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Secrets to Finding the Best Credit Cards: Build Credit and Stay Out of Debt

The Best Credit Cards

In the ever-changing financial world we live in today, credit cards seem to have somehow gotten a bad reputation. But in reality, when they are used wisely, credit cards can actually offer some helpful perks that can be beneficial to your financial situation.

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Table of Contents:

   •  Introduction: The Best Credit Cards

   •  Chapter 1: The Best Credit Card Rewards

   •  Chapter 2: Credit Card Rates

   •  Chapter 3: Credit Cards to Build Credit

   •  Chapter 4: Credit Card Debt

   •  Chapter 5: How Many Credit Cards Should You Have?

   •  Chapter 6: Find the Best Credit Cards & Let them Work for You

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Not only can credit cards offer tools to help you better manage your money and finances, but if you choose the best credit cards, they can also help you increase your credit score, provide protection on big-ticket items that you purchase, and even help to reduce your travel expenses with the variety of reward programs offered to cardholders.

Credit Card Image with Words in the BackgroundWith all of the credit cards available to consumers today, it may be overwhelming to decide which are the best credit cards for you to carry. Some credit cards are definitely better for you than others, so it is important to find the one that fits your spending habits and offers perks that will benefit you the most.

While any credit card will do just fine as a means to purchase goods and services, selecting the right one can offer substantial benefits that you might not even be aware of.

Some consumers may find that the best credit cards for them are those that offer low interest rates on purchases. This is definitely something to consider when choosing a credit card, as a low rate is always a good thing no matter what your circumstances. Other credit cards that offer reward perks versus an extra low interest rate, however, may work better for some people.

For instance, those who travel a lot for business or pleasure may find that the best credit cards for them are the ones that offer travel rewards. These rewards often make up for the higher interest rates, especially if you don’t carry a monthly balance.

Likewise, credit cards that reward users with points to apply towards online shopping portals may be a better choice for those who like to use their points to select and purchase merchandise they want to be delivered directly to them.

Since all credit cards are not created equally, though, savvy consumers should do their homework and spend some time researching to find the best credit cards to benefit their lifestyle and spending habits to make the most of those rewards.

In the following chapter you will find some tips to help you make smart decisions about finding the best credit cards for you.

The Best Credit Card Rewards

Choosing the right credit card is a big decision that should enhance your financial situation in some aspect and give you the best credit card rewards that correspond with your lifestyle. Popular credit card reward programs include cash back, travel incentives, and reward points.

All of these credit card programs have their own unique set of benefits and choosing the best credit card rewards should be done so on an individual basis. Here is a closer look at each of these types of credit card rewards programs to help you determine the best credit card rewards for you.

Types of Popular Credit Card Rewards

Reward Points

Credit card reward points are typically given to consumers based on each dollar they spend using the credit card. The reward is usually one point for each dollar spent on the credit card.

Once enough points are accumulated, the credit card reward points can be redeemed for merchandise, gift cards, travel perks, and more from the credit card’s online shopping mall. Some credit card companies even allow consumers to redeem their credit card reward points for cash that can be applied to their credit card balance as a payment or they can also request that a check be sent to them by mail.

Cash Back

Cash back rewards from your credit card is a popular perk that is offered by many credit card companies. While each credit card varies in their rules on purchases, this reward offers consumers the ability to earn cash back on a percentage of the money spent using the rewards credit card.

Typically, consumers can request either a check be mailed to them for their cash back percentage, or they can choose to have the amount of the cash back reward applied as a credit on the account.

Travel Perks

Woman pulling suitcase on moving walkwayTravel credit cards earn points that are often called miles. These miles are earned with every purchase using the card. The typical reward is 1 or 2 points for every dollar you spend using the rewards card.

Programs do vary by card, but many also offer extra points when you make certain purchases like travel-related expenses. Once you accumulate points, many cards have a portal similar to that of online hotel and other reservation websites that allow you to spend the earned points to pay for travel expenses and book reservations using the points.

Consumers should choose a credit card that offers the rewards that best fit their lifestyle and shopping trends.

Those who have a job that requires them to travel or jetsetters who live for travel adventures would best benefit from a credit card that offers travel perks. If you like to earn reward points to use for shopping for brand name items on the company’s online shopping center, eating dinner at restaurants, or getting a discount on your hotel stay, you might want to consider a credit card featuring reward points.

If none of these sounds like something you would be interested in, the best credit card rewards program for you may be the cash back program. It is fair to say that cash works for just about everyone, so credit cards with this reward program are always a safe choice.


Credit Card Rates

No matter what perks a credit card offers, smart consumers know that nothing beats low interest rate credit cards.
When choosing low interest rate credit cards, be sure to pay attention to all of the details concerning the interest rate though, as many rates are only available for a limited time. All of the details of the offer are listed on the credit card application, so be sure to read those thoroughly before applying.

Percent symbol on a cubeOne good example of this is when a variety of credit card companies offer promotions with interest rates as low as 0%. That sounds like an amazing opportunity, but it is important to realize that this rate will expire. When this happens, the interest rate will instantly increase to a much higher standard rate based on your creditworthiness.

It is crucial to know what the rate will be raised to in order to determine if the benefits outweigh the eventual cost.

It is also important to know whether you will be charged retroactive interest on those purchases made but not yet paid off during the initial period, which many credit card companies do charge. This could mean hundreds of extra dollars owed by you when the promotion expires.

However, if you plan to carry longer-term balances on the credit card, it makes better financial sense to choose low interest rate credit cards with a fixed rate that will remain in place as long as you continue to make monthly payments on time. This will allow you to pay lower overall interest while you make payments.

