5 Questions Every Millennial Should Ask Before Choosing a Credit Card
Business Solutions Before splurging on your next big music festival, here are some thoughts to consider when deciding on a credit card program in 2016.
1. How does my credit look?
You’re unlikely to qualify for the best offers if you’ve never had a credit card or a loan before, or if your credit report reveals problems. Review your credit reports; you can get them for free at AnnualCreditReport.com. And check your FICO score to see where you stand before applying.
Then choose a card that fits your credit score. There are great cards available for people with excellent, good or even fair credit.
2. Do I plan on carrying a balance?
Credit card rewards can be enticing, but reward cards typically carry higher interest rates. If you’re paying interest every month, you’re likely canceling out any rewards you earn. If you don’t think you’ll be able to pay off your balance in full each month, look for a credit card with a low, ongoing interest rate. If you plan to never carry a balance, however, the rate doesn’t matter as much.
3. What are the fees?
Even if you don’t plan on paying interest, your credit card can still cost you in fees. When comparing cards, pay special attention to annual fees, as well as fees for late payments. Also look out for fees for things such as balance transfers, cash advances and transactions outside the U.S. If you don’t plan on using your card for any of those things, those fees aren’t as important.
4. Where do I spend the most money?
Different credit cards offer bonus rewards on certain spending categories (such as groceries, gas or travel). Take a look at your spending to see where the bulk of your money goes. Then search for a card that rewards you for doing something you already do.
5. What kind of rewards or perks do I want?
Depending on your interests, you’ll find that some credit cards offer more rewards and benefits better suited for you. For example, if you frequently fly with a certain airline, you may get perks such as priority boarding or free checked bags with that airline’s credit card. Other cards’ rewards programs may be better for gift cards, merchandise or even simple cash back.