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It is just so easy to plunk down the plastic for purchases — too easy — when we feel like ordering takeout 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 when getting a new credit card is a smart move and can improve your financial outlook. Here are some of them, and our favorite cards for each right now.
1. You’re paying 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% — you are bleeding your budget.
We can discuss how to avoid this problem in the future or deal with an extreme debt crisis — more on that below — but sometimes a new credit card actually can help you out of this situation. Find one that charges 0% interest on balance transfers for a long introductory period. 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: Citi® Diamond Preferred® Card
This card gives you a whopping 18-month runway with a 0% APR to pay off balance transfers from other cards.
How it works: You pay a fee — $5 or 3% of the balance, whichever is greater — to transfer your balance from a card that is charging high interest, and then you get a 18-month introductory period at 0% APR to pay off that balance. That means, as of publication, you have until November 2021 at 0% interest. You can save a bundle if you are determined to pay down that balance during the grace period.
Note: After that introductory period, your interest rate will jump up to somewhere between 14.74% and 24.74%, depending on your credit score. So remember, the goal is to have no balance or a small balance by that time.
- Pay 0% APR on purchases on this card made in the first 18 months.
- No annual fee
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 dream of travel, but you’re not earning 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. Yes, we recognize that for most people right now, travel is limited due to COVID-19, but that just means it’s a good time to pile up rewards that you can use when it becomes safe to wander again.
We recommend: Chase Sapphire Preferred® Card
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, and they’ve added perks on food deliveries during this stay-at-home period.
- 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.
- Earn 5X points on Lyft rides through March 2022
- Get big discounts from DoorDash food deliveries for a year or more.
- No foreign transaction fees
Note: $95 annual fee
3. 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 as a college student or young adult — 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: Netspend® Visa Prepaid Card
Strictly speaking, since it is prepaid, this is not a credit card. But by carrying it you can start to build your creditworthiness in the eyes of lenders.
- No annual fee
- No credit check
- Direct deposit feature
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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