How To Find The Best Credit Card For Your Lifestyle
The world of credit cards is bigger than it’s ever been. The options are almost endless, which can make the entire process of picking one seriously overwhelming. Between 2 percent cash back on everything and 100,000 airline miles just for signing up, which one has the best credit card perks for your lifestyle?
According to Matt Schulz, chief industry analyst at CompareCards by LendingTree, sometimes the oldest advice is the best when picking out a credit card.
“It’s really about knowing yourself,” Schulz told Swirled. “When you’re looking for a card, you want to ask yourself how you intend to use the card and what you want to get from it. Once you know those answers, then you can go about finding a card that fits your lifestyle best.”
Schulz hit the nail on the head with this one.
I’d been talking about getting a new credit card for a long time, and finally decided to take the plunge. I wanted a new credit card that would allow me to rack up travel rewards. Even though I don’t travel often, when I do, I want to save money (who doesn’t?). But, when I started my search, the list of credit card options was overwhelming.
“There are many, many, many options out there and it can be confusing to know what’s what and what’s the right card,” Schulz said. “It’s really important to take the time to understand your own spending and your own financial situation before you apply.”
If you spend a lot of money on gas or groceries, eat out or travel a lot, or have bad credit or no credit at all, Schulz said there’s a card for you. According to WalletHub, the average credit card interest rate on a new card is 19.24 percent, so keep in mind that if you don’t pay the card off in full every month, you could get hit with that fee. Just take your time looking for the right one. Otherwise, you could end up in debt or might not take full advantage of the credit card perks that are offered.
A few credit card options to consider include student, low balance, cash back, hotel and airline rewards, gas points and general rewards points.
After thinking about my own lifestyle, I realized that I don’t fly often, but I do stay in hotels. So I signed up for the American Express Hilton Honors Ascend Card, which allows me to rack up hotel points. I chose this card because it came with a 100,000-point bonus for signing up and spending $3,000 in the first three months. Plus, I was already a Hilton Honors member. I call that a win-win.
Crazy About Credit Card Perks
Once I got the new card in the mail, I was hooked. I changed all of my automated payments over to the new credit card so I could rack up hotel points. I missed out on so many years of perks. Now, I’m not going to lie, it’s challenging to not open more credit cards when I see the perks.
“Generally, it’s really important to not apply for too much credit at a single time,” Schulz said. “It’s okay to apply for a handful of cards over the course of a year, but you definitely don’t want to apply for too many over the span of a few weeks or a month.”
Schulz recommends that, if you want to get multiple credit cards, your best move is to apply for one card and then use it for three to four months before applying for the next one.
“Part of why this is useful is that if your new card comes with a signup bonus, it probably also comes with a minimum amount of money that you have to spend to get that signup bonus,” Schulz said. By keeping it to one card, Schulz said you can focus all of your spending and efforts there, rather than spreading your spending across multiple cards, which can get you in trouble.
Managing and Boosting Your Credit Like a Boss
If you do want multiple credit cards with perks, be sure to manage them wisely. Make your payments in full and on time every month so that you don’t fall into debt. Don’t use all of your available credit either. A simple rule of thumb is to utilize no more than 30 percent of your total available credit across all of your cards in a month.
“Ultimately, you want to get that utilization rate as close to zero as possible, but you certainly don’t want to have it be above 30 percent,” Schulz said.
For example, if you have two credit cards with limits of $5,000 on each, your total available credit is $10,000. You’ll want to only spend up to 30 percent of that $10,000, which is $3,000. If you find you’re over 30 percent, Schulz said there are things you can do to change that.
“Obviously, the first thing you’d want to do is pay those balances down,” he said. “But you can also impact the other side of the equation by getting more available credit on those cards, because that can shift your utilization rate, too. If you get extra available credit, you want to make sure you’re not just going to use that as an excuse to go crazy spending [money]. If you get extra available credit and you handle it wisely, it can actually have a really positive impact on your credit score.”
If you’re someone with little credit experience, it’s important to understand how boosting your credit score can impact all other areas of your financial life. And the easiest (and most fun) way to increase your score? Credit cards with perks. Pay off the balance every month and rack up those rewards that work for your lifestyle.
“It’s the kind of thing where if you manage your spending and you handle those points cautiously and mindfully, then you really can make it work for you and get some real value out of those rewards programs,” Schulz said.
Trust me, it pays off. I just booked a night in Nashville for my boyfriend and me, using only points to pay for the hotel room. I’m conscious of the amount I spent to achieve that, but I also understand that if I use this new credit card wisely — paying it off on time and in full every month — I’ll be able to rack up a serious amount of hotel points before I know it, allowing me to stress less about my credit and more about where my next trip will take me. You can do the same, just focus on finding the best credit card perks for your lifestyle.
Sign up for Savvy Saver by Swirled, our newsletter featuring budget hacks and important (yet fun) financial info. Saving money just makes cents!
Sign up for our newsletter.
Say hello to the best part of your day.