**Special to The Just Word Blog from Barry Choi, a personal finance and travel expert at moneywehave.com**
If you’ve ever thought about getting a new (or your first) credit card, your head may have started spinning as soon as you began to do research. There are hundreds of credit cards available, and none of them are the same. Deciphering hieroglyphics may seem like an easier task than figuring out which is the right card for you.
Picking the right card does take some careful consideration. Instead of taking a recommendation from your bank or your friends, consider the following so you can make an informed decision.
What are your goals?
Before you dig deep into credit cards, think about what your goals are. Do you want to travel for less? Are you looking to save more money? Do you want to build your credit score? Are you trying to eliminate your debt? Based on your answers, you should be able to quickly narrow down your choices.
Someone who wants to get out of debt should take a look at low interest credit cards since many have a balance transfer option. This benefit allows you to move an existing balance over to the low interest credit card, which could have an interest rate as low as 0-4% for 6-12 months. If you focused on debt repayment during that promotional period, you could quickly reduce your debt.
For those looking to build or improve their credit score, a secured credit card may be the better option. Although these credit cards require you to put a security deposit on your card, the payments you make will be reported to the credit bureaus. Over time, your credit score will increase to a point where you can apply for a traditional card that offers better rewards.
Now, if you’re interested in travel or cash back rewards, it will require a bit more consideration.
What are your travel goals?
If travelling for cheap is your goal, then having one of the best travel credit cards in Canada will get you there. The problem is, there are still dozens of cards available with different loyalty programs, so you need to have a defined goal in mind.
Let’s say you want to redeem a business class ticket on Aeroplan in a few years. The natural start would be getting one of the best Aeroplan credit cards since you’ll earn points on all your purchases. Alternatively, you could consider the American Express Platinum Card as it comes with a generous sign up bonus, and your points can be transferred to Aeroplan.
For those who want the flexibility to be able to use their points for any type of travel or hotel stay, take a look at bank programs such as the Scotia Rewards, BMO Rewards or RBC Rewards. The rewards points you earn with these programs are flexible; although, they’re typically worth less than brand-specific programs such as the Marriott Bonvoy.
Where do you shop?
Many people prefer cash back credit cards since they’re easy to understand, but you still have a lot of choices. First off, you should think about where you spend the most money. Is it on groceries, gas, entertainment, the pharmacy or somewhere else? This is relevant because some credit cards will give you more cash back on specific spending categories. If you pick a card that lines up with your spending, you can put more money in your pocket.
For example, if you frequently shop at Loblaw’s owned stores or Shoppers Drug Mart, it could be in your best interest to get one of the PC Mastercards since it’ll earn you up to 4.5% in PC Optimum points. Also, if you take advantage of promotions such as bonus points events, targeted offers and PC Insiders, you could claim free groceries and merchandise pretty quickly.
Getting cash back is great, but you also need to find out when you’ll actually get paid. Some cards only pay you once a year while others pay monthly. Don’t forget, many credit cards come with an annual fee as well, so you need to factor that in when making your decision.
What additional benefits are you looking for?
Even after you’ve narrowed down your choices, you still need to pay attention to the additional benefits that come with your card.
As you can imagine, travel credit cards have travel benefits such as travel insurance, airport lounge access, hotel status upgrades, priority airport services and more. These can be highly beneficial and can make you feel like a VIP when you’re travelling.
Cash back cards can have benefits such as roadside assistance, mobile device insurance, exclusive access to events and more. These perks can often be worth more than the annual fee, so it’s crucial to choose benefits that matter to you.
Other benefits you might want to keep an eye for include price protection, no foreign transaction fees, purchase assurance and extended warranty.
Are there any great offers available right now?
Finally, there is one last thing to consider, which is arguably the most important thing for many people: the current sign-up offer. Most credit cards offer you a generous welcome bonus to entice you to sign up. This offer is usually a set number of points or increased cash back for a certain period of time.
While these offers can be enticing, they may come with a catch. Often, you need to spend a certain amount on your new credit card within a set period. For example, you might need to spend $1,500 in the first three months of card membership to get your bonus. Since there are different bonuses available all the time, by doing a bit of research, you may find one that is appealing to you.
As you’ve now learned, picking a new credit card takes careful consideration. You should choose one based on your goals, what benefits you’re interested in, and what offers are available.
Regardless of how attractive a card’s features are, ultimately, it is important to remember that you should always pay your bills in full and on time every month. There’s no point in earning rewards if you’re just going to pay it back in interest.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Justwealth, or its employees. The content of the article is provided solely for information purposes only and should not be construed as advice of any kind.