funding or manage finances, you’re in the right place. There’s plenty more to read on our blog.