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How to Choose the Right Credit Card

Credit cards come in all shapes and sizes (so to speak) and there is no one-size-fits-all solution. Different credit cards will come with different pros and cons, and many are suited and designed for people with certain lifestyles. What works for one person may be terrible for another person, and vice-versa. Fees, rates, perks, and limits are all designed to complement certain lifestyles and spending habits, and exist in order to tempt people from all walks of life.

For example, jet-setters and business travelers who fly around the world often may be tempted by frequent flyer miles, whereas people who simply spend a lot of money in general may be tempted by cashback rewards. It all depends on you and your spending habits.

When deciding on what credit card to choose, you really need to be honest with yourself. Take into account your lifestyle, spending habits, and circumstances, as well as any potential changes to your life that may be impending (i.e. moving to a new city or having a baby). Assess how much money you will spend on a credit card, question how much you take flights, and ask yourself how promptly you will pay back any debts.

Your credit card should be fitted to your lifestyle, not the other way around. Trying to adapt an unsuitable card to your lifestyle and spending habits is just going to end badly for you, as you are more likely to rack up debt and incur interest. Do not allow tempting perks and rewards to lead you to overspend on your new credit card. This is how the credit card providers make their profits, and even though overspending may lead to some perks, these perks could be outweighed by debt and interest if you are not vigilant.

New credit card users (i.e. young people) should ideally look for cards with low limits and low interest rates. You need to pay your bills on time at the end of the month, so hopefully the interest rate won’t matter too much anyway. Though rewards may not be applicable for young people, cashback systems may be good if they do not come with excessive fees. You should be using this time of your life to spend very carefully and build up a decent credit score for yourself.

Expecting parents (especially first-time parents) may want to look for cards with higher limits and lower interest rates. This should be attainable if you have a decent credit score and reputation already. Higher limits allow you to purchase expensive items for your new baby (cribs etc) without worrying too much about payment, and while keeping your credit score high.

Jetsetting and high-flying business people may wish to opt for a rewards-based credit card. These often allow you to receive discounts on international hotels and flights, and you may eventually receive some flights for free. These cards often come with high interest rates, however, so it is imperative that you pay your monthly bills on time. If not, you will incur serious interest fees and debt. These cards also come with annual fees, but if you spend wisely and pay your balance on time, you should be able to earn these fees back in perks and discounts over time.