How to Choose a Credit Card

There are hundreds of different credit cards out there all with different benefits and drawbacks.  Because of all of these options, choosing the right credit card for your specific needs becomes extremely difficult, especially if you don’t know what you want or need out of a credit.

But we are here to help you make this crucial decision.

Credit cards differ in many ways, so you will have to look at each of the possible factors before you can make your decision.

Annual Rate

An annual rate is how much you pay for the credit card every year.  This charge is completely separate from any charges that you get from making purchases.  This annual rate is simply for having (not even using) the credit card.

The annual rate is not standard on all credit cards, but some of the more “premium” cards do institute this rate.  But that is not to say that just because a card has an annual rate that it is a better card than one without an annual rate.  All that this means is that the credit card company can charge an annual rate.

Initial APR

The initial APR is the annual percentage rate for the first six to eighteen months of activating the credit card.  The APR refers to the interest that you would pay on late payments.

To entice customers, credit card companies will make this initial APR rather low, making it seem like the penalties for late payments are minimal and are really nothing to worry about.  But in reality, the initial APR expires and turns into the real APR.

Ongoing APR

The ongoing APR is usually much higher than the initial APR.  Once the initial APR ends, the ongoing APR kicks in.  Because money for any financial institutions works constantly meaning that money is being invested and reinvested on a regular basis, late payments are money that the financial institution cannot make more money off of, so they discourage it as much as possible.

This discouragement comes in the form of a very high ARP.  But if you pay your credit card bill in full every month, you don’t need to worry about the APR.  It only applies to late payments.


Rewards are the most fun part of having a credit card and are often the point of using a credit card if you don’t need the credit.  This is where many cards will differ and how most credit card users will choose their credit cards.

Rewards come in a few different forms: cash back, airplane miles, and points.

Cash back is indeed the most useful because cash can be used on anything, but cash back is usually pretty small, somewhere between one and three percent, often depending on the type of purchase.

Airplane miles can be quite large and are obviously good for anyone who travels frequently.  These will often only work for one airline as credit card companies will partner with individual airlines for promotions.

Points are each credit card company’s personal way of rewarding their customers.  Points can be used to pay for things in their catalog of items which often includes luxuries like electronics and concert tickets.

Now that you understand all the ways that credit cards can differ, you are fully equipped to make an informed decision regarding what card is best for you.

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