When I look for a credit card, here are some points I consider:
- Annual fee: All things being equal, I would prefer no fee, but some provide such great rewards that a $99 annual fee might be worth it.
- APR: This is your interest rate. In general, lower is better, but if you follow our never-carry-a-balance rule, it’ll never matter because you won’t be carrying a balance. Additionally, some cards offer a lower intro APR (i.e., 0% for 12 months) for new purchases and occasionally for balance transfers as well.
- Balance transfer fee: This is how much you have to pay to transfer the balance from one card to another. Let’s say you have a card with a $5,000 balance and a 24% APR. If you find another card that has a promotional offer of 0% on balance transfers for 12 months, then it might make sense to pay a 3% balance transfer fee ($5,000 x 3% = $150) to have a 0% interest rate for 12 months.
- Earning rate: This is the rate at which you earn rewards. One point per dollar spent is pretty common, though the value of points varies quite a bit.
- Sign-up bonus: Many cards offer huge bonuses (I’ve seen bonuses as high as 100,000 points). There are typically spending requirements (i.e., spend $2,000 on the card within three months) in order to get the bonus. We had an entire 10-day hotel stay covered by a single bonus, so there is a lot of potential here.