There is a huge variety of credit cards on the market, in all shapes and sizes. The right card for you will depend on your credit, your lifestyle, and what you want out of the card. Are you a frequent traveler? Do you shop at certain stores all the time? Do you spend a ton of money on gas? Learn how to pick the right card in our video with credit expert John Ulzheimer.
Hi, I’m John Ulzheimer, a credit expert who contributes to the Credit Card Insider blog. Today’s topic is choosing the best credit card, what’s the best credit card for you. The best credit card it is going to be a subjective issue and the best credit card for me may not be the best for you, the best credit card for you may not be the best credit card for me or anyone else, but I’ll give you some ideas of credit cards that I use and why I believe they’re a solid choice.
Number one, American Express. American Express targets consumers who have very good credit. They do not have a subprime product. Meaning if you have bad credit, then you’re not going to be able to get an American Express card. However, if you are able to get one, you will enjoy perhaps the best customer service in the credit card industry. In addition, their rewards programs are very tailored towards the business and personal traveler. Great miles cards with the American Express SkyMiles suite of cards. Excellent cash back options and excellent rewards options.
Most American Express cards have an annual fee, so if you’re averse to annual fees then that might not be the right card for you. However, do not discount a credit card immediately simply because it has an annual fee without balancing the benefits that you would likely get in exchange for the actual fee. For example, American Express has some cards that have annual fees in the several hundred dollars, which, on the surface, would seem to eliminate that as an option, however, if you look at that list of rewards that you get for the fee it’s actually well worth it. So do a little bit of research and balancing on the American Express suite of cards and you’ll likely find something that’s very attractive to you.
Number two: the Discover card. The Discover card is taken pretty much everywhere that any other credit card is taken so the days of going to a merchant or retailer and them not accepting a Discover card, those days are pretty much over. Almost every Discover card does not have an annual fee, in fact I cannot find one that has an annual fee, so if you’re one of those no annual fee people, then that’s not a bad option for you. Credits limits: Discover is not afraid to issue very high credit limits. The one on my card is $25,000. So if you’re someone who likes to have a lot of portable capacity in their credit card, then Discover might be a good option for you. And further, their essentially the card that invented the cash back bonus. So, if you like getting 1 percent or more on your purchases back in the from of either a statement credit a check or the ability to go shopping in their redemption mall, if you will, then the Discover is not a bad option for you.
Next, any credit card issued by a credit union. And here’s where the benefits going to be to you. If you are carrying balances from one month to the next, that means you’re going to be paying interest. And, in most cases, people who pay interest on credit cards are essentially financing the most expensive debt that they’ll ever finance because the average interest rate on a credit card is somewhere around fifteen percent, which is very high relative to what you pay on auto loans and mortgages. However, credit cards issued by credit unions typically have lower interest rates relative to the rest of the credit card industry. It would not be unheard-of to be able to get a credit card from a credit union with an interest rate of 7.9 percent, 9.9 percent, 12.9 percent. So these are very good options if you know you’re going to have to carry a balance from month to month because at the very least it’s going to cost you less than if you went out and got a credit card with a large mega-bank.
And finally, Fidelity has a very good retirement rewards credit card. This card, which generally has a very very high credit limit, is a tie back to your Fidelity Brokerage account, if you have one, and allows you to redeem points or cash back, and fund IRAs, or 529 college savings plans. Look, you’re not going to get rich and retire off of the rewards earned on this card, but they’re a nice little perk, and in many cases, either consumers forgo their rewards points, forget to redeem their rewards points, or use them for something that they probably didn’t want or need in the first place. At least in this case, the rewards are going to fund your retirement, which isn’t a bad way to use them.
If you have any more questions about rewards cards, credit cards, credits scoring, or credit reporting, please visit me at the Credit Card Insider blog. Have a great day.