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Ever since the first credit card debuted in 1958, people have been using them as a convenient form of payment, whether for big-ticket items or small daily purchases. As credit cards have become increasingly popular, options have multiplied. If you are looking to open a new credit card, you may be wondering, “Which credit card is right for me?”

While there is no single perfect credit card that is the best one for everyone, you can follow a few steps to see if you can find the right card for you. There are several variables to consider, from rewards to interest rates. Depending on your answers to some of the questions below, you may be able to narrow down your options and decide on the right card to apply for and use.

Check Your Credit

One of the first things that you will want to do before signing on to a new credit card is check your credit score. There are a number of places where you can check your credit score for free once a year. Credit scores typically range from 300 to 850, from poor to excellent.

Understanding your credit score can help you determine which credit cards you might be able to get. The way credit cards work is that typically, the cards with the highest rewards and most benefits also require the best credit scores. If your credit is fair or poor, you are not likely to be approved for those credit cards, so it may not make sense to even fill out an application.

Recommended: Guide to Credit Score Ranges

Identify Which Type of Credit Card You Need

There are many different types of credit cards out there, so the next step can be identifying which type of credit card you are looking for.

•   If you are looking for a rewards credit card that offers airline miles or other travel perks, that goal can help narrow down your choices.

•   Another option might be a credit card that earns cash back with every purchase.

•   You might also compare interest rates and see which offer is most attractive to you.

•   If you are working on building your credit, there may be a student or secured credit card to suit your needs.

Understanding the different types of cards that are available can help you choose the right credit card for your specific situation.

Narrow Your Choices by Asking the Right Questions

As you make your decision about which credit card is right for you, consider these points:

•   Some credit cards offer higher rewards in specific bonus categories, while others may offer a flat rate on all purchases. If you make a lot of purchases at grocery stores, gas stations, or home improvement stores, you may want to get a credit card that offers higher rewards rates in those categories.

•   If you have more balanced spending, it might make more sense to get a credit card that offers a high rewards rate on all purchases, no matter where you spend. Many people like using cash back rewards, among the various redemption options.

•   You’ll also want to look at any annual or other fees associated with a card to make sure you are getting enough in value to offset the cost of any fees you have to pay. It can sometimes make sense to have a credit card with an annual fee if the benefits are worth it to you (say, you travel a lot, and the card offers access to a network of posh airport lounges). That said, there are many excellent credit cards that do not charge an annual fee.

•   If you are focused on building your credit, see which secured credit cards are available. These cards involve a cash deposit that serves as collateral in case you can’t make a payment.

Recommended: Understanding Purchase Interest Charges on Credit Cards

Apply for the Credit Card That Offers You the Highest Value

Once you’ve figured out what kind of rewards you want to earn and what card you are likely to be approved for given your credit history, you can look at a few cards that fit those criteria. Compare interest rates, and consider the three main reasons you might consider applying for any particular card:

•   The value of the rewards you will earn with everyday purchases.

•   How much you might get from any one-time initial credit card bonus offers.

•   Any perks or benefits you receive just from having the card.

Carefully review each of these benefits for any cards you are considering and then apply for the card that gives you the best value.

Credit Card Tips

Once you’ve received your new credit card, these tips may help as you use it:

•   Set up a plan to pay it off in full each and every month if possible. Interest rates on your balance tend to be steep, so avoid paying those costs as best as you can.

•   While you may be able to pay your credit card with a debit card in some instances, it will likely be easier to set up your credit card account to automatically be paid from your bank account.

•   If you’re using this new card to replace a previous card, you may want to update any automatic bill payments to use your new card information.

•   If your bill is due right before payday, call the issuer and see if you can shift the date by which payment is needed. Some card issuers can accommodate this request.

You can learn more about how to use credit cards wisely by exploring this credit card guide.

The Takeaway

There are hundreds of different credit cards out there, and each one comes with their own terms and perks. If you’re curious about “Which credit card is right for me?” know that there isn’t a single credit card that is the best credit card for everyone — instead, you’ll have to analyze the options and pick the best one for you.

Carefully review which cards you’re likely to be approved for, the rewards and benefits of each one, and any annual fees associated with the card to find the one that’s a good fit for you.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How do I know what credit card is right for me?

There are a couple of different questions you’ll want to ask yourself to help decide which credit card is right for you. First, check your credit score, and look for a card that targets users within that credit score range. Then look for a card that offers rewards or benefits that you will find useful; also review whether an annual fee is charged.

How do I choose which card to use?

When you go to use your credit card, check to see which of your cards offers the most rewards for that type of purchase. If you have a card that offers a bonus rewards rate for those types of purchases, that could be a good one to use. Otherwise, use a credit card that offers a high rewards rate on all purchases.

