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It is just so easy to plunk down the plastic. My weakness is expensive shoes! You likely have your own — maybe eating out or hitting the clubs. Just so you know, I’m not here to advocate using credit cards so you can live the high life. But there are times when getting a new credit card is a smart move and can improve your financial outlook. Here are some of them, with recommendations on cards that fit each specific situation:
1. You’re paying high interest on another card balance
If you have a large balance on an existing card that carries a ridiculous interest rate — they can run as high as 27% — that means you could be paying $30, $40, even $100 or more a month in interest alone because you don’t have the funds to pay off your balance right away.
We can discuss how not to end up with this problem in the future or deal with an extreme debt crisis — more on that below — but many times a new credit card actually can help you out in this situation. Find one that charges 0% interest on balance transfers for a long introductory period — sometimes they run as long as 18 months. Transfer your balance from the high-interest card to the new card charging 0%, and then — this is critical — pay it off before the grace period ends.
We recommend: Chase Freedom Unlimited
Why we like it: This card has a generous 15-month introductory period during which you pay 0% APR on your transferred balance. That gives you some breathing room while you’re paying it down.
- Get 3% cash back for all purchases made on this card within the first year, up to $20,000 spent.
- After that, you’ll get 1.5% cash back on everything you purchase on this card.
- $0 annual fee
Note: This card has fee of 3% on the balance transferred or a $5 minimum.
If your debt seems out of control, you may not be able to pay off your balances within the grace period. If that’s the case, our Solutions Center can connect with a free credit counselor who can help you.
2. You’re starting out and need to build credit
No one is born with credit, but it’s hard to live in our world without it. So at some point — often when you are college students or young adults — it’s important to get a credit card. It’s not just a convenience for purchases, but a way to build up your credit history. To help with this task, there are cards specifically designed for people with little or no credit history.
We recommend: Journey Student Rewards from Capital One
Why it’s good: This card offers people with “average/fair/limited” credit to build a reputation as a responsible credit customer. The card gives you 1% cash back on all purchases. However, making your monthly payment on time will get you a higher cash-back rate — 1.25% — for that month. And there’s no annual fee.
Note: In what could be considered an extra incentive to help you become a responsible credit user, this card has a relatively high interest rate on unpaid balances. So it’s critical that you pay off this card each month as you build up your credit to avoid paying an increased interest rate on your balance.
3. You want to travel, but you’re not collecting rewards
If you love to travel and you’re not using points, you are leaving money on the table — think free hotel nights, free flights and upgrades. Your goal should be to obtain the best travel rewards card with the most flexible travel rewards program.
We recommend: Chase Sapphire Preferred
Why it’s fabulous: This highly rated travel card racks up 60,000 reward points after you use it for $4,000 worth of purchases within the first three months of opening the account, and redeeming the points you earn is easy through this card’s super flexible program.
- Earn 2 points for each $1 spent on travel and dining at restaurants worldwide and 1 point per $1 spent on other purchases.
- Points transfer 1:1 to other leading hotel and airline loyalty programs. And, if you redeem through the Chase Ultimate Rewards program, you get 25% more value — for example, 60,000 points are worth $750 for travel.
- No blackout dates or travel restrictions when you book through Chase Ultimate Rewards.
Note: $95 annual fee
4. You shun credit cards because you’re frugal
If you are super cautious with your money, you may think using credit cards is just a bad idea. You probably already use Ebates and other cash-back sites as well as discount gift cards and high-yield savings accounts. But if you’re conscientious about money, then you could also get an awesome cash-back credit card — which you would certainly pay off each month — and save even more on everything from gas and groceries to flights and eating out.
We suggest: Capital One Quicksilver Cash Rewards Card
Why we like it: Most cash-back cards give you 1% back on purchases; This card gives you 1.5% cash back. That’s 50% more free money. It also gives you a cash bonus, and you only have to spend $500 within the first three months to get it. Finally, there’s no annual fee.
- Earn unlimited 1.5% cash back on every purchase.
- Get a $150 cash bonus after you spend $500 on purchases within your first three months.
- 0% percent APR on purchases for the first 15 months
- No annual fee
- No foreign transaction fee
What’s your strategy with credit cards? Share with us in comments below or on our Facebook page.
Whatever you need in a credit card — whether it’s reward points, cash back or a low interest rate — you can find it with our credit card search tool. Click here to search for the plastic that best fits your needs.
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