Choosing the Right Credit Card
Credit cards have a reputation. People sometimes think of them as a way to spend and indulge but they’re actually an incredibly useful financial tool when you use them the right way.
With a credit card, you can build your credit history, add a layer of security to purchases, and earn valuable rewards. Whether you're applying for your first credit card or thinking about adding another to your wallet, understanding how credit cards work can help you make a confident financial decision.
Here are a few things you may want to consider when selecting a credit card, so you can make the right choice and use it responsibly.
Why Choose a Credit Card?
A credit card is similar in function to a debit card, but debit cards pull from existing funds in your accounts to make purchases, while credit cards allow you to flexibly borrow money up to an approved credit limit and repay it later. A credit card can also provide additional safeguards for online purchases. Because debit cards pull directly from your account, a fraudulent incident can have a bigger impact on your account and available funds, and can be a headache to recover.
You apply for a credit card and receive a set credit limit that you can spend up to, then make payments each month. When used responsibly, credit cards can provide valuable benefits, including:
Tools to build your credit history and increase your credit score
Convenient and secure purchase options
Protection from fraud
Rewards on everyday spending
Easier travel reservations for hotels and rental cars
How to Choose the Right Credit Card
To get the most from your credit card, consider how you plan to use it before applying for a new card option.
Everyday Spending
If you use your credit card for everyday purchases like groceries, gas, dining, or recurring bills, a rewards card may help you earn value on purchases you're already making. Your rewards become even more valuable if you pay your balance in full every month, because you won’t pay interest on your transactions and the rewards become extra earnings/money.
Our recommendation: The Titanium Rewards Visa(R) Signature credit card offers outstanding rewards on everyday purchases. Users earn 3x points on gas paid at the pump and on groceries, as well as 1.5x on other purchases.
For Large Purchases
If you plan to get a credit card for a major purchase like an appliance or a trip, you may expect to carry the balance for a longer period of time. In this case, you’ll want to consider interest rate as your top driver in making a card decision.
A card with a lower Annual Percentage Rate (APR) can help reduce interest costs over time.
Our recommendation: The Supreme Visa(R) credit card offers a great low rate as its main perk. The card makes paying for large purchases more affordable, because the interest rates are more reasonable. You can use our financial calculators to determine how long it might take you to pay down a credit card purchase and clear your debt.
For Maximizing Fun and Protection
If you use your card for recurring purchases like subscriptions to streaming services or your Fortnite Battle Passes, you may want a card that’s designed specifically to reward you for those purchases.
Using a credit card to manage recurring purchases can make it easy to accrue points, as long as you ensure you’re managing your total expenses properly.
Our recommendation: The Supreme Rewards Visa(R) Signature credit card gives users rich rewards on their streaming, gaming and entertainment purchases (4x the points on purchases). In addition, it provides protections that just make sense if you travel often, use your phone frequently, or just want to protect your identity.
For Building Credit
If you're just beginning your credit journey, establishing a positive payment history is the first step toward creating a strong financial future.
Using a credit card responsibly and paying on time each month is one of the best ways to build credit. A secured credit card can help you start establishing that strong credit history.
You place a set amount of money in a savings account, then can use the card up to the balance of that account. You create a positive payment history, which can position you to qualify for better cards and more advantageous loan rates in the future.
Our recommendation: With the Platinum Rewards Secured Visa credit card, you can begin to establish a positive payment history. It’s a great option for someone who is just building credit for the first time or for those seeking to rebuild credit standing.
Questions You May Have While Choosing a Credit Card
We’ve put together a few common questions members ask us during the credit card evaluation process. These answers may help you on your credit card journey:
What is my credit score and why does it matter?
Your credit score is a number lenders use to evaluate how you've managed credit available to you in the past.
Your credit score can have an impact on the loans you qualify for you and the rates you receive. Your credit score can be impacted by:
Your payment history (whether you’ve paid on time in the past)
Your credit utilization (how much you’re using the credit available to you)
Length of credit history (how long you’ve responsibly used your credit accounts)
What is a good credit score?
Typically credit scores fall into the following ranges:
Poor credit: Below 580
Fair credit: 580 to 669
Good credit: 670 to 739
Very good credit: 740 to 799
Excellent credit: 800 and higher
You can check your FICO score for free through Digital Banking and can evaluate where you stand. For more advice on figuring out your financial standing, read our digital primer.
What is a good credit utilization rate?
Divide your total credit available by the amount of credit you’re using. Financial experts generally recommend keeping utilization below 30 percent to demonstrate responsible borrowing.
Does applying for a credit card hurt my credit score?
Applying for several credit cards in a short period can temporarily lower your score.
It's usually better to apply when you have a genuine need and for a card that meets your needs (don’t be tricked into applying for multiple store cards to get short-term discounts).
Is there a benefit to paying off my card?
If you pay your statement balance each month by the due date, you'll generally avoid paying interest on purchases.
This allows you to enjoy the convenience and benefits of your card without increasing the overall cost of your purchases.
What happens if I miss a payment?
Late payments may result in late fees being charged, in increased interest costs, and in negative effects to your credit score.
You can use automatic payments or account alerts to stay on schedule and ensure your payments are made on time.
Why Consider an Andrews Federal Credit Card?
At Andrews Federal Credit Union, our credit cards give you the best options for your financial situation. We offer cards that are rewarding as well as cards with lower interest rates, and our cards include no annual fees.
In addition, you’ll have access to a full suite of card management tools from Andrews Federal so you can add your card to your digital wallet with confidence, set up alerts for spending or card usage, and make easy online payments.
When you’re looking for the right credit card, we're here to help you make informed financial decisions every step of the way. Learn more about the credit cards we offer and let us help you select the right option for you.
