Should You Carry A Credit Card For Emergencies
It would be best if you didnt have to use a credit card for an emergencyand instead had enough money in a liquid account, such as a savings account, to use in such a situation. However, if you are away from home while on vacation and dont have the ready cash to cover a car repair or some other unexpected expense, then a credit card can definitely come to the rescue.
Other situations, such as an unexpected medical bill or a job loss, can often drain any emergency savings. Having at least two or three credit cards can be a useful thing in times of crisis.
Ideally, these cards should have no annual fee, a relatively high credit limit, and a low interest rate. However, if you turn to credit cards when youve lost income, exercise extreme caution so that you dont take on unmanageable amounts of credit card debt.
Improve Your Credit Score
If you want to know how to choose a credit card because you have a low credit score or no credit history yet, then are a good place to start. Many of these are secured credit cards, which you open by paying a deposit to the credit card company. If you’re in college, student credit cards are another option.
Further Help And Information
For more information about how to deal with credit cards, see .
The Money Advice Service website has lots of useful information about borrowing and managing your money.
You can use a comparison website to see what different credit card providers are offering. Here are some examples of comparison websites:
Don’t Miss: Is Chase Freedom Unlimited Visa Signature
How Many Credit Cards Should You Have
Theres no set answer to how many credit cards you should have. Youre allowed to hold as many as you wish, though some providers will limit how many of its cards you can hold at any one time.
However, while you can technically have as many credit cards as you like, its often a bad idea to apply for them like theres no tomorrow.
Every application you make is recorded on your credit file, whether or not youre accepted. Make lots of credit card applications, especially in a short amount of time, and you may be giving lenders the impression youre desperate. This could reasonably enough harm your credit score.
Theres also credit utilisation to keep in mind. This refers to the ratio of credit you use.
For example, if youre given a £5,000 credit limit and you only utilise £3,000 , it will probably be seen as healthy. In contrast, make use of the full £5,000 and you could be giving lenders the impression youre struggling. That could impact your chances of getting accepted for other cards.
So while theres nothing inherently wrong with holding more than one card, first consider why you want multiple cards.
For example, you may wish to spread out the cost of a planned and budgeted-for purchase. Then, later on down the line, you may wish to earn cashback on your everyday spending.
In this case, having both 0% purchase and cashback options in your wallet wouldnt be reckless.
Capital One Venture X Rewards Credit Card: Best For No
- What we love about the Capital One Venture X Rewards Credit Card: This card sets the stage for a middle-ground option in the luxury travel space with its $395 annual fee and alluring travel benefits, including excellent airport lounge access and yearly travel credits and bonus miles.
- Who this card is good for: Frequent travelers with a taste for premium perks without the highest of premium costs. The Venture X is built for cardholders who want better rewards and benefits than a $100-tier premium travel card carries, but cant justify paying a $500-plus annual fee for an elite travel card stuffed with features they wont use.
- Alternatives: Occasional travelers that arent concerned with premium travel perks may get more value with Capital Ones former flagship card, the Capital One Venture Rewards Credit Card, which carries a much lower $95 annual fee.
Read our full Capital One Venture X Rewards Credit Card review or jump back to offer details.
Recommended Reading: What To Put For Monthly Housing Payment Credit Card Application
Types Of Credit Cards By Product Terms
A credit cards specific terms and features are what gives it character and sets it apart from other products vying for the business of a particular demographic.
Rewards Structure: Credit cards offer spending-based rewards in terms of cash back, points, and miles. Some cards offer the same per-dollar earning rate across all purchase types, while others provide extra rewards in certain specific categories, such as gas, groceries, or travel. In addition, its common for cards to offer initial rewards bonuses, whereby the user is awarded a lump-sum allotment of rewards after their first purchase or as a result of meeting an initial spending requirement.
Recommendation: Gravitate toward cash back rewards with lucrative earning rates in your biggest everyday expense categories, while periodically supplementing your earning power with an attractive initial bonus deal.
All credit cards charge interest. And if you dont pay off your full balance at the end of each billing period or you make the unwise decision to do a cash advance, youre going to get hit. More specifically, credit cards generally have three different types of interest rates that are relevant when shopping for a credit card offer: an introductory rate for balance transfers, an intro rate for new purchases, and a regular APR. Sometimes theyre the same. Sometimes theyre not.