Which credit card do most millionaires use?

It’s hard to say which credit card is most popular with millionaires, since that information is not generally considered public. However, it’s probably a safe bet that many millionaires might look for cards that offer a high level of benefits though they charge high annual fees. This might include The Centurion Card (aka “the Black Card”) from American Express, the Chase Sapphire Reserve, or the Capital One Venture X card.

Photo credit: iStock/AscentXmedia

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Some credit cards offer a promotional interest rate, as low as 0% APR, for purchases and/or balance transfers. Often, these promotional interest rates are offered for a limited period of time when you apply for a new card, though some issuers offer promotional rates for existing cardholders as well.

If you have a large purchase coming up, or an existing credit card balance that you want to transfer over, these cards can save you a significant amount of interest. You’ll just want to make sure to pay off the full balance by the end of the promotional period, as your interest rate will likely jump significantly when your promotional APR (annual percentage rate) expires.

What Are Credit Card Promotional Interest Rates?

A credit card promotional interest rate is an interest rate that is offered for a limited amount of time, as a promotion. During the promotional period, you’ll be charged a lower interest rate than your typical interest rate.

It’s common for credit cards to offer these introductory promotional interest rates for new members when you open a credit card account. However, it’s also possible for issuers to offer promotional interest rates to existing cardholders.

Recommended: How to Avoid Interest On a Credit Card

How Credit Card Promotional Interest Rates Work

One common scenario for how credit card promotional interest rates work is that an issuer might offer a 0% promotional interest rate on purchases and/or balance transfers for a certain period of time. When you’re using a credit card during the promotional interest period, you won’t pay any interest.

It’s important to note that there are two major types of promotional interest rates, and they vary slightly. With a 0% interest promotion, you won’t pay any interest during the promotional period. If there’s any balance remaining at the end of the promotional period, you’ll begin paying interest at that time. With a deferred interest promotional rate, on the other hand, you’ll pay interest on any outstanding balance back to the date of the initial purchase.

Benefits of Credit Card Promotional Rates

As you may have guessed, there are certainly upsides to taking advantage of credit card promotional interest rates. Here’s a quick look at the major benefits; you can learn more by consulting this credit card guide.

Low Interest Rate During the Promotional Period

One benefit of credit card promotional interest rates is the ability to take advantage of a low or even 0% interest rate during the promotional period. Having access to these promotional rates can give you added flexibility as you plan your financial future.

Ability to Make Balance Transfers

One possibility to maximize a credit card promotional rate is if you have existing consumer debt like a credit card balance. By using a balance transfer promotional interest rate, you can transfer your existing balance and save on interest. This can help lower the amount of time it takes to pay off your debt.

Can Pay For a Large Purchase Over Time

If your credit card has a 0% promotional interest rate on purchases, you can take advantage of that to pay for a large purchase over time. That way, you can spread out the cost of a large purchase over several months rather than needing to pay it off within one billing period.

Just make sure to pay your purchase off completely before the end of the promotional period to avoid paying any interest.

Drawbacks of Credit Card Promotional Rates

There are downsides to these offers to consider as well. Specifically, here are the drawbacks of credit card promotional interest rates.

Deferred Interest

You need to be careful if your credit card promotional rate is a deferred interest rate, rather than a 0% interest rate. Because of how credit cards work, with a deferred interest rate promotion, you’ll pay interest on any outstanding balance at the end of the promotional period — back to the date of the initial purchase. This amount will get added to your existing balance, driving it higher.

Penalty Interest Rates

You still have to make the minimum monthly payment on your credit card during the promotional period. If you don’t make your regularly scheduled payment, the issuer may cancel your promotional interest rate. They may even impose an additional credit card penalty interest rate that’s higher than the standard interest rate on your card.

May Encourage Poor Spending Habits

Establishing good saving habits and living within your means is an important financial concept to live by. While it may not always be possible, it’s generally considered a good idea to save up your money before making a purchase. While a 0% interest promotional rate means you won’t pay any interest, it can contribute to a mindset of buying things you don’t truly need.

Recommended: Tips for Using a Credit Card Responsibly

How Long Do Credit Card Promotional Interest Rates Last?

By law, credit card promotional interest rates must last at least six months, but it is common for them to last longer. You may see introductory interest rates lasting 12 to 21 months, or even longer.

Regardless of how long your promotional period lasts, make sure you have a plan to pay your balance off in full by the end of it. Credit card purchase interest charges will kick in once your promotional period is over.

