Consumers looking for a new credit card are spoiled for choice. The sheer number of options has many of us wondering how to choose a credit card. Interest rates, cash-back offers, reward points, and spending limits are all on the table. But don’t play credit-card roulette by simply applying for the first offer that comes your way.  

Instead, take the time to look for a credit card that best fits your particular financial circumstances and goals. And don’t assume that brand-name credit card companies hold all the “cards.” When you look into how to apply for a credit card, you may discover that your local credit union has the winning hand.

5 steps to choose and apply for a credit card

All standard credit cards have one feature in common: They are a convenient way to borrow money, which you must pay back with interest at a rate that fits your monthly budget. (Unless you pay off the total monthly balance promptly, then no interest for you!) 

But on closer examination, you’ll see that not all credit cards are alike. The first step in deciding how to get a credit card that works for you is knowing your primary goal for the card. You’ll want to choose a credit card with features that reflect your financial health, lifestyle goals, and future needs.

1. Compare credit card fees and benefits

When comparing credit cards, it pays to start by evaluating each card’s fees and benefits. 

Credit card fees

If you’re weighing the pros and cons of credit card usage, fees definitely fall on the con side. So, pay close attention to the small print that outlines a credit card’s fees. Common fees include:

• An annual fee just for possessing the credit card

• Transfer fees for moving a balance from one account to another

• Cash advance fees

An easy way to narrow your list is to look for credit cards that don’t include these and other fees. Fee-free credit card options are a hallmark of many credit union credit cards, which, by the way, also offer some of the lowest interest rates around.

Credit card features

On the features side, it often comes down to deciding what’s more important to you: saving money outright with immediate cash back or investing in a longer-term opportunity by accumulating points toward a future redemption. 

Popular credit card features include:

• Cashback (usually up to 5%) on purchases ranging from groceries to gas. When you’re ready to redeem, you’ll see the savings reflected through a check in the mail, a statement credit, or a money transfer to your financial institution.

• A points system that lets you earn a point (or more) for every dollar you spend; the points translate into discounts on a wide range of goods and services to purchase at your convenience.

• Other rewards, like bonus miles for air travel or retail gift cards. 

2. Check your credit score

It is important to understand how the three main credit bureaus (Equifax, Experian, and TransUnion) rate you as a borrower — whether you are seen as high risk, low risk, or somewhere in the middle. Keep in mind that borrowers with excellent credit scores can borrow money at much lower interest rates than borrowers who haven’t fared as well.

So, what is a good credit score? The generally accepted credit score range is:

• Poor: 300-579

• Fair: 580-669

• Good: 670-739

• Very Good: 740-799

• Excellent: 800-850

If you want to know how to check your credit score status in real time, the process is simple. Visit AnnualCreditScore.com to request your free score from all three credit bureaus in one spot. Credit-scoring agencies consider several factors when developing your credit score, including timeliness of payments, amount of debt you carry (outstanding balances), length of credit history, and number and type of credit accounts.

3. Know how to build or repair your credit

One of the best things you can do with a personal credit card is to build your credit record — especially if you’ve never borrowed money before — or repair a tarnished credit history. In both cases, the right card will open the door to low-interest funds on demand and offer a glide path to more favorable borrowing for big-ticket purchases down the road.

If you’re looking for the best credit card for bad credit, a top option is a savings-secured credit card that allows you to borrow against the limits of your savings account. Meaning, even if you only have $250 in savings, you can start with a line of credit up to that amount. 

Other “starter” credit cards cater to new borrowers by offering low-interest rates on purchases, free balance transfers (to move you away from higher-rate cards), and travel and emergency assistance services. If you handle this type of card responsibly, you can eventually move to a more feature-rich card, such as a cash-back card.

4. Compare credit card terms and conditions 

Once you’ve reviewed your credit history and score and how they may impact your credit card options, it’s time to look closely at credit card terms and conditions. Be forewarned, that you may need a pair of reading glasses to scour the fine print for some of these details. They include:

• Interest charges. Once you’ve grasped your credit history and score and how they may impact your credit card options, it’s time to look closely at credit card terms and conditions. 

• Late payment fees. If you miss a monthly payment or pay the bill late, you may be assessed a penalty fee each time ($30 or $40 a pop, in some cases), and your credit score may also take a hit.

• Foreign transaction fees. Purchasing goods or services outside the United States may incur an additional fee of around 3% on your credit card bill. If these types of purchases will be necessary or routine for you, look for a card that does not impose international surcharges.

• Limits on bonuses/points/cash back. If a credit card offers a sign-up bonus, special introductory interest rates, or other incentives, make sure you qualify. The fine print may reveal these opportunities are only available for select customers, expire quickly, or must be used in a specific fashion.

5. Apply for a credit card

Now, you’re ready to fill out an application for the credit card that hits the jackpot with all the features and benefits you want and need and none of the extra fees and charges you don’t.

What's involved in applying for a credit card? Expect to provide some personal information, including your legal name, birth date, address, annual income, and Social Security number. The prospective lender will use your nine-digit Social Security number to generate your credit score report. If you're under 21 and/or do not have an income, you can use your household income on the application.

If your credit history is well established, you can likely apply to be pre-approved for a credit card. Often, this simply requires your name, address, and the last four digits of your Social Security number. Not all credit card providers allow for pre-approval on all cards. Pre-approved credit cards generally do not affect your credit score.

If your credit card application is denied, chances are you applied for a card offering terms that don’t match your credit history or financial profile. For example, a no-fee, ultra-low APR card may only be available to applicants with excellent credit carrying little-to-no credit card debt. If that doesn’t describe you, you’ll be turned down.

Fortunately, you have options. It’s likely your local credit union has various credit union credit card options that will work for you. Credit union credit cards are often the best choice for people with the best credit and for those with a low credit score or no track record of managing debt. Credit unions offer loan options for virtually every type of borrower.

Further resources on how to choose a credit card

For more detailed information on how to choose a credit card and how to apply for a credit card that’ll be your ace in the hole, check out these additional resources:

• Advice on credit and debt. USA.gov offers a clear overview of dealing with debt and understanding credit scores.

• Get a free credit report. MyCreditUnion.gov provides instructions on how to obtain your free annual credit report.

• Understand credit card agreements. The Consumer Financial Protection Bureau is an impartial source of information on credit card agreements and what to “know before you owe.”

Thorough research will pay off when choosing and applying for a credit card. Credit unions offer low-interest credit cards suited to every borrower’s needs, including those with an imperfect credit history. Find a credit union near you.

Did you know?

Credit union credit cards are an excellent choice for members across various credit scores. Unlike banks with more rigid metrics, credit unions are more likely to consider a more comprehensive range of factors in the credit card application process, such as employment experience and other life circumstances.