Chase Freedom Unlimited: Best For Everyday Purchases
- What we love about the Chase Freedom Unlimited: This card offers exceptional value and flexibility. Youll earn at least 1.5 percent cash back on every purchase and can redeem your rewards as a statement credit, to cover travel, for online shopping and more, without worrying about sacrificing point value. Plus, your points could be worth 25 to 50 percent more if you pair this card with an Ultimate Rewards travel card and redeem for travel with Chase.
- Who this card is good for: Someone looking for a standalone rewards card that covers a few key spending categories and earns a better-than-average base rewards rate on all other purchases. Its an especially good fit if you think youll get a premium Ultimate Rewards travel or business card in the future.
- Alternatives: The Capital One SavorOne Cash Rewards Credit Card is a terrific standalone alternative for everyday spending since it covers even more bonus categories. While youll only earn 1 percent on general purchases, you get 3 percent back on dining, grocery stores , entertainment and select streaming services, plus 5 percent back on hotel and rental car bookings made through Capital One Travel. If you dont have a dedicated grocery rewards card and would rather stick with a single card for most of your everyday purchases, the SavorOne is hard to beat.
Read our full Chase Freedom Unlimited review or jump back to offer details.
Don’t Miss: How To Change Credit Card For Apple Purchases
Decide Which Type Of Credit Card Suits Your Needs
Below we list which consumer each type of credit card is best for.
Rewards
If you have no debt and have already established good credit, rewards credit cards can help you offset the cost of purchases and pay for upcoming travel . Rewards cards come in all shapes and sizes with cards offering cash back, points or miles in common spending categories that can be redeemed for statement credits, gift cards, airfare, hotels and more.
Depending on the rewards card you open, you may receive added perks. Here are some of our favorites:
- Chase Sapphire Reserve®: 50% more value on points redeemed for travel via Chase Ultimate Rewards®
- Capital One Venture Rewards Credit Card: Global Entry or TSA PreCheck credit
- Citi Rewards+â Student Card: For every purchase, points are rounded up to the nearest 10 points
- Discover it® Cash Back: For new card members in their first year only, all the cash back earned in the first 12 months is doubled at the end of the year
Terms apply for all benefits.
Intro 0% APR
During the interest-free period, you can benefit from substantial savings versus carrying a balance on a high interest credit card, where a portion of your payment goes toward interest charges.
The best balance transfer credit cards offer no interest periods of at least a year, and some cards also offer hard-to-find $0 balance transfer fees.
Building credit
Youre Our First Priorityevery Time
We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
You May Like: Can I Use My Personal Credit Card For My Llc
Wells Fargo Active Cash Card
Why We Like It: The Wells Fargo Active Cash® Card is the best credit card for people with good credit who want a consistent rewards rate across all purchases. It gives 2% cash rewards on purchases, plus an initial bonus of $200 cash rewards after spending $1,000 in the first 3 months.
Wells Fargo Active Cash also has a $0 annual fee and a low introductory APR. New cardholders enjoy 0% for 15 months from account opening on purchases and qualifying balance transfers.
What We Dont Like: The regular APR is pretty high, so its best to pay your bill in full monthly after the low-interest promotion ends.
Who Should Get It: Apply for Wells Fargo Active Cash if you want a great all-around credit card.
Alternatives to Consider: Chase Freedom Unlimited® and the Citi Double Cash Card are worth a look as well.
How Multiple Credit Cards Affect Your Credit Score
Having multiple credit cards can indirectly impact your by lowering your debt to credit ratioalso known as your credit utilization rate.
Your credit utilization rate is the amount of credit you use compared to the total credit available to you. Lenders usually like to see a credit utilization rate below 30 percent. A rate higher than 30 percent may negatively affect your credit scores.
When you open a new credit card, you increase the total credit available to you. That means you’ll be able to spend more before hitting that 30 percent credit utilization rate. If your rate is already at or above 30 percent, opening a new card could improve your credit scores by lowering your credit utilization rate.
However, the most important thing to do with multiple credit cards is to keep up with what you owe. Be sure to monitor how much you spend on each credit card and the payment due dates so that you don’t go into credit card debt, pay high interest rates or get charged fees for missing a payment. It’s also a good idea to pay off your credit card balances in full each month instead of only making the minimum payment.
Don’t Miss: Does Applying For Another Credit Card Affect Credit Score
Can I Be Approved For A Credit Card With No Credit History
There may be suitable credit card options for people with no credit history. If you have no credit, you might want to consider a student credit card, which offers a low credit limit for you to get started. If you aren’t a student and have little to no credit, you may find secured credit cards useful as your first cards.
Key Information You Should Get
When you are given information about a credit card, it should include a summary box with standard key information about the card. This should include the interest free period, interest rate and other charges. This is so that you can easily compare different cards.
