How to Pick the Right Credit Card for Your Needs in 6 Simple Steps

Don’t just sign up for any old credit card offer you get in the mail. Here’s how to make sure you get the credit card with the most benefits for you.

Written by Erin Gobler / January 13, 2022

Quick Bites

  • Your credit score helps determine which credit card you qualify for.
  • Doing a quick check-in about your spending habits and financial goals can help you zero in on a card with rewards that make the most sense for you.
  • Using a 0% balance transfer card can be a good way to pay down debt on another credit card.
  • You didn’t get approved for the credit card you want? You can call the issuer’s reconsideration department to follow up.

What if we told you that you could be paid to shop? It may sound too good to be true, but when you think about it, many credit cards do just that. Credit cards come with features like sign-up bonuses and ongoing rewards that allow you to earn cash back and points on your purchases, save money on travel and more.

But with so many credit cards on the market, it’s easy to feel overwhelmed trying to choose the right one. Which credit card company is best? Should you choose a travel or cash back reward? These are just a couple of the questions you may find yourself asking.

To help you pick the right credit card for your needs, we’ve put together a quick step-by-step guide. 

Inside this article

  1. Check your credit score
  2. Look at your spending habits
  3. Research cards
  4. Get preapproved
  5. Apply for your card
  6. Use it responsibly

Step 1: Check your credit score and credit report

The most important step to choosing the right credit card is to check your credit score and credit report since they’ll be a huge factor in determining which credit cards you’re eligible for.

Most credit cards require a certain credit score to qualify. Some cards may be available only to borrowers with good or excellent credit, meaning a score of 670 or higher.[1] Others are designed for borrowers with fair credit, meaning a credit score between 580 and 669.

Knowing your credit score is critical in choosing the right credit card because you’ll be able to narrow down your list to only the cards you meet the eligibility requirements for.

In addition to checking your credit score, you should also check your credit report. When you apply for a credit card, companies consider your annual income, payment history, credit utilization and the number of hard inquiries. These factors are important not only for determining if you qualify for a credit card but also for determining your credit limit and interest rate.

If you have several negative marks on your credit report, it may be worth waiting to apply for a credit card until you’ve been able to make some improvements.

How to Raise Your Credit Score

If you check your credit and find that your credit score isn’t high enough to qualify for the cards you want, there are plenty of steps you can take to increase your score

The two most important factors determining your credit score are your payment history and your credit utilization.[2] You can improve your payment history by paying your bills on time and catching up on any past-due accounts.

Your credit utilization is the percent of available credit you’re currently using. It’s best to keep your credit utilization below 30%, and you can reduce it by either paying off existing credit card debt or increasing your credit limits.

Step 2: Think about your spending habits and financial goals

Why look at your spending habits and your financial goals?

Different credit cards reward you for different types of spending. Some offer higher cash back for categories like groceries, eating out or gas station purchases. Others have increased rewards for travel spending. 

To get the most out of any credit card, it’s important to choose one that rewards you for the spending you do most often. A credit card that offers increased rewards for travel will be great for some people, but it won’t be much help if you rarely travel.

Below we’ll break down some of the most popular credit card features that can help you reach your financial goals.

Cash Back

A cash back card can be an excellent tool if you’re saving for a large purchase since you can use your accrued cash back for that purchase. Cards designed for cash back typically offer between 1% and 2% on your spending, which you can cash in at any time.

Rewards 

Other cards allow users to accrue points, which they can then use for a specific purpose. Points cards are often tied to travel, and allow you to exchange your points for airline miles, nights at a hotel and more. In fact, many people sign up for a travel credit card to help them build rewards for a specific trip they have planned because they know the rewards it offers will help them to maximize their points.

Balance Transfers

If your financial goal is to pay off existing credit card debt, then a balance transfer card is the perfect tool to do it. These cards offer an introductory APR rate—often as low as 0%—for a period of six to 18 months. During these months, more of your monthly payment can go toward paying off your principal balance, since you’re paying little to no interest.