It is also important to know that anytime you are late or miss a monthly credit card payment, you will most likely see an increase in credit card interest rates on that credit card. Lower rates are reserved for those that are financially responsible and pay their credit card bills on time. When you fail to do so, you will be disciplined with higher rates and possibly even a lower credit limit.

Credit Cards to Build Credit

Often times when young people are just starting out on their own, or if someone has not made many major credit purchases like a home or vehicle in their lifetime, they may find that their credit score is lacking. While you do not have bad credit, your credit file may not have enough credit history to prove to lenders and creditors that you are financially responsible.

Man holding credit card while on laptopEstablishing a credit card in your name is a great way to help you build your credit and prove that you are worthy enough for lenders to take a chance on and give you a loan.

It is a wise choice to apply for a credit card to help build your credit score and increase your spending power. The key to building and maintaining a good rating with the credit bureaus is to use the credit card at least a few times a month. If you have the credit card and don’t use it, you are not doing anything at all to increase your credit rating and change your credit profile.

In addition to using the card for purchases each month, it is just as crucial to make the payments on time. Not only does this provide a good rating when they report to the credit agencies, but it also builds a reliable payment history for creditors to refer to when you apply for a loan, credit card, or another line of credit.

If you are able to pay the full balance each month, that’s even better for your credit score and your finances, as you will not accrue additional interest that will need to be paid by you.


RELATED: How to Build Credit with a Credit Card


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credit card book with cover on book

Credit Card Debt

Sometimes consumers rely on their credit cards too much though, which can cause them to get into credit card debt and even possibly ruin the good credit score they worked so hard to earn.

Man with a rock on him that says DebtWhether you like to shop at your favorite stores, have a lot of monthly expenses you can’t afford, or have an unexpected financial crisis that causes you to use your credit card, be careful because those charges can add up very quickly. This can wreak havoc on your financial status when it causes higher monthly payments due to the added purchases and extra interest, which can sometimes seem overwhelming and unaffordable.

If you find yourself with a high amount of credit card debt, getting a loan is often a better solution than getting another credit card to go deeper into debt.

In this scenario it’s often a smart time to consider getting a debt consolidation loan from your local bank or credit union.

A debt consolidation loan gives you money that can be used to pay off those high interest credit cards. This kind of fixed-rate low interest loan is set up with affordable monthly payments that are due over a certain period of time, making it easier to pay off the debt without accruing expensive, recurring monthly interest fees.

Homeowners should also be aware that they may have the option to obtain a home equity loan via their credit union or bank.

These loans offer low interest rates with affordable payments that can help you get rid of credit card debt and gain control of your finances again. Homeowners can also seek a home equity line of credit that allows them to write checks for expenses at a much lower interest rate than credit cards offer. This is an excellent choice to avoid credit card debt if you have equity in your home.


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How Many Credit Cards Should You Have?

Notebook with Q & A written on itThere is no set amount of credit cards you are required to carry, but it is definitely a good idea to have at least two to three different types of cards.

The first and best reason is that not all cards are accepted everywhere. Some places prefer Visa and Master Cards, which were the first credit cards created. And while American Express is a popular credit card, it is not as widely accepted as the traditional credit cards, so consumers may have a hard time using it where needed.

Discover Card is also a popular card that is not accepted at all places. While Discover offers some great reward features, the fact that it is not accepted everywhere could leave you in a tough and awkward situation if you do not have another type of credit card to use.

Having a variety of available cards at your disposal is a guarantee that at least one of them will be accepted when you want or need to use it.

In addition, savvy consumers can utilize the rewards and perks of their variety of credit cards to receive the maximum benefits possible. For example, having a rewards card allows you to reap those benefits and take advantage of all of the rewards offered to get discounts, travel upgrades, cash back, and more.
Once the rewards have accumulated, the balance can then be transferred to a lower interest rate credit card so you can get the benefit of lower finance charges on all of your purchases. “Stacking” these credit cards to receive the maximum benefit is a smart financial move and makes perfect sense.

Be sure to take advantage of combining reward credit card perks with the benefits of those with low interest rates for the perfect, custom credit card reward system that works best for you.

Find the Best Credit Cards and Let Them Work for You

To truly find the best credit cards that work for you, it is a good idea to evaluate your credit cards every year to ensure you are not only receiving the benefits offered with the card but also to make sure you are taking advantage of those perks.

It may surprise you to learn that in addition to the advertised reward offers from the credit card company, there are additional perks and rewards that you may, in fact, be missing out on just because you are not aware of them.

Many credit card companies give cardholders benefits such as extended warranties, insurance coverage when traveling by rental car or plane, additional purchase and return protection, and more. This is especially important if the credit card requires you to pay an annual fee for those rewards.

Compare your credit card usage to make sure that the perks and benefits of the credit card outweigh the annual fee they charge. If not, it might be time to consider closing this credit card account and doing research to find another credit card with rewards that do not charge an annual fee.

It is also a good time to decide if you really need all of the credit cards you have in your wallet. Although it is great to reap the rewards of these credit cards, it is also smart to close some of the accounts if you find that your credit card debt is getting too high.

When used wisely, credit cards can help you build and maintain your financial health. From raising your credit bureau score and providing substantial rewards to offsetting travel expenses and providing purchase protection, credit cards can be an invaluable tool for better money management. Contact your local credit union today to learn about your credit card options, debt consolidation loans, and home equity loans or lines of credit for a better and brighter financial future.