Whether we like it or not, credit cards are a must-have item for an adult living in North America. Sure, you can get along as a young adult with just a debit card that’s linked to your bank account. If you want to move forward in life, though, and to make any major purchases—a new car, say, or a house—you need a credit history to do so.
Even most rental applications require a great credit score. This makes sense. After all, why would a landlord want an unreliable tenant? A credit score and credit history provide the necessary information for any potential landlord or lender who wants to know they’re going into business with a reliable person.
All that being true, it still leaves the thorny question of how to go about choosing the right credit card for your specific needs. Each card comes with its pros and cons. Are you more interested in a hefty welcome bonus, or a low annual fee?
How about bonus points for travel or other eligible purchases? Plus, of course, certain credit cards are designed differently for cardholders in the U.S. than they are for cardholders who are Canadians. If you’re feeling overwhelmed by the wealth of potential credit cards, never fear! We’ve got a few tips and tricks that will help you make a great credit card choice and boost your credit score at the same time.
Consider your lifestyle and needs
The first thing to do is examine your needs (and wants) when it comes to the way in which you live your life. For example, a common perk with a cash-back credit card is a certain percentage return on eligible purchases, such as at gas stations or pharmacies. If you don’t have a car, you don’t need a credit card that gives you cash or bonus points at the gas pump.
On the other hand, if you travel a lot for work by plane, the best credit card might be one that gives you a welcome bonus if you use it for flights or an Air Canada credit card, on which you can accumulate bonus points to put towards future flights or upgrades. The best credit cards in Canada or the U.S. are the ones tailored to your lifestyle, which means that they offer the most opportunities to maximize potential perks.
Take a good hard look at where your credit score is now
Be honest. How’s your credit score and credit history? There’s no shame in having a spotty credit history, but bad credit can be a defining factor when it comes to deciding on the best credit card for you.
If you struggle with making payments to American Express or MasterCard on time, maybe a huge credit limit and high interest rates aren’t great choices for you. In order to build credit, you need to pay off any accumulated debt, of course, but you also shouldn’t commit to a new credit card that will inhibit your journey towards a great credit score.
Are you making any big purchases in the near future?
Sometimes, it makes sense to make use of a credit card’s welcome bonus and then cancel after the first year, although this practice is definitely frowned upon by card issuers. It’s perfectly legal, though, and it may work in your favor if you need to pay for a renovation or another big expense soon, and you see a card that will give you a lot of bonus points for renovation-related purchases.
Knowing that you have a credit card dedicated to your kitchen remodel will ease your mind when you’re searching for “kitchen design near me” or “new kitchen cabinets for excellent value.” You should note, though, that the sum you owe to the card issuer does not disappear once you cancel your credit card, and you still need to pay that back in order to avoid bad credit.
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