How to Choose the Best Credit card: Low APR vs. Great Rewards

  • December 13, 2023

In today's financial landscape, finding the best credit cards can be a game-changer for your credit journey. Whether you're looking to transfer balances, earn rewards, or build your credit, this comprehensive guide will help you compare credit cards and choose the best options for your needs. We’ll explore the key features of the best credit cards, how to use them effectively, and what to look for when applying online. By the end, you'll have all the card information you need to make an informed decision and find a credit card that suits your lifestyle.

Understanding the Basics of Credit Cards

Before diving into the specifics, it's crucial to understand the basics of credit cards. A credit card is a financial tool issued by a credit card issuer, allowing you to borrow funds for purchases. Each month, you receive a credit card bill, which you can pay in full or in part. Paying your bill on time helps build your credit, while carrying a balance can accrue interest at a variable APR or fixed rate.

Types of Credit Cards

There are various types of credit cards, each designed to meet different financial needs:

  1. Balance Transfer Credit Cards: These cards offer a 0 percent APR on balance transfers for a specified period. They are ideal for consolidating debt and saving on interest. When comparing balance transfer credit cards, pay attention to the balance transfer APR after the introductory period and any associated fees.
  2. Rewards Credit Cards: These cards offer incentives like cash back rewards, travel rewards, or points redeemable for various perks. The best rewards credit cards offer generous earning rates and flexible redemption options.
  3. Secured Credit Cards: Designed for those with fair credit or limited credit history, secured credit cards require a security deposit. They help build your credit by reporting your payment history to credit bureaus.
  4. Student Credit Cards: Tailored for college students, these cards often have lower credit limits and are designed to help young adults start their credit journey.

Key Features to Consider

When choosing the best credit cards, consider the following features:

  1. Introductory APR: Many credit cards offer a 0 percent APR on purchases or balance transfers for an introductory period. This can save you money on interest and help you pay down debt faster.
  2. Variable APR: After the introductory period, the APR becomes variable. Look for a good credit card APR that aligns with your financial situation.
  3. Rewards Programs: Evaluate the rewards program offered by the card issuer. Whether you prefer cash rewards, travel rewards, or points, choose a card that matches your spending habits and lifestyle.
  4. Fees and Penalties: Be aware of any annual fees, balance transfer fees, and penalty APRs for late payments. These can add up and impact the overall value of the card.
  5. Credit Limit: Your credit limit affects your purchasing power and credit utilization ratio. Ensure the card offers a limit that suits your needs.
  6. Additional Benefits: Many credit cards come with additional perks such as travel insurance, purchase protection, and extended warranties. Compare credit card benefits to find one that offers the best value.

How to Apply Online

Applying for a credit card online is a convenient and straightforward process. Follow these steps to ensure a smooth application:

  1. Research and Compare: Use online tools to compare credit cards side by side. Look for the best credit cards that meet your criteria and read reviews to understand other users' experiences.
  2. Check Your Credit Score: Your credit score plays a significant role in the approval process. Ensure your score is in good shape before applying.
  3. Gather Necessary Information: Have your personal information, employment details, and financial information ready. This includes your Social Security number, income, and housing costs.
  4. Complete the Application: Fill out the application form on the card issuer's website. Double-check your information to avoid errors that could delay the process.
  5. Submit and Wait for Approval: After submitting your application, the credit card issuer will review your information and perform a credit check. Approval times vary, but you can typically expect a response within a few days.

Tips for Choosing the Best Credit Card

Selecting the best credit card requires careful consideration and understanding of your financial needs. Here are some tips to help you make the right choice:

  1. Understand Your Spending Habits: Analyze your spending patterns to determine which type of credit card suits you best. If you spend a lot on groceries and gas, a cash back rewards card may be ideal. For frequent travelers, a travel rewards card with points or miles might be more beneficial.
  2. Evaluate Rewards and Benefits: Different credit cards offer various rewards and benefits. Compare the rewards programs, such as cash back, travel rewards, and points, to see which aligns with your lifestyle. Also, consider additional benefits like travel insurance, purchase protection, and extended warranties.
  3. Consider the APR: The annual percentage rate (APR) determines the interest you’ll pay on balances. A lower APR is better if you plan to carry a balance. Look for cards with a good credit card APR that suits your financial situation.
  4. Check Fees and Penalties: Be aware of any fees associated with the credit card, including annual fees, balance transfer fees, and penalty APRs for late payments. Some cards waive annual fees for the first year, while others offer no fees at all. Choose a card that minimizes costs.
  5. Review the Credit Limit: Your credit limit affects your purchasing power and credit utilization ratio, which impacts your credit score. Ensure the card offers a sufficient limit for your needs without encouraging overspending.
  6. Read the Fine Print: Carefully read the terms and conditions of the credit card to understand all the details, including the introductory APR period, variable APR, and any potential penalties. This will help you avoid surprises down the road.

