Choosing a Credit Card Wisely
Depending on the source you consult, you’ll learn that the average American has 3 – 4 credit cards, but some have many, many more. There isn’t a single “right” answer about how many credit cards a person should have. But here are a couple of tips for choosing a credit card wisely to fit your personal financial situation:
- If you are among the majority of credit card holders, you don’t pay off your card every month. In fact, you may be carrying a pretty significant balance and paying only minimum payments each month. The bigger the balance and the longer you carry it, the more rates are going to matter to you.
- Don’t be swayed by introductory offers without getting the rest of the story. 0% sounds terrific but if you have to pay a 3% fee on the balances you transfer, you may very well be better off with a card offering a slightly higher intro rate but with no balance transfer fee. At a minimum, be sure to consider possible balance transfer fees, annual fees, and penalty fees.
- Find out what the rate will be AFTER the introductory period. Unless you are planning to continuously open and close credit card accounts (which can have a negative impact on your credit score), the rate after the introductory period is significantly more important than the temporary intro deal.
- If you are one of the +/-29%* of Americans paying off your credit card every month, rates (intro or otherwise) may be much less important to you than the kinds of rewards offered by a credit card. Instead of looking to transfer balances, you may be looking for those up front bonus points, opportunities to earn double points, flexibility in cashing in points, and additional benefits like travel insurance.
*According to the American Bankers Association, 2013