Zero Interest vs. Deferred Interest Promotions

Both 0% interest rates and deferred interest rates are different kinds of promotional rates where you don’t pay any interest during the promotional period. However, they come with some key differences:

What to Consider When Getting a Card With a Zero-Interest or Deferred Interest Promotion

One of the top credit card rules is to make sure you pay off your credit card balance in full, each and every month. But if you’re carrying a balance with a promotional credit card rate, you’ll want to make sure you understand if it’s a 0% rate or a deferred interest promotion.

With a 0% promotional rate, you’ll start paying interest on any balance at the end of the promo period. But with a deferred interest promotional rate, you’ll pay interest on any balance, back-dated to the date of the initial purchase.

In either case, the best option is to make sure that you have a plan in place to pay off the balance by the end of the promotional period.

Paying off Balances With Promotional Rates

You’ll want to have a gameplan for how to pay off your balance before the end of the promotional period. That’s because at the end of the promotional period, your credit card APR will increase significantly.

If you still are carrying a balance, you will have to start paying interest on the balance. And if you were under a deferred interest promotional rate, that interest will be calculated back from the initial date of purchase.

Watch Out for High Post-Promotion APRs

Using a 0% promotional interest rate can seem like an attractive option, but it can lull you into a false sense of financial security. You should always be aware that the 0% interest rate won’t last forever. Your interest rate will go up at the end of the promotional period, and if you’re still carrying a credit card balance, you’ll start paying interest on the balance.

Exploring Other Credit Card Options

There are some other credit card options besides getting a card with a promotional interest rate. For instance, you might look for a credit card that offers cash back or other credit card rewards with each purchase.

Before focusing on credit card rewards or cash back, however, you’ll want to make sure that you first focus on paying off your balance. Otherwise, the interest that you pay each month will more than offset any rewards you earn.

If you’re carrying a balance, you can also attempt to get a good credit card APR by making on-time payments and asking your issuer to lower your interest rate. By simply securing a good APR, you won’t have to worry about it expiring and then spiking like you would with a promotional APR.

The Takeaway

Some credit cards offer promotional interest rates to new and/or existing cardholders. These promotional interest rates could be a 0% interest rate for a specific period of time, or a low interest rate to encourage balance transfers.

While taking advantage of promotional interest rates can be a savvy financial move if you have existing consumer debt or need to make a large purchase, you’ll want to make sure you have a plan to pay off your balance in full before the promotional period ends. That way, you avoid having to pay any interest. Shop around and consider offers from different credit card providers before you make a decision.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Will my interest rate spike after a promotional deal ends?

Credit card promotional interest rates generally last only for a specific number of months before the interest rate on the card rises. Credit card providers make money by charging interest on balances that are not paid off. So, while your credit card may charge 0% or a lower promotional rate for a period of time, the interest rate will rise once the promotional period is over and will apply to any outstanding balance on the card.

How does a promo APR work?

Promotional APR offers are generally put forward by credit card companies as a way to entice new applicants. Cards may offer a 0% introductory APR for a certain number of months on purchases and/or balance transfers. Once the promotional period is over, your interest rate will rise to a normal level.

Should you close a credit card with a high interest rate?

Having a credit card with a high interest rate will not negatively impact your credit or your finances so long as you aren’t carrying a balance. So, simply having a high interest rate is not a reason, in and of itself, to close a credit card. But if you have a balance on a credit card with a high interest rate, you might want to consider doing a balance transfer to a card with a promotional 0% interest rate while you work to pay it off.

Is my credit card’s promotional rate too good to be true?

Promotional interest rates are a legitimate marketing strategy used by many credit card companies. While you shouldn’t treat them as a scam, you also need to make sure that you are aware of the terms of the promotional rate and how long the rate is good for. Make a plan to completely pay off your balance by the end of the promotional period before your interest rate increases.

Photo credit: iStock/Jakkapan Sookjaroen

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you fall significantly behind on your credit card payments, your account may get sent to collections. Credit card debt collection is the process where creditors or third-party collection agencies pursue repayment of significantly overdue credit card balances, typically 120 days to 180 days late.

Some credit card issuers have in-house collection departments, but often they will close your account and assign or sell your debt to a third-party collection agency. This agency will then contact you to try to collect on the debt. Here’s a closer look at what happens when credit card debt goes to collections.

What Are Credit Card Collections?

Credit card collections is the process lenders and third-party agencies use to recover unpaid debt.

If you’re familiar with using a credit card, you’ll know that card issuers allow you to make purchases with the promise of eventual repayment. But if you don’t make even the credit card minimum payment for many months in a row, the credit card company may eventually send your debt to collections in an effort to recoup the money you owe.

When Are You at Risk of Credit Card Debt Collection?

While there is no standard timeline, credit card debt typically moves to collections after 120 to 180 days of nonpayment.

