How to choose a credit card that makes sense for you
Oct 19, 2024
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Shannon Terrell, lead writer and spokesperson for NerdWallet, dives into the intricate world of credit cards, offering invaluable insights for Canadians. She highlights the importance of understanding annual fees, rewards structures, and interest rates to select the best card for individual financial goals. The discussion touches on maximizing rewards based on personal spending habits, evaluating perks against usage, and navigating balance transfers. Shannon equips listeners with strategies to make informed credit card choices, crucial in today's economic climate.
Evaluating annual fees against benefits is crucial to ensure a credit card selection is financially beneficial and aligns with needs.
Understanding personal spending habits and financial goals is essential for choosing a credit card that maximizes rewards and minimizes debt risks.
Deep dives
Assessing Credit Card Fit
Understanding the suitability of a credit card involves evaluating several key factors. One major aspect is whether the annual fee is justified by the benefits received; if not, considering cards with lower or no fees may be wise. Additionally, the alignment of the reward structure with personal spending habits is crucial; if rewards often go unused, a different card might be better. Finally, if carrying high balances or only making minimum payments becomes a pattern, it signals the need to rethink credit management strategies.
Choosing the Right Card
When searching for a new credit card, it's essential to consider one's financial goals and credit score. These two metrics dictate the type of card one can target, informing choices between those that offer rewards, build credit, or provide a financial safety net. The Canadian market offers hundreds of cards, each varying in annual fees, rewards structures, and additional perks like travel insurance or cashback. Therefore, narrowing the selection based on personal spending patterns and desired benefits is vital for making an informed choice.
Options for Managing Debt
For individuals grappling with credit card debt, several strategies can offer relief. One useful option is a balance transfer credit card, allowing the movement of high-interest debt to a new card with lower rates, often as low as 0% for an introductory period. Alternatively, a secured credit card can help build or rehabilitate poor credit, requiring a security deposit that serves as the credit limit. These secured cards may offer fewer perks but are easier to qualify for, making them a practical tool for those with limited credit histories.
This episode first aired on October 17, 2024 over at In This Economy?!, our sister show at the Frequency Podcast Network. The show helps Canadians understand the systems behind their money problems so they can make informed decisions about their personal finances. If you like what you hear, please consider giving us a follow!
Credit card debt has been skyrocketing among many Canadians, basically since the pandemic began. And while it would be nice to be able to go without it, that's not a reality for many of us. So how do you sort through the hundreds of cards out there—and their various rewards, annual fees and interest rates—and choose one that actually works for you? We speak to Shannon Terrell, who's sifted through every card out there for NerdWallet, to find out how you can end up in a better financial place.
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