What Qualifies as a Best Credit Card
A few months ago, the best credit card offers provided 0% interest rates on purchases and/or balance transfers for up to 15 months, fixed interest rates on balance transfers for life or up to 5% cashback on purchases. As a result of the credit crunch, most credit card companies have scaled back on these generous offers rather significantly. Unfortunately, this is a trend that is likely to continue.
Given current economic circumstances, today's best credit card is nowhere near as good as yesterday's. Nevertheless, the process of finding the best credit card remains the same. Ultimately, there is no single best credit card for everyone. A credit card may be great for one person, but provide no value to another. Thus, when choosing a credit card, the important thing is to choose the best credit card for your personal needs.
For many of us, the most important factor to consider when applying for a credit card is the long term interest rate. Unfortunately, 95% of credit card companies offer multiple rates. Generally, there are two types of rate offers: tiered and range. With tiered rates, a person will get one of three rates, based on their credit profile. If they do not quality for the best interest rate, they will be offered the next rate, which can be three or four percent higher. With a range rate, a person may not qualify for the lowest rate, but may qualify for a rate that is as little as 1/4% higher. For those seeking low rates, a credit card that offers an APR range, such as Discover Card, may be the best option.
A second, though extremely important factor pertains to 0% rates. With some companies, everyone who is approved will get a 0% interest rate for the amount of time advertised. However, most companies offered tiered rates. Thus, it is best to apply online and wait to transfer balances, so that you can make sure you get a 0% APR for the length of time you desired.
People who pay their bills in full every month don't need to be concerned as much about interest rates as those who carry balances, since they won't be paying interest anyhow. For these individuals, choosing the best credit card comes down to choosing the best rewards program.
With credit card rewards, the main issue to consider is whether or not to pay an annual fee. If you spend $50,000 a year on your credit cards, paying an annual fee of $150 may be worthwhile, as you will earn close to $500 in rewards. Plus, paying an annual fee may entitle you to better rewards or rewards that provide more lucrative incentives. For most consumers, however, choosing the best credit card ultimately comes down to striking the right balance between low interest rates, quality no annual fee rewards, and money saving 0% rates. |
