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It is just so easy to plunk down the plastic for purchases — too easy — when we feel like eating out or nabbing a new pair of shoes. Just so you know, I’m not here to advocate using credit cards so you can live the high life. But there are times then 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 to avoid 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: Capital One® Quicksilver® Cash Rewards
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 a $150 cash bonus after you spend $500 with this card within the first three months.
- Get unlimited 1.5% cash back on all purchases made with this card.
- 0% APR on purchases for the first 15 months
- No annual fee
- No foreign transaction fees
Note: This card has a fee of 3% of balances transferred within the first 15 months.
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 also 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 the chance to build a reputation as responsible credit customers. It 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 your balance on this card each month as you build up your credit to avoid paying an increased interest rate.
3. You want to travel, but you’re not collecting rewards
If you love to travel and you’re not using a credit card that offers points, you’re 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: Capital One Venture® Rewards
Why we like it: This card offers a hefty welcome bonus of 50,000 miles after you spend $3,000 within your first three months with the account. You earn 2x miles for every dollar spent on the card. So long as you are paying off your card each month (since paying interest on a balance is obviously counterproductive), you can rack up serious mileage for all your adventures.
- Earn 2x miles for every dollar spent on this card, every day.
- No blackout dates when you travel.
- Points transfer to more than a dozen hotel and airline loyalty programs.
- Pay no foreign transaction fees.
- No annual fee for the first year, then $95 per year.
We also recommend: Chase Sapphire Preferred®
Why it’s fabulous: This highly rated travel card racks up 60,000 bonus points after you use it for $4,000 worth of purchases within the first three months of opening the account. 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 foreign transaction fees
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 Rakuten (formerly called 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 (yes, again): Capital One® Quicksilver® Cash Rewards
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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