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Picking the Right Credit Card for You

Finding the right credit card isn’t as easy as filling out the first application you get in the mail—or at least it shouldn’t be. The right credit card for you depends on various factors, including your credit score, your spending habits, and your benefit preferences. Shopping around and comparing offers before applying can help you find the best card for your needs, while making sure you’re not paying higher interest rates and unnecessary fees. 


Questions to Ask Yourself

First, determine why you want or need a credit card and how you plan to use it every month.

  • Do you plan to pay off your balances in full and on time every month?
  • If not, how many months will you spread repayment over?
  • Are you looking to transfer the balance of another credit card?
  • Are you primarily interested in maximizing rewards?
  • Do you want to use a credit card to build or repair your credit?
  • Do you shop primarily at one store?

These answers can help you get the maximum benefit from your credit card at the lowest cost to you.


Types of Credit Cards

Credit cards aren’t one-size-fits-all. There are different categories of credit cards, and each one works differently from the rest.

Traditional Credit Cards

The most basic credit cards are those that operate on one of the four major international networks: Mastercard, Visa, American Express, and Discover. The network determines where your card is accepted, so choose one that your preferred retailers accept. 

Visa and Mastercard use a separate card issuer, such as a bank or credit union, while American Express and Discover are both the network and issuer. The details of how your credit card works, like interest, fees, and rewards, are set by the issuer, not the network.

No matter the network, all traditional credit cards have spending limits based on your credit history. You can pay your bill in full every month or carry a balance and pay what you owe over time, which accrues interest. Failing to pay at least the minimum monthly payments can lead to late fees and damage your credit score. 

Charge Cards

Charge cards are a type of credit card but require full payment each month, unlike traditional credit cards. They typically have no preset spending limit, often charge an annual fee, and are less widely offered.

Missing a full payment on your charge card can lead to card closure and fees. Charge cards are generally only available to those with excellent credit.

Secured Cards

Sometimes called credit-builder cards, secured credit cards require a deposit with the issuing bank or credit union that is equal to your spending limit. This is how the card issuer minimizes the risk of giving a credit card to someone with little to no credit.

If you miss payments, the issuer can withdraw from your deposit. Consistently making on-time payments helps improve your credit rating and can lead to qualifying for a traditional credit card. 

Cosponsored Cards

Financial institutions often team up with companies like airlines or retailers to offer cosponsored cards through major networks. The card issuer (usually a bank or credit union) handles the billing, while the partner provides the perks, like travel points or cashback.

These cards typically feature generous sign-up bonuses and ongoing rewards, but may require substantial spending before reaping any major benefits. Additionally, these cards often come with annual fees and higher interest rates.


Why Interest Matters

If you pay your credit card balance in full each month, the APR isn’t as important. But if you carry a balance, the APR is a primary factor in deciding between cards. Some cards offer low or no interest for a limited time before higher rates apply.

Looking at the APR helps you compare cards fairly and gives a clear, apples-to-apples view of costs.

Keep in mind that there are variable rates and fixed rates. Variable APRs change more often, while fixed APRs are steadier and come with advance notice before changes take place.


Know Your Terms

  • Annual fee: A flat rate charged for yearly use of a credit card. Some cards charge no annual fee, others range from $25 to thousands. 
  • Annual percentage rate (APR): The yearly interest charged on borrowed money, which is key when comparing card costs.
  • Finance charge: The monthly cost of borrowing based on your balance, term, and APR, which is applied every month you do not pay your balance off in full.
  • Grace period: The number of days you have to pay your bill before a finance charge applies. 
  • Late payment fee: The fee charged if you don’t pay the minimum payment by the due date.
  • Minimum payment: The lowest amount you must pay by the due date to avoid late payment fees.


Don't Forget to Shop ECU's Credit Card Options

And, while you’re comparing various credit card offerings, don’t forget to check out ECU’s Visa® Credit Cards that are designed with you in mind. With low fixed and variable rate options, no annual fees, no balance transfer fees, options to earn rewards and cash back, and so much more, you’ll be sure to find the right credit card for you at ECU!

Ready to find the best fit for you? Click here to learn more and apply today!