However, the warning signs often appear much earlier — most notably when a cardholder can only manage the minimum monthly payment. Because interest rates now average over 20% and typically compound daily, balances can become unmanageable fast. While recent proposals aim to cap credit card interest rates, a steadily climbing balance remains a clear indicator of financial distress.

💡 Quick Tip: Wherever you stand on the proposed Trump credit card interest cap, one of the best strategies you can use to pay down high-interest credit card debt is to secure a lower interest rate. A SoFi personal loan for credit card debt can provide a cheaper, faster, and predictable way to pay down debt.

How Do Credit Card Collections Work?

Credit card debt collection results from not paying your credit card bills. The best way to use credit cards is to always pay the full statement balance by the payment due date. If you’re unable to do that, you’ll want to at least make the credit card minimum payment to keep your account in good standing and avoid late fees.

If you don’t make any payments toward your credit card balance for around four to six months, the credit card company may start the credit card collections process. At this point, a third-party debt collector may assume responsibility for trying to get you to repay what you owe, relying on the contact information the credit card company has on file to get in touch.

Credit Card Debt Collections Process

Credit card companies will typically begin the credit card debt collections process by attempting to contact you directly to pay off the debt. If you haven’t made any credit card payments recently, the bank will likely reach out via email or certified letter. If you still don’t make any payments or arrange for a payment plan within 30 to 90 days, they’ll likely send the debt to collectors.

Many card issuers do not have the staff or business model to engage in a long-term credit card collection process. That’s why they will often hire a third-party company to do the actual debt collection. In many cases, they will simply sell the debt to a collection company for less than it’s worth. Either way, the collection agency will then try to collect on the debt. There are currently over 5,000 third-party debt collection companies in the U.S.

Features of Credit Card Debt Collections

When debt goes to collections, a collector will typically contact you via phone, email, or mail to recover the debt. They must abide by the Fair Debt Collection Practices Act (FDCPA), which prohibits them from contacting you before 8 a.m. or after 9 p.m, contacting you by email or text message if you ask them to stop, or contact you at work if you tell them not to.

In addition, a debt collector must give you “validation information” about the debt either when they first communicate with you or within five days of the first contact. By law, they must provide the following details:

•   The collector’s name and mailing address

•   The name of the original creditor you owe

•   How much money you owe, written out to include interest, fees, payments, and credits

•   Steps to take if you don’t think it’s your debt

If you need help understanding your rights or how to handle credit card debt in collections, you might consider working with a nonprofit credit counseling service.

What Is a Collection Lawsuit?

If debt collectors are not successful in using phone calls, letters, or emails to collect on a debt, the next step is often a lawsuit. A collection lawsuit is a civil legal action filed by a creditor against a debtor to recover unpaid, delinquent, or defaulted debt. A court judgment in their favor can lead to wage garnishment, bank account freezes, or property liens.

However, debt collectors cannot sue you for “old” debt if it has passed the legal time limit, known as the statute of limitations. The statute of limitations on consumer debt can range anywhere from two to 20 years, depending on the state. The timeline may start on the date you made the last payment or the first missed payment — this also varies by state.

Once the statute of limitation expires, the debt is considered “time-barred” and collectors no longer have the legal right to take you to court.

Responding to a Collection Lawsuit: What to Know

It’s important to respond to a collection lawsuit promptly, as ignoring the summons can result in an automatic loss (default judgment). You typically need to respond in writing by a date specified in the court papers, either personally or through your attorney.

You may also need to show up in court, even if you don’t believe you owe the debt. By showing up to court, the debt collector will have to prove that you owe the debt, the amount is correct, and they have the legal right to sue you to collect on the debt. If they can’t, you may have the debt vacated. You may also be able to have the debt discharged if it’s past your state’s statute of limitations.

If you’re unsure how to handle a debt collection lawsuit, you may want to consult a debt relief lawyer.

What Happens If You Don’t Respond to a Collection Lawsuit?

If you don’t respond to a collection lawsuit, it’s possible that the judge will issue a default judgment against you. A default judgment means that the plaintiff (the debt collector) automatically wins, since the defendant (you) did not respond to the lawsuit. In that case, the debt collector now has the legal right to garnish your wages and/or attempt to go after the money in any of your bank accounts.

How a Debt in Collection Affects Your Credit

Once a credit card issuer sends your debt to collections, they will typically close your account and the collection is usually reported as a separate account on your credit report, where it can stay for up to seven years.

A collection account on your credit report is considered a negative entry and can negatively impact your scores, though its impact diminishes over time.

