When it comes to choosing credit cards, there are a lot of options to consider, and it can be an overwhelming process. With so many offers boasting up front rewards and discounts and other incentives, it can be hard to determine which offer is best for you and your unique financial situation. Two of the biggest factors to consider are interest rates tacked onto the card, along with the rewards the specific card comes with. Today, we’re going to break down the benefits of each, and when it’s best to use both.
One of, if not the first, things to consider when applying for credit card offers is the interest rate. This is a major factor, because if not managed properly, you can end up in credit card debt in no time. That’s why you have to determine whether or not you plan on carrying a balance on your card before deciding on one. If you are planning on carrying a balance, you need to look for an offer that has a 0% or low APR rate as opposed to great cashback rewards. However, if you don’t plan on keeping a balance on your card, the APR rate (although still important) shouldn’t be as significant of a factor to consider.
As a quick side note, it’s also important to note that many cards offer a 0% APR rate up front for a promotional period for balance transfers and/or purchases; be careful to read the fine print on offers like this. If you’re planning to make a large one-time purchase with a credit card, this can be a good strategy to employ if you can pay off your balance before the promotional period expires.
Cashback rewards are another major factor that should influence your decision when it comes to credit card offers. Stores offer cashback offers and discounts on select purchases, while others offer travel rewards, to name a few. While important, these kinds of rewards should really only be considered if you plan on paying off your balance each and every month. If you plan on keeping a balance due to a large one-time payment, rewards will do you no good. If all you end up doing is paying off your balance, you won’t accrue enough rewards to be of any significant benefit in the long term.
These two factors are important to consider in conjunction with what you intend on using the card in question for. It’s all about being strategic and intentional about your decision; don’t ever agree to a credit card offer that you haven’t adequately prepared for or researched. That’s where it can get dangerous for your overall financial health. Don’t let an attractive up-front offer or discount trap you into a long-term credit agreement that you won’t want to be in months down the line. Your credit should be working for you, not the other way around.