December 20, 2024

How to Choose the Right Credit Card

There are hundreds of credit cards out there. But figuring out how to choose a credit card that matches your spending habits and financial goals doesn’t have to be overwhelming. By focusing on the features that matter most to you — like rewards, interest rates, and fees — you’ll find a card that fits your lifestyle and puts you in control.

Let’s break down the steps to make this decision easier. Feel confident about the card in your wallet.

Which type of credit card do you need?

Here are some of the most popular types of credit cards to consider and why they might be a good fit:

Rewards credit cards. Who doesn’t love earning something back when they shop? With rewards cards, you can earn points, cash back, or miles on your purchases. Some cards even offer sign-up bonuses, giving you extra cash if you spend a set amount within the first few months. But it’s important to check for any fees or limits that might eat into your rewards.
Travel cards. What credit card should you get if you love to travel? There are more options than you might think. Many travel cards offer a few air miles per dollar spent on travel-related purchases, and some cards come with additional perks like free checked bags, airport lounge access, or travel insurance. Plus, many cards waive foreign transaction fees, which is handy if you go abroad often.
Student cards. Student credit cards are a good option for managing spending. These cards often have low credit limits (usually under $1,000), making it easier to manage spending. Many also offer rewards — like cash back on purchases — so you can start building credit while earning a little something back.
Secured cards. Secured credit cards are a reliable choice for anyone working on building or rebuilding their credit. You just need to make a security deposit, like $500, which often acts as your credit limit. Secured cards are also among the best credit cards to improve credit because many report to all three major credit bureaus, helping you build credit with each on-time payment.

How to choose a credit card: 4 steps

Here’s a step-by-step guide to finding a card that truly adds value to your wallet:

1. Check your credit report

Before you apply, take a close look at your credit report. Understanding your credit score provides insight into your financial health and helps you determine what financial opportunities you may qualify for.

You’re entitled to a free annual report from the three major credit bureaus — Equifax, Experian, and TransUnion. But there are other ways to check your score, like EarnIn’s Credit Monitoring tool, which lets you keep an eye on it anytime, for free.

2. Evaluate your financial habits and goals

Think about how you plan to use the card. If you consistently pay off your balance in full, rewards or cash back cards could benefit you most because you gain rewards without paying interest. But if you’re likely to carry a balance, a card with a low interest rate may save you more over time. It’s all about matching the card to your habits to maximize your benefits.

3. Factor in additional fees and perks

Don’t overlook the extra perks and fees in your card’s fine print. They can make a huge difference in your experience.

Some cards charge annual fees — ranging from $50 to $700 for premium cards — but offer benefits like travel credits, airport lounge access, or elite status with hotels. These can be worthwhile if you use these perks often. Also, features like purchase protection, extended warranties, and rental car insurance can add unexpected value if you use them.

4. Choose a card and apply wisely

Once you've narrowed down your options, apply for the card that fits your financial goals, if you’re building credit, maximizing rewards, or managing interest. For example, if you want to build credit, you might prioritize a card with low fees and manageable limits.

To avoid unnecessary impacts on your credit score, be mindful of how frequently you apply for credit cards. Each application triggers a hard credit inquiry, which can lower your score. Use pre-approval or pre-qualification checks to gauge your chances without affecting your score.

What to look for in a credit card

Choosing the right credit card offers means balancing costs and benefits. Here’s what to look for:

Annual fees. Some cards have high annual fees. While they often come with perks, no-fee options offer solid benefits if you’re budget-conscious.
Interest rates. Check the annual percentage rate (APR) to see how much you might end up paying every year. Introductory 0% APR offers are common, allowing you to avoid paying interest on purchases or balance transfers during the promotional period — but review the regular rate so you know what you’re getting into. Interest can rack up fast, so be careful.
Rewards programs. Choose rewards that fit your spending habits, like cashback on groceries or points for travel, to maximize the value.
Welcome bonuses. Many cards offer bonuses if you spend a certain amount early on. Just make sure it aligns with your budget.
Credit score requirements. Most rewards cards require a relatively high credit score, like 600. Target cards that match your score for better approval chances. The more realistic you are, the more likely approval is.
Extra perks. Look for perks like travel insurance or extended warranties, which add value if you use them regularly.

What to do if you keep getting denied for a credit card

Getting denied can be discouraging, but it’s not the end. Here are steps you can take to improve your chances next time:

Understand the reason for denial. Most card issuers send a letter explaining why they denied you. Reviewing this can help you pinpoint what needs improvement.
Improve your credit score. Pay down existing debts, make on-time payments, and reduce credit card balances. Even a small score increase can make a big difference.
Consider secured cards. Secured cards require a deposit, but they’re often easier to get. They’re also one of the best ways to build or rebuild credit over time, making them perfect for beginners.
Check your credit report. Look for errors or fraudulent activity that could be hurting your score. There could be factors you don’t even know about, like an old card you no longer use.
Wait before reapplying. Multiple applications in a short period can harm your score. Waiting a few months gives your credit time to improve after the hard check.
Consult a financial advisor. If you’re unsure what’s holding you back, a financial advisor can help you create a personalized plan to strengthen your credit profile.

The next step? Track your credit score with EarnIn

Finding the right credit card doesn’t have to be stressful. Once you’ve chosen an option that fits your needs, maintaining a healthy credit score and managing spending habits is key.

EarnIn makes it easier with personalized credit insights and recommendations, helping you stay confident in your financial journey. With EarnIn’s Credit Monitoring tool, you can track your credit score and receive proactive tips. Enjoy your new card worry-free.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

1. EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out.

Your VantageScore 3.0 from Experian® indicates your credit risk level and is not used by all lenders, so don't be surprised if your lender uses a score that's different from your VantageScore 3.0. Learn more.

2. EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out.