How to Pick Between Two Credit Cards

With the variety of different credit card options out there, it can get quite confusing at times which cards are even worth applying for. In our opinion, we believe the best credit card for you largely depends on both your past and future spending habits, any upcoming expenses, and how you plan to use the credit card. For example, if you’re looking to do a ton of holiday shopping in the next few months, it makes a lot more sense to go for a cash back or rewards credit card rather than a secured credit card. Below, we have gone over some of the common factors that help you easily differentiate two credit cards.

Common Differentiators

A factor that can easily help you differentiate two credit cards is its annual fee. This is one of the most important numbers to consider when deciding between credit cards. If an annual hundred dollar fee is too much for your bank account, it’s much wiser to go with the card with a lower or zero annual fee. Similarly, if you don’t think you can pay off your bill every month, the card with a lower purchase APR is a better investment. Nowadays, many credit cards offer an introductory discounted annual fee and APR for the first year.

It’s also common with higher tier credit cards to offer a welcome bonus as well. Some cards allow you to redeem this welcome bonus for cash or other rewards. For example, the Chase Sapphire Preferred card offers 60,000 points after you spend $4,000 within the first 3 months.

Annual fees, APR, and bonuses are some of the more well-known numbers to look at when picking between two credit cards. It’s important to note that most beginner cards won’t have any annual fees or bonuses, and APR usually depends on your credit score.

If you’re comparing two cash back or rewards credit cards, it’s important to look at more than just the general rewards rate. The more flexible the rate is, the more places you can use the card to earn points or cash back. For example, a card that only offers 5% cash back on dining may sound good on paper, but is severely limiting where you can earn cash back. A better card would be one that offers 3% cash back on dining, 2% on gas, and 1% everywhere else. The more places the card allows you to earn points or cash back, the easier it is to rack up rewards.

Other Extras

Many cards also come with other valuable extras that can give them the edge over other credit cards. Some common extras that you should be looking for are purchase protection and zero fraud liability. Other useful benefits that can be helpful to certain consumers are purchase protection, auto rental collision damage waiver, and extended warranties. Depending on what you are looking to use the credit card for, these extra benefits can make a world of a difference and make the card a lot more useful to you. 

Conclusion

When looking at credit cards, it’s important first to figure out what type of card you need, whether it be a travel card, cash back, secured, and so on. Once you’ve narrowed down the list, the more obscure numbers are important to compare in order to truly figure out what card is most beneficial for your spending habits. Annual fees, interest rates, and other benefits can heavily differentiate two similar-looking credit cards.