3 Tips for Choosing a Credit Card


Choosing the right credit card can be a big step in managing your finances. Our “friends across the pond” put together a great article to get you started, but not everything applies directly to credit cards in the USA. We’ve put together our own set of tips here to help you think through the process and figure out what might be the best credit card for your needs.

Figure out how you intend to use your credit card.

There are generally two scenarios:

  • Make all purchases on your credit card and pay off the entire balance each month.
  • Spread out the cost of a large (or emergency) purchase by making monthly payments plus interest.
  • If you pay off your balance in full every month, your interest rate may not be as important as the incentives offered by the card issuer, such as:
  1. Travel points
  2. Cash back
  3. Loyalty points or rewards
  4. Discounts or Gift Cards for some purchases or at some retail outlets
  5. Insurance and other benefits
  6. Annual fees

In the second scenario, other considerations may be more important, such as:

  • Annual Percentage Rate (APR) – This is the interest rate you pay on the portion of the balance that remains on your card after you make your monthly payment (if you don’t pay your balance off in full).
  • Introductory Interest Rates – To get your business, some credit card companies will offer a lower interest rate (or no interest) at the beginning, then transition you to their regular, higher interest rate after a certain period of time. This is especially popular for balance transfers, which means you use this new credit card to pay off an old credit card.
  • Minimum Payment – What is the minimum amount you have to pay each month without additional penalty? Minimum payment amounts are usually a percentage of the outstanding balance on the card or a flat dollar amount. For example, a minimum payment might be 2% of the outstanding balance or $15, whichever is greater.
  • Annual fees – Some credit cards charge an annual fee. SBCP has no annual fee on either credit card we offer: Classic or Platinum.
  • Charges for late fees or going over your credit limit – Each card will have its own policy for additional charges for things like paying late or going over your credit limit.

Compare the features that are most important to you.

On the back side of most credit card statements is a Summary Box with standard information about the card for comparison purposes. Items listed for comparison should include:

  • Details on any introductory rates or interest-free periods
  • Annual fees
  • Charges for late payment or going over your limit
  • Minimum payment expectations
  • Rewards and bonuses

Do your research if your credit card application gets denied.

Your application for credit may be denied for a variety of reasons, including:

  • Bad credit score (watch this video to understand your credit score better)
  • Not a long enough employment history
  • A short credit history
  • Applied for lots of credit recently (mortgage, car loan, other credit cards, etc.)
  • Recent late payments on bills or other credit
You can ask what factors played into the decision to reject your credit application and take steps to improve those areas of your application.

Remember, we’re here if you need help. Call your local State Bank of Cross Plains office with questions or visit our  to learn more about credit cards and your credit score.

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