Finding the Right Credit Card for You

What are the factors to consider when choosing a credit card?

With so many credit cards available, it’s not surprising that careful thought is required to decide which one to select. Here are some factors to consider when choosing the card that suits you best.

Many millennials have a cautious attitude towards credit, perhaps due to large student loans. Nonetheless, the right credit card, responsibly managed, can provide you with beneficial perks. Even if you have no credit history, most people can qualify for some kind of credit card.

Your first card might be basic. If you have no credit history or a low credit score, your first card will probably offer few frills and a modest credit limit. The good news is that there are cards that match this description and charge no annual fee. You can use your first card to establish your creditworthiness by making timely payments.

Cash back, points, or miles? Many cards offer rewards when used to make purchases. Cash back cards offer cold hard cash, the most versatile reward. You’ll find cards that offer 3% to 5% back (or more) on selected purchases and at least 1% cash back on all other purchases. If you like to travel, you might consider cards that offer frequent flier miles on one or more airlines. The third type of reward, points, can be exchanged for cash or miles or can be used to purchase selected items directly.

Cards compete by offering introductory bonuses to new members. Some cards may offer to pay you a lump-sum bonus if you use your card for a set amount of purchases in the first few months after opening the account. You might also be offered an introductory period of 0% interest on purchases and balance transfers. The period might run from 6 to 18 months. After that, you’ll be assessed interest at a specified annual percentage rate (APR) on any remaining balance that you don’t fully pay by the due date for the current billing cycle.

Understand all the card’s features. Some cards offer high bonus rewards on purchases from selected types of merchants, and some of these cards rotate the merchant type each quarter. If you accept a card with rotating merchants, remember to activate your participation each quarter if you want to earn the high rewards. Some cards that charge an annual fee will waive it for the first year. Annual fees might range from $49 to $500 or more. Cards can offer all types of benefits, such as free car rental insurance and free baggage check-in. Read all the fine print before choosing which card to get.

Your credit card usage should fit into your savings and investment plans. It’s important to avoid chronic large credit card balances that compromise your ability to save for your retirement. But it’s also important to establish a positive credit history. Call or email me today to review your savings and investment plans. Together, we can refine your monthly budget to accommodate credit cards without shortchanging your important financial goals.

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This material was prepared by LPL Financial, LLC.

This material is for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separately from this educational material.

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If you have questions about your retirement account or overall financial situation, please contact:

Christopher W. Lowe, CFP®

Financial Advisor

4030 Sunset Road | San Diego, CA 92103

(323) 842-LOWE (5693) | christopher.lowe@lpl.com

Christopher W. Lowe, CFP® is a Registered Representative with, and securities offered through LPL Financial, Member FINRA/SIPC.  Investment advice offered through Independent Advisor Alliance, a registered investment advisor. Independent Advisor Alliance and CWL Wealth Management and Red Envelope Wealth Management are separate entities from LPL Financial.

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