How to Choose the Best Credit Card for Your Needs

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Credit cards are like spouses. You mean it when you tell yours he or she's the best in the world. And it's true -- to you. But this person might be the worst in a different relationship. In exactly the same way, there's no such thing as "the best credit card." The one your colleague or friend raves about might be ideal for her or him, but could be totally unsuitable for you. Many people underestimate how important it is to align their plastic with their unique lifestyle, circumstances, characteristics and needs. So let's explore some of the criteria you should use when you're choosing the best plastic for you.

Eligibility

There's really no point in applying for plastic for which you're unlikely to be approved. In fact, it's likely to harm your credit score, at least in the short term.

Luckily, LendingTree's credit card listings show the score you'll probably need for each product, and its free credit score service lets you monitor your VantageScore 3.0 score.

Rewards Cards

Yes, it's obvious that someone who hates flying shouldn't normally have airline plastic, just as a non-driver is unlikely to benefit from a gas card. But it's worth going beyond that to make sure your card is going to give you -- with your particular spending patterns -- plenty of opportunities to earn the maximum rewards. You also want those rewards to be a good fit with your lifestyle: So would you be better off redeeming miles, points or cash back? You might decide on one of those cards that give points that can be converted into cash or used for travel purchases, such as the Barclaycard® Rewards MasterCard®. That gives a point for every dollar spent on purchases -- and double that on gas, grocery, and utility purchases, so it's particularly good for families.

Another important criterion when selecting rewards cards is your willingness to spend time maximizing your rewards. Some products give you a highly attractive five percent cash back on categories of shopping that change each quarter. But you have to remember to register anew every three months, and you may wish to schedule your major purchases around these promotions to earn the highest rewards. Bear in mind there are caps on eligible spending, either quarterly or annually, depending on the card issuer. A number of products offer these deals, including the Chase Freedom® card. At the time of writing, that's giving a $100 sign-up bonus to new customers who spend $500 on the card during the three months after the account's opened. Its bonus spending categories for the October 1 - December 31, 2014 period are on purchases (capped at $1,500 that quarter) from Amazon.com, Zappos.com and select department stores.

That's a great deal, but you have to ask yourself whether you're really going to jump through those hoops. If you are, go for it. If you're not, you might be better off going for a low-maintenance card with a less attractive headline rate, such as the Citi® Double Cash Card. This gives you an impressive two percent cash back on all purchases: 1 percent when you buy, and the same again when you pay your bill.

Zero Percent APR Cards

"Free" money! What's not to like? Nothing at all, providing you have the iron will necessary to use these products strategically.

Right now, the Citi® Diamond Preferred® Card and the Citi Simplicity® Card are both offering a whopping 18 months of interest-free credit on balance transfers and purchases alike. Buy a major appliance using either of these and you stand to save serious money. Similarly, if you have existing credit card debt that's making you uncomfortable, transferring some or all of it to one of these Citi products to pay down your balances faster can be a great idea.

However, these products require that you really agonize over your personal characteristics. Many (maybe most) borrowers lack the self-discipline to use such cards well and end up owing more than when they started out. Be honest with yourself: are you going to benefit from one of these... or be another victim of them?

Low-Interest Credit Cards

If you always zero your card balances every month, you couldn't care less what the rates on your cards are: You never pay a dime in interest anyway. But plastic isn't a cheap way to borrow, so if you sometimes or always carry a balance, you should be looking for ways to pay less.

The smart move is to have at least two cards in your wallet, one of which is a great rewards card, and the other low-interest plastic. The rule is to pay using the former for all the purchases you make that you're going to pay for in full at the end of the current billing cycle -- and to swipe the low-interest plastic for everything else. There may be a few exceptions to this (if you need to rack up spending to qualify for a generous sign-up bonus, for example), but do the math: you're almost always going to benefit by following this rule, no matter how generous your rewards program is.

The Barclaycard® Ring MasterCard® is currently (September 2014) offering an exceptionally low eight percent APR on purchases, which could easily be half the rate charged by your rewards cards. The trouble is, you're going to need a good credit score (probably over 698) to stand a chance of being approved. If your score's lower, check the list of low-interest plastic to see what might be within your grasp.

Secured Cards

With a secured credit card, you pay a deposit to the issuer upfront, and that almost always becomes your credit limit. You might (though it's unlikely) get a paid a tiny rate of interest on your deposit, but you're pretty much certain to be charged a whole lot on any balance you maintain.

Whoa! What? It costs you a small fortune to borrow your own money? What's the point of that?

Well, secured cards are used to build better credit scores by people who have either a very limited credit history or one that's been ruined. Debit and prepaid cards generally don't report to credit bureaus, so it's very hard to quickly build/rebuild a credit history without a credit card, auto loan or mortgage. Play nicely with a secured card for a year or so, and there's a good chance you could qualify for mainstream plastic.

People with poor credit are regarded as fair game by the sharks who circle the lending industry, so take great care when selecting secured products. You really need to read and understand the agreement you sign. But a secured card from a mainstream lender, such as the Capital One® Secured MasterCard®, is much less likely to be a rip off.

Pick a Card

By now, you'll have seen the point: you're an individual, and your best credit cards (like your wife or husband) are likely different from other people's ideals. Take care choosing yours, and you stand to reap the best possible rewards and benefits.

DISCLOSURE:The terms listed here were accurate at the time of publication and are subject to change. Cards selected in this article appear on this site from companies from which LendingTree receives compensation. LendingTree does not include all card companies or all card offers available in the marketplace. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. The author's methodology includes looking at rewards, fees, benefits, and rates to appeal to a variety of consumers. This would include, but may not be limited to, consumers looking for travel rewards, cash back rewards, and consumers with fair or good credit.

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