Which Credit Card Is Right For Me?

Which Credit Card Is Right For Me?

Credit cards have become a way of life for many American consumers. In fact, about 84% of us have at least one credit card. The reasons we use these cards vary:

• The convenience and safety of not having to carry cash
• The ease of making online purchases and payments
• The ability to buy something now and pay later
• Efficient tracking of expenditures
• The opportunity to build credit
• The potential opportunity to earn rewards

The challenge is finding the right credit card for yourself when there are so many to choose from. Your choice begins in deciding whether a low-rate credit card or a rewards credit card is right for you. Low-rate cards are designed for cardholders who carry a balance rather than paying their card balance in full each month. Rewards cards are designed for those who do pay off their balance each month. They award perks — cash back, points or travel miles, for example — on purchases made with the credit card.

The benefit of a low-rate credit card

When you use a credit card and pay the full balance off by the due date each month, you don’t incur interest charges. However, if you don’t pay the full balance each month, the remaining balance that you carry into the next month is charged interest at an annual percentage rate (APR) determined by the card issuer. The APR on credit cards is typically a variable rate that is determined by considering a number of factors, including the prime rate (the interest rate commercial banks charge their most creditworthy customers, which is based on the federal funds rate set by the Federal Reserve Bank), the cardholder’s creditworthiness and other factors.

People who choose a low-rate credit card over a rewards credit card often do so to save on interest charges. A low-rate credit card’s APR is lower than the average rewards credit card APR, so if you carry a balance from month to month, the low-rate card may save you money. It pays to shop around for a low-rate card that also has an introductory APR of 0%, so that you pay no interest, even if you carry a balance, for the first several months you use your card. The Dollar Bank Low Rate Credit Card, for example, charges no interest for the first six months you have your card.

The benefit of a rewards credit card

A rewards credit card enables you to earn cash back, points, travel miles or other perks on the purchases you make with your card. Rewards are calculated by a formula set by the card issuer. The Dollar Bank Rewards Credit Card, for example, offers cash back calculated as a percentage of your net monthly purchases (your total purchases minus any credits and returns) once you’ve paid for those purchases. (Similar to the Dollar Bank Low Rate Credit Card, this rewards card offers a 0% introductory APR good for a limited time.)

If your money management style includes paying off your credit card balance every month, a rewards credit card may be a good option for you. In essence, it rewards you for making purchases you would have made anyway. 

Features to look for in a credit card

Whether you determine that a low-rate credit card or a rewards credit card is right for you, make sure it has the features that are important to you. Here are some popular features you may want to look for:

No annual fee. Don’t assume that cards that charge an annual fee are somehow better than those that don’t. Do a side-by-side comparison; you may be surprised to see that a no-annual-fee card has everything you want and need in a credit card.

Special 0% introductory rate. Cards that offer an introductory APR of 0% may not only save you interest charges on balances you carry during those first few months, but also offer you the opportunity to transfer higher-interest credit card balances to your new card to help you save money over the longer term. A low-rate credit card can be an ideal option for this type of debt consolidation. (Credit card issuers may charge a one-time fee of 1-5% when a balance is moved from one card to another, but the potential interest savings generally outweighs the fee.)

Mobile/Online payment options and 24/7 online account access. Make sure you will have easy online and mobile access to your credit card account, as well as the ability to use your payment option of choice for monthly payments.

Security features. The security of your account and your identity is critical, particularly as cybercriminals become increasingly sophisticated in their scams and schemes. Look for a card that helps protect you and your money with features such as:

• Card control – Turning your card on and off so that you control how, when and where it can be used should be as easy as tapping an app.
• Fraud alerts – Be sure the card you choose offers you protection through fraud alert text messages that let you know when suspicious activity has occurred on your account so you can confirm whether or not you initiated the transaction.
• Zero liability policy – Check the credit card agreement to see if you will be responsible for unauthorized charges or if those charges will be removed from your account at no charge should they occur.
• Free identity theft protection – Detecting and resolving identity theft can be extremely time-consuming and expensive if you don’t have identity theft protection. Again, read the fine print of the credit card agreement to see what level of assistance would be made available to you if your identity were stolen.

Finding the right credit card is important, so take your time comparing your options before you apply. It’s important to fully understand your card’s terms so you are completely comfortable using it and there are no surprises when those monthly statements start rolling in.

If you’d like to apply for a Dollar Bank Low Rate or Rewards Credit Card, you can apply online, by phone at 1-800-242-2265 (Monday - Friday, 8:00 AM - 8:00 PM and Saturday 9:00 AM - 3:00 PM) or by visiting your local Dollar Bank office. For information about applying for a Dollar Bank Secured Credit Card, call 1-800-242-2265 or visit your local Dollar Bank office.

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.