How to Use Credit Cards Wisely

Once you've chosen the best credit card, using it wisely is crucial for maintaining good financial health and maximizing benefits. Here are some strategies to help you manage your credit card effectively:

  1. Pay Your Bill in Full and On Time: To avoid interest charges and maintain a good credit score, always pay your credit card bill in full each month. Set up reminders or automatic payments to ensure you never miss a due date.
  2. Keep Your Credit Utilization Low: Aim to keep your credit utilization ratio below 30%. This means using less than 30% of your available credit limit. High utilization can negatively impact your credit score.
  3. Avoid Unnecessary Debt: Use your credit card for planned expenses and avoid impulse purchases that can lead to debt. Stick to a budget and only charge what you can afford to pay off each month.
  4. Take Advantage of Rewards: Make the most of your credit card rewards by using them strategically. For example, redeem travel rewards during off-peak seasons for better deals or use cash back rewards to offset your statement balance.
  5. Monitor Your Account Regularly: Regularly check your credit card statements and account activity to spot any unauthorized transactions or errors. This helps you stay on top of your finances and protect against fraud.
  6. Use Introductory Offers Wisely: If your card offers an introductory 0 percent APR on purchases or balance transfers, use this period to make significant purchases or consolidate debt without accruing interest. Plan to pay off the balance before the introductory period ends to avoid high-interest charges.

Building and Maintaining Good Credit

A credit card can be a powerful tool for building and maintaining good credit. Here’s how you can use your credit card to improve your credit score:

  1. Establish a Positive Payment History: Your payment history is a significant factor in your credit score. Always pay your bills on time to build a positive payment history. Even one missed payment can have a substantial impact on your score.
  2. Maintain a Low Credit Utilization Ratio: As mentioned earlier, keeping your credit utilization ratio below 30% is crucial. This shows lenders that you’re using your credit responsibly.
  3. Avoid Opening Too Many New Accounts: While it’s essential to have a diverse credit mix, opening too many new credit accounts in a short period can negatively impact your credit score. Each new application results in a hard inquiry, which can lower your score temporarily.
  4. Keep Old Accounts Open: The length of your credit history also affects your credit score. Keep older accounts open and in good standing to show a longer credit history.
  5. Regularly Review Your Credit Report: Check your credit report regularly to ensure all information is accurate. Dispute any errors with the credit bureaus to prevent them from harming your score.
  6. Use Secured Credit Cards for Building Credit: If you have fair credit or no credit history, a secured credit card can help you establish or rebuild your credit. Make small purchases and pay them off in full each month to build a positive payment history.

Avoiding Common Credit Card Mistakes

Credit cards can offer many benefits, but they can also lead to financial trouble if not used wisely. Here are some common credit card mistakes to avoid:

  1. Carrying a Balance: Carrying a balance on your credit card means you’ll accrue interest charges, especially if the APR is high. This can quickly lead to debt. Aim to pay your balance in full each month.
  2. Missing Payments: Missing a payment not only incurs late fees and penalty APRs but also negatively impacts your credit score. Set up automatic payments or reminders to ensure you never miss a due date.
  3. Applying for Too Many Cards: Each credit card application results in a hard inquiry on your credit report. Applying for multiple cards in a short period can lower your credit score and make you appear risky to lenders.
  4. Ignoring Fees and Terms: Failing to read the fine print can result in unexpected fees and charges. Always review the terms and conditions before applying for a credit card.
  5. Using Credit Cards for Cash Advances: Cash advances often come with high fees and interest rates. Avoid using your credit card for cash advances unless it’s an emergency.
  6. Overspending: It’s easy to overspend with a credit card, especially if you view it as extra money. Stick to a budget and use your credit card for planned purchases only.

Maximizing Rewards and Benefits

Credit cards offer various rewards and benefits that can enhance your financial well-being. Here’s how to maximize these perks:

  1. Choose the Right Card for Your Spending: Select a credit card that aligns with your spending habits. If you spend a lot on dining and travel, a card with travel rewards may be best. For everyday purchases, a cash back rewards card might be more suitable.
  2. Take Advantage of Sign-Up Bonuses: Many credit cards offer sign-up bonuses for new cardholders who meet a spending requirement within the first few months. Plan your spending to take full advantage of these bonuses.
  3. Redeem Rewards Wisely: Different rewards programs offer various redemption options. Compare the value of different redemption methods to get the most out of your rewards. For example, redeeming points for travel might offer more value than cash back.
  4. Utilize Additional Benefits: Beyond rewards, many credit cards offer additional perks like travel insurance, extended warranties, and purchase protection. Make sure to use these benefits to maximize the value of your card.
  5. Monitor Expiration Dates: Some rewards points or miles may expire if not used within a certain period. Keep track of expiration dates to ensure you don’t lose out on valuable rewards.


Choosing the best credit cards involves careful consideration of various factors, from APR and rewards to fees and credit limits. By understanding your financial goals and comparing different options, you can find a credit card that enhances your credit journey and offers valuable benefits. Whether you're looking for a balance transfer credit card, a rewards card, or a card to help build your credit, the right choice can make a significant difference in your financial well-being. Apply online today and take the first step towards a more rewarding credit experience.

Whatever type of credit card is right for you, you’ll find it at Monterra Credit Union. Need a low interest rate? Try our Visa® Platinum card. Think rewards are right for you? We’ve got a Visa® Signature Rewards and a Visa® Platinum Rewards card. With all of our cards, you’ll have no annual fees and always affordable rates!