Getting your first credit card can be exciting and a huge milestone at the same time. Having a credit card will also mean making some adjustments as you need to know how to handle a credit card responsibly. Therefore, it’s imperative to understand every detail before diving in to save on money and build good credit within a short time.
Credit card companies primarily make their money through annual fees, interest charges that rack up if you fail to pay your bill in full, and interchange fees that accumulate every time you swipe your card. Annual fees reflect on your credit card statement at the end of the month, and you are required to pay the annual fee the same month you sign up and then 12 months after that.
Just like in any other purchase, you always want to get the best out of every purchase. If you choose reward credit cards, expect to check up points or miles for cash back, free travel, or merchandise every time you swipe your card. However, the bigger the perks, the higher the annual fees.
Choosing the right credit card can be overwhelming. The many options in the market further make it hard to know what would work for you. Reward cards can potentially help you stretch your budget offer cashback, airline miles, or hotel points, among other benefits.
Furthermore, getting the best of these cards depends on your accuracy in choosing the right one, your discipline in paying off your monthly balance, and maximizing rewards with redemption choices.
To apply for a rewards credit card, you need to have good credit because most reward cards require good credit scores except for a few exceptions. You also need to make sure that you don’t carry any balance.
Recurring balances can cancel out the interest you accumulate out the value of your interests.
A rewards card is a better option if you travel a lot. Your regular travel spending can earn you points towards your next trip if you are loyal to a particular airline or hotel or spend more on specific items such as groceries, restaurants, or gas.
Credit cards can offer you luxurious travel benefits such as hotel room upgrades, elite status, access to airport priority lanes, and admission to airport lounges.
As your travel habits keep changing, you may find some benefits more valuable than the rest, depending on the budgets you choose to work with. COVID-19 interrupted most travels, and while you might not have traveled enough in 2021, you might still not be sure of what 2022 travel will look like.
When applying for a new credit card, the travel credit card benefits you need to look for include: travel insurance which can cover cancellations, rental car insurance to cover costs of damage or theft, and flexible cancellation policies when redeeming award travel.
As you travel, overspending is unavoidable. The excitement and the mentality of doing it once in a while can get you into spending on things during your last days of vacations just to keep fun going. The duty-free shopping, clothing, and other trip-related expenditures can lead to you returning home to higher credit card bills.
Even in normal situations, unexpected expenses can never be avoided. Some of the benefits of an online payday loans include helping you keep the fun going and earn additional cash in a short amount of time.
Earning a Sign-Up Bonus
There are popular credit cards that offer welcome bonuses. Sign-up bonuses are the easiest way to earn extra rewards during your first months of opening an account, and you’ll be required to meet a certain spending requirement to earn the bonus.
Spending requirements range from $500 to $5,000 within the first three months of credit card sign-up. Therefore, you should consider your budget to earn a good bonus and be able to pay off the balance on time and in full.
The good news is that few cards waive spending requirements and will reward you with a bonus once your account is approved or once you make your first purchase.
Are Credit Cards with Annual Fees Worth Paying?
There are several credit cards in the market with tempting perks. Credit cards with annual fees are worth it, but not for everyone.
To help you figure out if this will be the right move for you, consider: how you are managing the credit cards you currently have, see if the perks will make sense to you, whether the perks need you to change your lifestyle, or if you will get value back when paying the annual fee.