If you pay the debt in collection, the collector may update your account status to “paid” on your credit report. While paid collections can still impact your credit scores, some newer scoring models do not consider paid collection accounts when calculating your score.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Guide to Dealing With Credit Card Debt in Collection

If you have credit card debt in collections, it’s important to immediately request a debt validation letter to confirm the debt is yours and accurate. It’s also a good idea to check your state’s statute of limitations for suing on debt, and keep in mind that paying or promising to pay a time-barred debt can reset this clock.

You can check the validity of the debt by looking at your credit reports. If the debt is yours and it’s not time-barred, you might offer to pay a reduced, lump-sum amount in exchange for marking the debt “settled in full.” You’ll want to be sure to get any agreements in writing before making a payment.

Taking Charge of Your Finances

If you’re worrying about credit card debt collections, you may feel like your finances have spun out of your control. Here are some tips to take charge once again:

•   Only spend what you can afford to pay off: One of the best tips for using a credit card responsibly is to avoid making purchases that you won’t be able to pay off each month. This will stop your spending from spiraling into debt.

•   Always try to pay off your credit card in full: While not always easy to do, paying your full statement amount each month allows you to avoid paying interest on your purchases and accumulating debt and can positively impact your credit file.

•   Address any debt head on: If you find yourself in the position of having credit card debt, one of the best things you can do is acknowledge your situation and make a plan to pay off your credit card bill. Start a budget, cut expenses if needed, and use any monthly surplus amount to pay down your debt. It’s also smart to stop spending on your credit card until you’ve reduced or eliminated any outstanding balance.

Recommended: When Are Credit Card Payments Due?

The Takeaway

If you miss making a credit card payment for many months in a row, your card issuer may send you debt to collections. Often, this means that your account will be managed by a third-party agency. This can significantly harm your credit for up to seven years and may even result in a collection lawsuit. Understanding your rights under the FDCPA and proactively addressing debt issues (before they go to collections) can help you regain control of your financial health.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

What happens when credit card debt goes to collections?

When credit card debt goes to collections, the creditor or a third-party collection agency will contact you to try and recover the overdue balance. This may happen after you’ve missed payments for 120 to 180 days. The collector must provide validation information about the debt and abide by the Fair Debt Collection Practices Act (FDCPA). The collection account will appear on your credit report for up to seven years, and can negatively affect your credit scores. If a collector cannot recoup what’s owed, they may file a collection lawsuit, which could result in a court judgment allowing for wage garnishment or bank account levies.

Can a debt collector force me to pay?

A debt collector cannot legally force you to pay a debt. They are permitted to contact you to request payment, and, if the debt is still within the statute of limitations, they can file a lawsuit. If they win the lawsuit and obtain a court judgment, that judgment can legally allow them to garnish your wages or freeze your bank accounts to recover the debt. However, they must always follow the rules of the Fair Debt Collection Practices Act (FDCPA).

How long can credit card debt be collected?

The length of time a credit card debt can be collected depends on your state’s statute of limitations, which dictates how long a creditor has to sue you. This period can range from two to 20 years, typically starting from the date of your last payment or first missed payment. Once the statute of limitations expires, a collector can no longer take legal action against you, though they may still attempt to collect the debt.

Do debt collections affect your credit score?

A debt in collections can negatively affect your credit and remains on your credit report for up to seven years. Since payment history is the most significant factor in credit scoring, a collection account is a serious negative mark. Paying the debt may help, as some modern scoring models disregard paid collection accounts.

Photo credit: iStock/courtneyk

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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With so many options available, choosing a credit card isn’t as simple as signing up for whichever card happens to be popular at the moment. Instead, you should consider things like your credit score, preferred features, and spending habits.

After all, there are many different types of credit cards meant for different purposes. Making the best choice is about not only knowing your approval odds, but also how you intend to use the card after signing up. Using a step-by-step approach for how to choose a credit card will help you make the right decision for your situation.

Where To Begin When Choosing a Credit Card

Choosing a credit card is a matter of understanding which type of credit card works best for you. You’ll want to consider a number of factors, including:

•   Your credit score

•   How you plan to use your new credit card and which features you’ll need

•   How the card stacks up to other options

•   The card’s interest rates and fees

•   Which rewards you want

•   Any sign-up bonuses offered

Read on to learn more about each of these items and what specifically to look for.

Checking Your Credit Score

Checking your credit score should be one of the first steps you take before applying for a new credit card. One of the best ways to know your approval odds is to check your score.

One way to do so is to use AnnualCreditReport.com. This website allows you to request a copy of your credit report from each of the major credit reporting bureaus: Experian®, Equifax®, and TransUnion®. Federal law allows you to request one copy of your credit report from each reporting bureau per year.

