Credit cards can be a very helpful tool if used wisely. They are a convenient way to pay for things without having to carry cash or write checks. You can use a credit card to buy an expensive item and then pay for it over several months instead of having to pay for it all once. For that matter, you can use a credit card basically free so long as you pay off your balance each month. In other words, you get to buy something and use it for several weeks – completely interest-free.
Where people get in trouble
Unfortunately, credit cards can also be a path to problems. People generally get into trouble with credit cards either because of unforeseen circumstances or because they simply didn’t handle them responsibly. As an example of this, I recently read a story of a couple who ran up $90,000 in credit card debt and who had an income of just $2000 a month. This means the minimum monthly payments required by their cards actually exceeded their monthly income.
What are the “best” credit cards?
There is almost a bewildering array of credit cards to choose from these days. However, there are “best ” credit cards depending on some different factors. There are credit cards with the best interest rates, the best credit cards if you have bad credit, credit cards for low interest balance transfers, credit cards that offer the best rewards and then there is one that I call the “Best of Show.”
Credit cards with the best interest rates
If your goal is to pay the least amount of interest, there are several cards that would be right up your alley. Included in this group is the Citi® Diamond Preferred® Card and the Discover® Open Road Card. Other good choices for low interest rates include the Citi Simplicity® Card, and the Discover More® Card. As an example of these cards, the Citi® Diamond Preferred® Card has an APR of just 11.99% to 21.99% depending on your credit worthiness and that’s after 18 months of a 0% intro APR on balance transfers and purchases.
Best credit cards for people with bad credit
Despite what you might think, if you have bad credit you can still get a credit card. In fact, there are several “best” ones available including the Horizon Gold Credit Card, the Applied Bank® Visa® Business Card (that has a monthly fee) and the First Premier® Bank Classic Credit Card, which requires an upfront fee.
Best credit cards that offer low interest balance transfers
A good strategy for dealing with credit card debt is to transfer them to one that has a lower interest rate and a 0% interest rate for some introductory period. As of this writing, the best credit cards in this category included the Citi Simplicity® Card, Slate from Chase, and the Discover More Card. The Simplicity card offers up to 18 months of 0% interest, while the More Card offers only six months interest free.
Best credit cards for rewards
If you want to get rewards for your credit card spending, the Citi Dividend World MasterCard could be a good choice as would be the Citi Thank You Card. This card is especially valuable in that it gives you one point for every dollar you spend and you can use themaz to buy virtually anything.
Best of Show
There is one card that as of this writing I would call the best of the best. It is the Capital One® Venturesm Rewards Credit Card. In fact, Money® magazine recently named it the “best card for rewards for free airline flights.” This is probably due to the fact that you earn 2x miles on everything you purchase and you can redeem them for any expense having to do with travel. If you are a new customer, you get a 0% annual fee for the first 12 months and earn 10,000 bonus miles. However, this card also makes it clear that it is only for people with excellent credit.