For a first time credit card consumer, choosing a credit card may seem overwhelming. A credit card — much like a pair of jeans — is not one size fits all. There are a variety of cards, just like there are a variety of fits in denim, to suit each person’s individual needs. We have a few things for you to keep in mind when choosing which card is best.
There are thousands of credit cards out there, but on the most basic level there are two types: those that offer some type of reward and those that don’t. A rewards card allows you to earn rewards — cash back, airline miles or hotel points — for the purchases that you make. A non-reward card does not incentivize purchases, but often has lower finance costs — balance transfer fees or APR — associated.
While there are obvious pros to having a rewards card, such as earning money back or points for your purchases, there are cons as well. ClearPoint Credit Counseling suggests a few things to be aware of. With the promise of rewards for spending, there is the potential to spend more than you planned to spend otherwise. There may also be annual fees attached to these cards, or higher finance charges. The bottom line: Be smart with your credit card spending, regardless of whether it is a rewards card or non-rewards card.
A reward credit card is most beneficial if you pay the entirety of your balance each month, which is best practice if you choose to get any type of credit card. If you don’t think you’ll be able to pay your entire balance each month, then perhaps you should consider waiting to apply until you know you will be.
[Shameless plug: First Internet Bank offers a reward and non-reward card option, both with a competitive interest rate. Our cashback card pays 3% for gas transactions and 1% for all other purchases, with no limit to the amount of cashback you can earn! End of sales pitch.]
As always, we’re here to help you make informed financial decisions and answer any questions you have about our cards, or credit in general. Don’t hesitate to call us toll free at 1-888-873-3424. (You’re on your own to find the perfect pair of jeans.)