Credit-Building

It may also be that your financial goal is to boost your credit to qualify for even better credit opportunities in the future. In that case, you might consider a secured credit card or another type of credit card designed to help build credit.

Step 3: Research cards that fit your needs

Once you have a better idea of what you want from a credit card, you can start researching cards that fit your needs. There are plenty of resources online specifically designed to help you find the right credit card.

Some online resources allow you to search for credit cards based on certain features, such as cash back, travel rewards, balance transfers and more. Others will ask you a few questions and recommend suitable cards based on your responses.

As you’re researching credit cards, there are many factors to consider, including:

  • Required credit score

  • Interest rate

  • Introductory rate

  • Credit limit

  • Annual fee

  • Rewards structure

  • Rewards categories

  • Foreign transaction fees

  • Credit score monitoring

  • Other card perks

Step 4: Get preapproved for a credit card

Preapproval is a process that allows you to find out ahead of time whether you might be approved for a credit card. 

When a credit card company preapproves you for a card, they’ve made a soft inquiry on your credit report and checked your credit score to see if you’re a good candidate for the card. If you’re preapproved for a card, that could be a good indicator that you’ll be approved if you apply for the card.

Tip: Getting a preapproval for a credit card isn’t foolproof. It’s possible there’s something on your credit report that doesn’t come up during the soft inquiry but prevents you from qualifying for the credit card. However, preapproval can be a good indicator in most cases.

There are a few different ways to get preapproved for a credit card. First, you can visit the card issuer’s website and see if it has a form where you can seek preapproval. Additionally, some credit card comparison sites allow you to enter your financial information and see a list of cards you would be preapproved for. 

Finally, you can see what credit cards you’re already preapproved for by looking at offers you receive in the mail or via email. Most of us end up tossing those offers in the trash, but you may just find that you’re preapproved for a card you actually want.

Step 5: Apply for your credit card

Once you’ve found the credit card that’s right for you and you’re pretty sure you’ll qualify, there’s nothing left to do but apply. The simplest way to apply for a credit card is by going directly to the card issuer’s website.

When you apply for a new credit card, you may find out in seconds whether you qualify. This scenario is most likely for creditworthy borrowers who are obviously good candidates. In some cases, you may have to wait a few days for the company to review your application. In that case, they’ll send you a letter or email to let you know if you’ve been approved.

Tip: If you’re approved for the card, in many cases, you can start using the card digitally before you even receive a physical card.

If you haven’t been approved for the card, you can contact the company’s reconsideration line and ask them to give your application another look. On the other hand, you could spend a few months trying to boost your credit score and try again in the future.

Step 6: Use your credit card responsibly

To really enjoy the benefits of a credit card, it’s important to use it responsibly. Otherwise, the costs far outweigh the benefits.

First, make sure you pay your credit card off in full each month to avoid paying interest. The one exception is if you’ve applied for a 0% balance transfer card to tackle debt from another credit card. But if that’s the case, avoid using the card for anything until your existing debt is gone.

Additionally, keep an eye on your credit utilization. The ideal credit utilization is below 30% of your available credit.[3] Even if you’re paying off your card in full each month, you can still lose points on your credit score if you use most of your available credit each month.

Article Sources
  1. Experian. “What Is a Good Credit Score?” https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score.
  2. Experian. “What Affects Your Credit Scores?” https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-affects-your-credit-scores.
  3. Experian. “What Is the Best Credit Utilization Ratio?” https://www.experian.com/blogs/ask-experian/what-is-the-best-percentile-for-credit-utilization.

About the Author

Erin Gobler

Erin Gobler

Erin is a personal finance expert and journalist who has been writing online for nearly a decade. Erin’s work has appeared in major financial publications, including Fox Business, Time, Credit Karma, and more.

Full bio

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