However, you may want to check your credit score more often than once per year, especially if you are in the process of building your credit. You can sign up for credit score monitoring to keep tabs on your score efficiently.

There are several credit scoring models available, but most lenders use FICO, so getting this score can be a good way to gauge your chance of approval. These checks won’t guarantee you’ll get approved for a credit card, but they can help you get a better sense of where you stand. Plus, pulling your credit report won’t hurt your credit score.

Identifying the Features You Need

There are many different types of credit cards, each of which has its own set of features. Identifying the features you need can help you find the right credit card, as how credit cards work varies depending on the type.

Credit Builder Credit Cards

Some credit cards are meant for those who are working on building their credit. This could include college students, those trying to repair their credit, or anyone with little to no credit history.

In those cases, you might need a secured credit card or a student credit card. Secured credit cards require a security deposit, usually around a couple or a few hundred dollars, that is fully refundable. Your credit limit is usually equal to your security deposit, so the card issuer has little risk of losing money. Student credit cards, on the other hand, are usually unsecured and may have special perks for students.

Here are some features to look for in credit builder credit cards:

•   No annual fee: If you are working to build your credit, annual fees could make things more difficult.

•   Credit limit increases: Credit limits often start low with these cards; some offer credit limit increases if you use your card responsibly.

•   Free credit score: Some credit builder cards offer free credit score monitoring to let you know where you stand.

Balance Transfer Credit Cards

Balance transfer credit cards are ideal for consolidating and paying off debt. Thus, the key with this type of card is finding one that keeps fees as low as possible:

•   0% introductory APR: Balance transfer credit cards may come with low or 0% balance transfer APR for a specified introductory period, sometimes lasting a year or more. Some even have a separate 0% APR introductory period for purchases. This can allow you to avoid paying much in interest for a certain period of time and instead put your money toward paying down the principal balance.

•   Balance transfer fees: These cards often charge separate balance transfer fees, which you should be aware of if you plan to transfer large balances.

Rewards Credit Cards

Credit card rules say that you shouldn’t get a card just for the points. However, rewards credit cards may come with a variety of benefits. These include cash back, points and miles, and various perks, such as rental car insurance and airport lounge access. You can redeem points and miles for statement credits, gift cards, flights, and hotels, so you’ll have to decide what’s most important to you.

Here are some rewards credit card features to consider:

•   Sign-up bonuses: Some rewards credit cards include sign-up bonuses that can be worth hundreds of dollars.

•   Low or no annual fee: While some of these credit cards have annual fees, not all of them do.

•   Rewards categories: Rewards credit cards generally let you earn a percentage of your purchases in cash back or points/miles. Some have higher earning rates for certain categories, such as groceries or travel. Look for one that earns a lot of points where you normally spend the most.

•   Other perks: These cards can come with a variety of other perks, from UberEats credits to free hotel nights. If you never travel, for example, you may not be interested in free hotel stays.

Narrowing Your Choices by Doing Research and Asking Questions

The key to how to pick a credit card is understanding how you want to use it. While some credit cards are more like generalists, doing many things somewhat well, others are niche cards that are great in certain scenarios. Consider what’s most important to you and how much you need certain features.

Once you’ve decided which type of credit card you want, the next step is to compare some of the best options. For instance, if you want a rewards credit card and don’t want to pay a high annual fee, look for no annual fee rewards credit cards. For balance transfer credit cards, you can look for ones with the lowest fees, including a lengthy 0% introductory APR. Also keep in mind you don’t need to rely on one card to meet all of your needs. Here’s a primer on how many credit cards you should have.

Identify a handful of cards that look like good candidates based on your research. Once you have two to three cards that seem like the right fit, you might want to submit a prequalification form. This process will give you a hint about whether you might qualify — and it won’t affect your credit score. Prequalification doesn’t guarantee approval, but it will help you know where you stand.

Familiarizing Yourself With the Interest Fees and Rates

Having a basic understanding of interest rates and fees will help you avoid paying more than expected to use your new credit card.

Different types of credit cards tend to come with varying interest rates. For instance, the minimum annual percentage rate (APR) for travel cards currently ranges between 17.49% and 19.99%. However, the maximum APR for these credit cards can be slightly lower than the maximum for 0% APR and low-interest credit cards.

Of course, fees also matter. Balance transfer cards might have a 0% introductory period, but a fee may apply every time you initiate a balance transfer. Depending on the card, other fees may be involved, such as late fees and penalties, annual fees, and foreign transaction fees. Be sure to review all relevant fees before signing up for and using a credit card.

