Three Things to Consider
When deciding on the right credit card, there are three things you should consider:
- What is the interest rate?
- Is there an annual fee?
- Do they report to the credit bureaus?
Most credit cards will have high interest rates that should deter consumers from paying just the minimum amount on their credit card. The high interest would then be charged to the remaining balance, which could lead to credit card debt being accumulated. Finding a credit card with a low interest rate is ideal but the best practice is to always pay the full statement balance every month.
Some credit cards offer no annual fees, however some that do have annual fees offer perks that could outweigh the fee itself. Be very careful to compare and weigh your pros and cons when choosing these credit cards. For example, if you travel often, a travel credit card where you earn points may be beneficial to you. Be mindful and read the fine print because the benefits may not always be as good as they seem.
Using your credit card to reestablish your credit score may be a wise thing to do. Some creditors offer ‘Secured Credit Cards’ which reports to the credit bureau to increase your credit score for purchases like a home.