You can find more information about the credit card summary box including an explanation of what all the terms mean, on the UK Cards Association’s website at: www.theukcardsassociation.org.uk.
Also Check: How To Check My Kohls Credit Card Balance
Best Credit Cards For Beginners In September 2022
*Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated August 31, 2022 . Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
Pay Off Purchases Over Time Without Interest
If you have one or more expenses that will take you some time to pay back, 0% intro APR credit cards are just what you need. These cards offer a 0% intro APR on purchases.
If you’re wondering how to choose a credit card with a 0% intro APR, look at the length of the introductory APR period. It can last for a year or longer, depending on the card you get. Once it ends, the APR will increase, so you should aim to pay off your full balance by then.
Don’t Miss: Which Credit Card Has Best Car Rental Insurance
What Impacts Your Credit Score
Especially with this years economic uncertainties, understanding what does and doesnt affect your credit score is more important than ever if you have fair credit. Almost half of the surveyed cardholders whose incomes were harmed since March did something to potentially damage their score, according to a July 2020 Bankrate survey.
- 17% added to their debt. Additionally, 8% carried a balance, thinking it would help their score.Could hurt your: credit utilization ratio
- 12% paid a bill late, and 6% didnt pay a bill at all.Could hurt your: payment history
- 3% cancelled a credit card, thinking it would help their score.Could hurt your: credit history
When you boil down the noise about what factors are and arent considered by FICO, weve found late payments, keeping your card balances full and bankruptcies have the biggest impact on your score.
There are many misjudgments around credit scores. According to VantageScores 2020 Survey, nearly half of Americans wrongfully believe that a persons age impacts their credit score. Additionally, that same study found that only 33% knew that a credit score is meant to represent the risk of not repaying a loan, with 14% even thinking that it represents ones knowledge of consumer credit. While that isnt the case, improving your knowledge of credit scores is a great step in the right direction.
How Credit Score Affects Your Credit Card Choice
are one of the biggest limiting factors in choosing what credit card you should apply for. If your FICO Score isn’t high enough, youll be instantly denied a wide range of products.
For example, the Chase Sapphire Preferred® Card is one of the best credit cards, but also requires you to have 720 – 850 credit a score of at least 750 or better.
No matter what your credit score is, though, your credit card options will still boil down to the same card categories weve outlined above rewards cards versus low interest cards. The only thing that changes is your pool of options the lower your score, the fewer cards youll likely get approved for.
Secured credit cards
Secured credit cards are a special subset of card products intended for those with limited or damaged credit histories. If you’ve never had an open line of credit or have defaulted on a loan in the past, this may be the option to look for.
In order to open a secured credit card account, individuals are required to put down a security deposit that will double as their line of credit. These cards are intended to be a temporary option that allows users to build up their credit history. Once your score bounces back to being Average Credit Score in America: 2021 Report, youll be able to apply for a better card that doesn’t require a deposit.
Also Check: How To Lower My Apr On My Credit Card
Is A Low Fee Card Right For Me
A low fee card is ideal for an occasional credit card user who always pays down their balance. It offers all the convenience of having ready access to credit, without ongoing high costs. So long as any purchases made on the card are paid off in full each billing period, the card costs very little, if anything, to use.
Before getting a low fee card consider:
- Will you spend beyond your limit? Even if you only use the card occasionally, if you end up with an outstanding balance, you could end up paying more interest than that offered by a low rate card
- How often will you really use your card? If you end up using your card frequently, you may miss out on the benefits of a rewards card
- What other fees or charges are involved? Are there minimum spending limits or high fees for late payments, for example?
How Credit Card Options Change By Credit Score & History
The selection of credit cards you’re eligible for will depend largely on your credit score and your credit history. However, it’s not surprising that cards with the best rewards and terms go to those with excellent credit scores. This includes cards with the most lucrative rewards schemes, sign-up bonus offers and cardholder perks.
According to the Federal Reserve, the average credit card interest rate was 14.75% as of February 2021. However, individuals with fair credit are typically eligible for offers with considerably higher rates.
For example, the Capital One QuicksilverOne Cash Rewards Credit Card is marketed to people with “fair” credit, and thus it comes with a variable APR of 26.99%. Meanwhile, the Capital One Quicksilver Cash Rewards Credit Card for people with excellent credit comes with an introductory APR offer, followed by a variable APR of 15.49% to 25.49%.
Don’t Miss: Can I Pay Off Personal Loan With Credit Card