Deciding Which Rewards You Want

You also may need to decide which type of rewards you’ll want to earn. There are a few different types of rewards that credit cards can offer:

•   Cash back: With a cash back rewards credit card, users typically earn a percentage in cash on each eligible purchase you make with your card. You could get a flat rate across categories, or you may earn a higher rate in specific categories. Or you might see offers for unlimited cash back. If you want to earn rewards across spending categories and don’t want to worry about calculating and converting, cash back might be the right rewards option for you.

•   Points: Another way to earn credit card rewards is through points. You’ll earn a certain number of points for every dollar spent, with the rate and redemption options varying depending on the issuer. The perk of points is that you can redeem them in a number of different ways, including cash back, travel, charitable donations, statement credits, gift cards, and more.

•   Miles: If you’re a frequent flier, you might prefer earning airline miles. Credit cards that allow you to earn miles let you redeem your rewards for flights and other travel-related perks, such as hotel stays or access to airport lounges.

Looking at Sign-Up Bonuses

Some credit cards feature sign-up bonuses to attract new customers. Usually, you have to spend a certain amount in the first three or four months of opening the card. If you meet the minimum spending threshold within that time frame, you’ll receive cash, points, or miles as a reward. The trick is to ensure you can meet the spending threshold on time.

There can be a wide range of bonus amounts; for instance, the Chase Freedom® Student credit card has a $200 bonus for making $500 worth of purchases in the first three months. On the other end of the spectrum is the American Express Platinum Card, which at the time of writing offers 175,000 points after spending $12,000 in the first six months. Most sign-up bonuses, however, fall somewhere in between.

Choosing the Card With the Highest Overall Value

There are several credit cards available that offer similar benefits. In those cases, you will want to compare them directly to one another and find features that give one card the edge. Here are a few things to consider for each type of credit card:

Student and secured credit cards:

•   Credit limit increases: Some student credit cards will automatically increase your credit limit if your account remains in good standing.

•   Flexible credit lines: Some secured credit cards give you access to a larger credit line than your deposit.

0% introductory APR or balance transfer credit cards:

•   No late fees or penalties: Some credit cards waive these fees, which might be helpful when transferring balances.

•   Installment plans: Some balance transfer cards offer installment plans to help you repay your balance over time.

Rewards or travel credit cards:

•   Low spending threshold: Requirements to earn sign-up bonuses can vary; look for one that’s well within your budget.

•   Points transfer: Some travel credit cards let you transfer points to airlines or hotels, which can lead to better redemption rates in some cases.

How Your Credit Score Affects Your Chance of Approval

Your credit score is one of the biggest factors in determining whether you’re approved for a credit card. If you have poor or no credit, you probably won’t get approved for a card that requires very good to excellent credit, regardless of other factors, given what a credit card is and how the approval process works.

Luxury credit cards, for example, may require a credit score of 670 or higher. If your score is higher, you might be approved for one of these cards (though approval is not guaranteed). If your credit score is below 670, however, your approval odds will probably be quite low.

While a credit score and credit card offers are intertwined, that may not be the only factor a card issuer considers. Issuers might also look at things such as your employment status and income. This is one of the reasons that a good credit score doesn’t guarantee approval.

Still, a better credit score can help you secure the credit card you want. As such, you might consider taking steps to build your credit score before applying for a credit card, such as by making on-time payments or lowering your credit utilization ratio.

What Comes Next After Choosing a Credit Card?

If you’ve already submitted prequalification forms, you should have some idea about your approval odds for each card. As mentioned, those forms do not guarantee approval but can serve as a valuable guideline.

Once you have chosen a credit card, it’s time to apply. Some general steps are to:

1.    Visit the card issuer’s website and click apply.

2.    Fill in the required information.

3.    Submit your application.

In some cases, you may receive instant approval (or denial). In others, the card company will need more time to review your application. If approved, you can usually expect to receive your card in the mail in seven to 10 business days. As you wait, learn more about credit cards by exploring this credit card guide.

If you are denied, you can call the card’s reconsideration line and provide additional information. Perhaps you forgot some additional sources of income that could help your case. Anything that may help is worth mentioning.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

The Takeaway

Deciding which credit card is best for you can be a bit of a complex process. However, once you have a better understanding of what you need, the process of choosing a credit card doesn’t have to be difficult. Some credit cards are simply better than others, and picking them is a surprisingly easy choice after comparison shopping.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How does your credit score determine the card to choose?

Your credit score is one of the most important factors in deciding which credit card to choose. For example, if your credit score is poor, you probably won’t be approved for a premium card with excellent rewards that requires good to excellent credit.

How do you choose a credit card for the first time?

In most cases, the best choice for your first card should have no annual fee. Some good choices are student credit cards (for students) or secured credit cards. These cards are ideal for building credit and often have low fees.

