5 Things to Look for When Choosing Your First Credit Card

Person at laptop with credit card

Do you ever feel like choosing the best credit card can be tough? From interest rates and transaction fees, to benefits and rewards, there’s a lot to think about. But don’t let those factors get in the way; if you know what you’re looking for, picking out your first credit card can be quick and easy.

The Navy Federal More Rewards American Express® Card offers up to three times the points on these types of select purchases and rewards never expire while your account is open.

If you’re a service member who finds it difficult to determine which plastic best fits your lifestyle, here’s what you should be looking for:

1) Know Your Spending Style. First, assess your own spending habits. Where are you spending the most money – is it on gas, dinning out or groceries? If so, then pick a card that offers discounts or rewards for shopping at the places you visit every day.

2) The Cost of Credit Cards. When applying for credit cards, you’ll frequently see the letters “APR.” For credit cards, interest rates are typically expressed as a yearly rate, or the annual percentage rate (APR). For example, a credit card company might charge 12 percent APR, what that really means is they’re charging one percent per month, but the APR is one percent x 12 months, which is where you get the 12 percent.

Beyond APR, keep in mind those pesky foreign transaction fees that some credit cards carry. If you travel often, or are likely to experience deployment, we recommend eliminating foreign transaction fees (which can be as high as 3 percent) altogether.

3) Reward Yourself. There’s a common misconception that you have to spend more to reap the benefits of your card’s rewards. If you find yourself seeing rewards like “for every $5,000 you spend, you’ll get $50 back,” walk away. Rewards programs should be easy to understand and – as the name suggests – actually reward you. Finding the right program may take some research.

4) Credit Limits Are Key. A credit limit is the amount of money that the credit card issuer will let you borrow. This is essentially the absolute maximum that can be charged to a credit card.

Credit limits can span from a few hundred to tens of thousands of dollars and issuers have the right to alter your limit as they see fit. The size of a credit limit and how much of it has been used, have a large influence on credit scores, so seek a credit limit that suits your budget and spending habits.

Spend accordingly and make sure you’re only charging what you can pay back.

5) Trust Where You Bank. When looking at financial products or services, make sure it’s with a financial institution you can trust and count on. A credit union is a great place to start. They’re member owned, make member service their top priority, and typically have better interest rates than banks.

These days, rewards credit cards can cater to any specific lifestyle, but how you spend and how you want to be rewarded should be top of mind. By following these steps you’ll know what to look for, what to avoid and how to spot the good cards from the not-so-good cards.

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