credit & debt

How to Pick the Best Credit Card for You

Consider these four things before signing up for a new card.

When looking for a credit card, use these points as a guide before you apply.

Interest rates. A single credit card may have a lower annual percentage rate for customers with the strongest credit profiles. Some cards offer an introductory or teaser rate of 0% that expires after six to 18 months.

Fees. Some rewards cards have an annual fee of $75 or more. If you expect the value of your earnings to exceed the fee, it may be worth paying. Traveling abroad? Pick a card with no foreign transaction fee, which is often about 3% on each purchase. Moving debt from a high-rate card to one with a low introductory rate could save you money, but watch out for the balance-transfer fee: 3% is standard, but some are as high as 5%. Late-payment fees are now fixed at $25 or $35.

Rewards. Check for expiration dates on points or miles and caps on how much you can earn or spend. Some cards rotate categories every few months on the purchases that earn the most rewards. Many issuers sweeten the pot for new customers with sign-up bonuses.

Perks. Most cards provide rental-car insurance to cover collision damage as long as you reserve and pay for the rental with the card. Some cards offer roadside assistance if your car breaks down. Concierge services may include travel booking and upgrades. Some cards extend manufacturer warranties on purchases made with the card. With purchase protection, you’re reimbursed for items you bought with the card that are later damaged or stolen.

This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.

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