Smart Swiping: A Guide to Choosing the Right Credit Card

Guide to Choosing the Right Credit Card

BIG Ideas:

  • A credit card is a powerful tool that can help you manage your spending and build the credit you need to reach life’s goals.
  • The credit card that’s right for you depends on your budget, spending patterns, and goals.
  •  Always pay your credit card bill on time and avoid charging more than your budget can afford. 

They’re only 3.375 inches wide by 2.125 high. Some may think of them as “plastic,” but for college students and recent grads, they can represent a very REAL and HUGE step toward financial independence.

They’re credit cards – if used responsibly, powerful tools to help you manage your money. They can be used to establish or build credit. Track and manage your spending and make secure purchases that can save you money.

The more pressing question is: How do you choose the one that’s right for you – especially when there are so many to pick from? 

Well, you can start by taking the following steps:

  1. Analyze your spending. Before you choose a credit card, know your spending patterns. You can get that information through online or mobile banking, your banking statements, or budgeting apps. If you see that you are spending money on travel, a credit card that offers travel rewards might be best. Conversely, if your spending is on everyday expenses, like gas, takeout, or groceries, you may want a card that offers cash back on everyday purchases.
  1. Know your credit card options. You can choose from the following:
    • Cards with no annual fee
    • Cards with lower interest rates
    • Cards that offer rewards, such as cash back, miles, or points that can be redeemed for merchandise
    • Student credit cards
    • Secured credit cards (that use your savings account as collateral)

The one that’s right for you depends on your spending patterns, goals, and what’s important to you.

  1. Know the fees. After you narrow down your options, look closely at the fees, which can vary significantly by card. One common fee is an annual fee, which can be significant based on the perks offered. Before you apply for a credit card with a high annual fee, make sure you can afford it. If not, opt for a card that offers no annual fee. Another fee is a foreign transaction fee. If you plan to travel abroad, choose a card that offers a low or (even better) no fee for foreign transactions. Pretty much all credit cards come with late fees, so be sure to pay at least the minimum amount due on time, every month.
  1. Review the interest rates. Credit card rates are represented as Annual Percentage Rates or APRs, which include the total cost of borrowing. Interest is charged on purchases, cash advances, and balance transfers, and can vary significantly by lender. So, make sure you understand the fees involved. For example, if you plan to use a credit card to make a large purchase, you may want to choose a card that offers an introductory 0% APR on purchases for a limited time. That would give you time to pay off the balance before you incur interest fees.
  1. Look at card benefits. Credit cards can come with perks and extras beyond rewards, such as purchase protection, travel insurance, and access to exclusive events. Some even offer attractive sign-up bonuses when you reach a certain spending level.
  1. Read the fine print. Credit card disclosures may not seem like riveting reading, but they do contain important information you need to review. Before you choose a card, make sure you read the terms and conditions and understand the length of the grace period (the amount of time you have to pay off purchases before interest is charged). You should also know when payments are due, how interest is accrued, and how your minimum payment is determined.
  1. Comparison shop. For extra help making your selection, use comparison tools like the one from NerdWallet. You’ll be able to see how cards differ by fees, perks, rewards, APRs, and consumer reviews.

Swipe, dip, and tap responsibly

Whichever option you choose, you must use your credit card wisely. That means:

  • Making payments on time to avoid costly late fees and lowering your credit score.
  • Not spending more than you can afford.
  • Paying off balances before the grace period ends to avoid interest fees.
  • Reviewing your account activity online or on your statements to detect fraud. 

Brazos is here to help you build a brighter financial future

For more than 40 years, Brazos Higher Education has been helping make education more affordable for students. As a Texas non-profit, we can offer you great rates on student loans and refinance loans. Contact us today!