Discovering the Best Credit Card for You

Despite getting a lot of criticism, credit cards are a financial vehicle that is very important to the everyday American. They allow us to build our credit scores in order to get qualified for even better financing for things like mortgages and car loans. The good news is that it is very easy to get a credit card, allowing you to start building credit early. In today’s article, I am going to be breaking down how to find the credit card that is right for you. 

1. Are you new to credit? 

If you are just getting started with credit cards, there are a couple of options that you can go with. You can open up either a secured credit card or an unsecured credit card. A secured credit card is one where you have to put down an initial deposit to get. This is the less preferable option to many. The more popular option that I would recommend would just be to open up a simple, unsecured credit card that is personalized and made for new borrowers. This could either be the Discover It card or the Capital One Platinum. From a personalized perspective, look at cards that would most benefit you and your situation. You might be a student and can receive rewards based on your performance in school. Also, you could just be the everyday American who loves receiving cashback. If you are an experienced borrower, look into opening up new accounts and building that credit history. Even though new accounts hurt your credit in the short term, many accounts with a long credit history are great for your credit score. In the end, doing research to find out the best credit card for you can really help with long term credit success.

2. Know how credit works

One of the biggest reasons why borrowers screw up their finances with credit cards is because they don’t know the intricacies of how credit works. Credit isn’t really taught in school and many borrowers don’t go out of their way to learn all about it. The good news that the way your credit score is determined is very simple. 35% of your credit score is payment history, 30% is the amounts you owe, 15% is the length of your credit history, 10% is new credit, and 10% is credit mix. As you can see, paying your credit card on time and not carrying a balance on it compromise over half of your credit score. This is why one of the most important things you can do is start with one credit card, pay it off every month and build that credit history with just that one card. After a few months of doing this, you should have over a 750 credit score or at least very close to it. After only eight months of using credit, I have a 771 credit score doing exactly that.

All in all, credit is a very simple game. Use the credit card as you would any debit card and your finances will do nothing but gain from it.