Find the right credit card to suit your needs

Find the right credit card to suit your needs

Do you really need to have a credit card? Chances are, the answer is probably yes. After all, there are a lot of times when a credit card may be essential, or at least, incredibly convenient. For instance, you typically need a credit card to book a hotel room, reserve a rental car or make a purchase online. And even if you don't do any of those things frequently, you might want to consider keeping a credit card for emergencies. You may also want to use at least one credit card on a regular basis in order to keep current or build your credit history in case you want to take out a loan for a home or car. So, now you know that you probably would benefit from having a credit card. But, where do you go from here?

Keep an eye on your interest rate

Even though you should aim to pay your credit card off in full each month, we all know that things happen. That's why it's important to take the time to find a credit card with the lowest interest rate for which you can qualify. According to Smart Credit, you can, in fact, shop around for the best interest rate. President of Consumer Education for Smart Credit, John Ulzheimer, suggests that consumers use credit card comparison sites to their advantage. "You can compare cards to each other based on things like rewards, fees and interest rates," said Ulzheimer. "You can do all of this without applying for any of them." If you're looking for a place to get started, sites like WisePiggy.com provide consumers with an opportunity to do just that.

Know your fees and limits

When you decide to apply for a credit card, it's important to take the time to read the fine print. When you do, you may find that the card you want has an annual fee. Paying an annual fee usually makes sense for a very select group -- often frequent travelers or those who are sure to exceed the amount of the fee with the benefits of the card. It's also important to know what other potential fees may crop up if you make a late payment or go over your limit. Furthermore, making a late payment can also cause your interest rate to go up as well. In order to protect yourself, it's important to educate yourself about any potential fees or penalties associated with your new card. That way, you can avoid them.

Don't forget rewards and benefits

Many credit cards have rolled out generous rewards programs to lure new customers into signing up for their card. Of course, specific benefits can vary depending on the credit card you choose. While some credit cards are geared toward individuals who want points or credits for travel, others offer statement credits, gift cards or gifts. Additionally, many credit cards provide other services and benefits that make them a wise tool for specific purchases. For instance, some cards offer insurance on rental cars, travel insurance, damage and theft protection and extended warranties. In many cases, using a credit card can provide you with a variety of benefits that using cash just can't deliver.

Decide how many cards you need

Once you understand the potential benefits of having a credit card, you might be tempted to get more than one. According to Smart Credit, that isn't always a bad idea. Apparently, how you are utilizing your cards is much more important than how many cards you actually have in your wallet. According to John Ulzheimer, most credit score experts believe that consumers should only utilize 10 percent of their available credit regardless of how many credit cards they have. What this means is this: whether you have one card or four, you should focus on only using 10 percent of your available credit at any given time. But, be careful: applying for too many credit cards can negatively impact your score. Therefore, you should always use your best judgment before applying for a new card and only apply for a new card when it's beneficial or necessary. Smart Credit may have said it best: "As a rule of thumb, you shouldn't apply for credit unless you really need it."

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