How to Choose and Manage a Credit Card
With credit card offers and options being plentiful, navigating your options can seem overwhelming. Read some tips from Fifth Third Bank for comparing credit cards.
Credit card offers and options are plentiful, but navigating this endless stream of opportunities can sometimes feel a little overwhelming. With some planning and insight, you can take yourself from novice to pro when shopping for and managing your credit cards.
Step 1: Plan
Instead of making snap decisions, coming up with a plan that includes your credit card goals could save you some expensive headaches in the future. Here are some things to consider:
Why do you want a card?
Are you building your credit, going on a trip, trying to save money? Being clear on why you want a credit card will help you determine which offers to evaluate and which to pass.
How do you plan on using it?
Do you want to use your card for everyday purchases—such as getting gas or buying groceries—or for a one-time purchase that you can pay off over time? Do you have a balance on another card that you want to pay down, or do you want to reduce using your debit card? Knowing how you plan to use your card can help you determine which options suit your needs best.
What perks are important to you?
Do you travel a lot? Perks like mileage points, concierge services and travel insurance might be important. If you like to shop, price protection and extended warranties might be more to your liking. Or maybe you just like earning cash back every time you spend.
Be aware of phishing
Be on the lookout when it comes to deals and offers coming to your inbox. Always exercise caution, even with emails that appear to be from legitimate senders. Typos and misspelled words are common signs that an email could be a scam. Be cautious clicking on links or attachments that look suspicious; doing so may expose your computer or device to malware, which could be used to steal or “phish” for information, such as usernames, passwords and card information. For additional information go to https://www.53.com/mkg/security/phishing/index.html
Step 2: Research
Once you’ve figured out your plan, it’s time to do a little research. A good way to start is by knowing your current credit score. The higher your score, the better your options in terms of rates and types of cards you could be eligible for.
Obtain your credit score from a credit reporting agency. You are allowed one free credit report from each of the agencies every 12 months. Visit annualcreditreport.com for more information.
Take a look at what you owe on any existing credit cards, your interest rates, other debts and current spending habits. Put them on paper, in a spreadsheet or any kind of form that will help you see the numbers, rather than just thinking about them. This will help you be more realistic and objective about your goals.
Now it’s time to find a card that fits your needs and goals. Applying for multiple cards at once may not the best approach. Every time you apply for a new card, a credit inquiry is triggered. Multiple inquiries may have a negative impact on your overall credit score.
Make sure to weigh your options carefully before you apply for credit. Here are some places to consider shopping for a new card:
Your Financial Institution
Great options may be closer than you think. To learn more about Fifth Third card offers, visit 53.com/creditcards.
Credit Card Networks
Each credit card network has a website where you can browse among the various types of cards and available promotions in a network. This is where having a plan comes in handy. You can search for cards based on the features and benefits you’re looking for, or by current offers that may be available.
Other Credit Card Companies
Credit card companies are actual card issuers. You can browse for card types and promotions on a credit card company website the same way you do on a credit card network. The difference is that your search is narrower: it is specific to one particular credit card company.
Online Comparison Tools
A number of third-party sites offer online tools that can help you compare information across multiple credit cards, as well as by certain criteria, such as spending habits, financial goals, projected interest and payoff calculations. Whether you're an existing customer of Fifth Third Bank or are considering becoming one, check out our credit card options to find one that suits your needs.
Step 3: Evaluate
There are several key terms you should familiarize yourself with as you begin comparing offers and weighing your options.
The Annual Percentage Rate (APR), is the annual rate charged to you for borrowing money using your credit card. The APR may differ by the type of transaction—such as purchase, cash advance or balance transfer.
Introductory and Promotional APRs
Some credit cards offer an introductory or promotional rate as an incentive to apply. Rates can range from low to 0% fixed rates on purchases or balance transfers for a specified period of time. Be careful to review the details of the offer, otherwise you could end up paying a higher interest rate in the long run than by using a similar card with no introductory rate.
Some credit cards will present a penalty APR if an account falls delinquent, goes overlimit or has a payment returned. This penalty APR will replace your current rate at a higher APR. Be sure you understand what could trigger a rate increase for your card.
Make sure you examine any fees that may be associated with the card. An annual fee is a yearly fee charged by the credit card company to use the card. A balance transfer fee may be a percentage of the balance transfer or a dollor amount. Other fees may include cash advance fees, convenience check fees or international transaction fees. Review the terms and conditions or card agreement to identify if any additional fees may apply to the card.
If you're looking for fee-free services, check out the free checking account and savings account offers from Fifth Third Bank.
Some credit cards earn points or percentages for every dollar you charge on your card and present those points and percentages as rewards. The amount you can earn often varies, depending on the type of purchase being made. For example, a rewards card may let you earn higher reward amounts at certain merchants, such as gas stations or grocery stores, while other merchants or types of purchases earn smaller reward amounts.
Rewards may also vary and offer different means of redemption, such as offering cash back (we recommend our Fifth Third Cash/Back Card!), points for miles and travel, or points for merchandise offered through a catalog from select partners
Be sure you understand the qualifications, fees and other stipulations for using the rewards card. Some may carry a higher annual fee or interest rates than a non-rewards credit card. Rewards cards may also have certain restrictions and caps, or require minimum spend and/or redemption amounts. Additionally, some rewards programs have expiring points or percentages, be sure to read the rewards conditions.
Secured Credit Card
A secured credit card uses your own money as a security deposit. The amount of the deposit becomes your credit line. A secured card is often an ideal solution if you are building your credit history for the first time or need to repair a low credit score. Be sure to review all fees and stipulations for using the card. Also, verify the card issuer will report your recent activity to the credit reporting agencies.
Step 4: Manage
Once you’ve selected and have been approved for a credit card, the most important work begins: managing your card responsibly. But properly managing your card begins with managing checking and savings accounts, too. After all, you do need to pay your credit card bills, and knowing what you can afford budget-wise is important. Fifth Third offers a variety of banking programs, such as Fifth Third Momentum® Banking, to help you set goals and monitor all aspects of your financial health.
It’s sometimes easy to think that because you have a certain amount of credit, the sky is the limit. Consider your credit card a tool when it comes to building your credit history and maintaining a strong credit score.