Find the right credit card for you

When you’re facing a sea of credit card offers — each offering different things — how do you choose the right one? In a world where countless options abound, finding a credit card tailored to your individual preferences, needs and credit situation is a crucial step toward achieving your financial goals. For a lot of people, this process can create more questions than answers. But luckily, we’re here to help you figure it all out. 

From the various card types to the advantages and disadvantages of each, here’s a handy overview of the best credit cards for beginners. 

First things first

Do you know your credit score? If not, you should. Your credit score serves as a snapshot of your financial health and creditworthiness. Good credit can be the make-or-break detail that determines whether you can get a credit card with a low interest rate. So, before you do anything else, be sure to check your credit report. You can do this through one of the three major reporting agencies (TransUnion, Equifax and Experian) or by requesting a free credit report online. Your credit report includes a history of each account listed, including open and closed dates, your credit limit or loan amount and info that indicates whether you made on-time, late or missed payments each month.

Secured vs. unsecured credit cards

Before we get into the various types of cards out there, it’s important to know the difference between secured and unsecured credit cards because they differ significantly in their fundamental structures. 

With secured credit cards, a security deposit is required as a form of collateral. This deposit, handed over to the financial institution, corresponds to the card's credit limit or slightly surpasses it. In cases where the cardholder fails to settle their dues, the bank can access the owed amount from the security deposit. These cards are particularly valuable for establishing or enhancing credit for someone who lacks a credit history or has faced credit challenges. 

In contrast, unsecured credit cards, which constitute the majority of credit cards today, do not require a security deposit. Issued based on your credit history and your commitment to reimburse borrowed funds, these cards offer a predefined credit limit. You have the flexibility to use the card up to the specified limit, and you can repay the outstanding balance either monthly or over an extended period.

Types of cards

Though there are countless types of credit cards, most of them fall into the following three categories:

1.    Rewards
2.    Low interest
3.    Credit building

Let’s break down the advantages and disadvantages of each. 

1.    Rewards cards
Pros: These cards offer benefits such as cash back, travel miles or points for purchases made, providing potential savings and incentives for cardholders. These rewards can accumulate over time and be redeemed for various perks, enhancing the overall value of spending. 
Cons: Rewards cards often come with higher interest rates and annual fees, which can negate the benefits if balances are not paid in full each month. Additionally, overspending to pursue rewards can lead to debt, and the complexity of reward programs might make them less suitable for people seeking simplicity in their credit card usage.

2.    Low interest cards
Pros: These cards offer reduced interest rates on carried balances, making them advantageous for people who may need to carry debt over time, allowing for more affordable repayment. They can help manage unexpected expenses without accruing excessive interest charges. 
Cons: Low interest cards may come with fewer rewards or perks compared to higher interest rate cards, and qualifying for them often requires a good credit score. Additionally, reliance on low interest cards might discourage timely debt repayment or responsible spending habits, potentially leading to long-term debt accumulation.

3.    Credit building cards
Pros: These cards, often aimed at people with limited or poor credit history, offer the advantage of helping to establish or improve credit scores through responsible use. They usually have lower credit limits and fewer features, making them less risky for cardholders. These are sometimes the best credit cards for beginners.
Cons: Credit building cards might come with higher interest rates, fees and limited rewards. Over time, responsible usage can lead to better credit opportunities, while mismanagement can worsen financial situations.

If you’re still not sure which type of card might be best for you, Desert Financial has a handful of card options that are ideal for travel, cashback, transferring a balance, building credit and more. 

Give yourself some credit

In a world teeming with credit card options, selecting the right credit card is a pivotal step in realizing your financial goals. Armed with a little knowledge, you’ll be able to make the best choice.

Most importantly, do your homework: start by understanding your credit score and then diligently research your card options, weighing the merits and drawbacks of each. Before committing, make sure your choice is aligned with your needs — whether those are travel rewards, cash back, balance transfers or credit building. By comparing, understanding terms and responsibly paying off balances, you'll chart a course for financial success.

When applying for a new line of credit, one thing to keep in mind is your debt-to-income ratio (DTI). Don’t know what DTI is or how to optimize it? Let’s start now.