What is the most important factor when choosing a credit card?

The most important factor when choosing a credit card is probably how you intend to use it. For example, a premium credit card may offer excellent benefits for the frequent traveler, but someone who just wants to earn cash back on groceries may not benefit from travel perks.

Photo credit: iStock/Eva-Katalin

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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The median annual pay for cosmetologists is $35,420 a year, according to the Bureau of Labor Statistics’ most recent data. Helping people feel their best can be a rewarding way to spend your workdays, and cosmetologists get to do just that. From hair to skincare to makeup to nails, there are many different niches a cosmetologist can master, all of which can be enjoyable career paths.

That said, the average pay for cosmetologists is significantly lower than the average income for all jobs in America, which, according to the Bureau of Labor Statistics, is $62,088 for the first quarter of 2025 (based on an average weekly salary of $1,194).

Keep reading to learn what it’s like to work as a cosmetologist and the earning potential for this role.

What Are Cosmetologists?

Cosmetologists provide personal grooming services, such as haircuts, manicures and pedicures, skincare services and facials, hair removal (waxing), or makeup artistry. Many cosmetologists offer a variety of these services, whereas others have a specific niche, such as hairstyling.

During cosmetology school, it’s common for students to take lessons in a variety of different specialties. That way, they can gain better insight into which areas of cosmetology they’re most passionate about and skilled at.

In terms of training, states often require a certain number of hours of training and a passing grade in written and practical examinations. For instance, in New York, you need 1,000 hours of training. You might study at a private cosmetology school (cosmetology school loans may be available) or undertake an associate’s degree program.

Your area of specialization can impact your earning potential as a cosmetologist, as can your location. In New York City, with its high cost of living and pay grade, one study found the average salary to be more than $70,000 per year. That could mean that those in major cities who have superior skills and experience and a loyal following could even earn $100,000 per year.

Lastly, it’s important to recognize that cosmetology typically involves lots of interaction with clients. For this reason, it may not be the best job for antisocial people.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

How Much Do Starting Cosmetologists Make a Year?

Cosmetologists in entry-level positions can expect to earn less than those with many years of experience.

When it comes to starting wages, cosmetologists can expect to earn a median hourly wage of $11.82 (in the lowest 10% of earners) but may see that amount rise significantly over time. The top 10% of earners in this field make more than $33.76 per hour.

For example, a celebrity makeup artist can make very competitive pay, but they also tend to be extremely skilled and experienced.

What Is the Average Salary for a Cosmetologist?

The amount of money someone stands to earn as a cosmetologist can vary significantly depending on the services they offer, their experience level, and where they live. The median annual salary is $35,420.

It’s important to note that an annual salary is not a guarantee as a cosmetologist, as many work part-time. In terms of how much a cosmetologist makes an hour, the median hourly wage for a cosmetologist is $16.95.

These medians give prospective cosmetologists an idea of how much they stand to make if they pursue this career path, but they can get an even clearer picture by reviewing the average salary by state. Here, you’ll find these figures for each state according to 2024 data.

What Is the Average Cosmetologist Salary by State for 2024?

Source: CareerOneStop

Cosmetologist Job Considerations for Pay and Benefits

Even if they work full-time, many cosmetologists are self-employed and rent a chair or space at the salon they work in. Because most cosmetologists are not full-time employees of someone else’s business, they typically don’t receive employer-sponsored benefits such as health coverage or a 401(k) match. This means they also don’t receive a paycheck when they take time off. To help offset the loss of benefits, cosmetologists need to set their rates to cover not only living expenses but also health care and their retirement fund.

Some cosmetologists, however, will find full-time work. Examples of these career paths could be working as a cosmetology instructor or at a resort’s spa.

Pros and Cons of a Cosmetologist Salary

One of the main benefits of working as a cosmetologist is that you don’t require expensive schooling to start this career. While you must typically complete a state-approved cosmetology program, this education path is usually much faster and less expensive than pursuing a four-year degree, with costs generally ranging from $10,000 to $20,000. This means many cosmetologists can avoid taking out expensive student loans with monthly payments that can eat into their paychecks.

However, there’s no denying that the average cosmetologist salary is below the national average salary for all incomes combined.

The Takeaway

Working as a cosmetologist leads to a median annual salary of $35,420. With hard work and strong skills, cosmetologists can expect to make more money as their careers progress, especially if they work in certain markets. Also, since many cosmetologists work for themselves, they can gradually increase their rates as they build their client base and reputation.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Can you make 100K a year as a cosmetologist?

It’s possible to earn $100,000 or more a year as a cosmetologist. However, it will take time to build up a client base or find a position that pays high enough rates to earn a six-figure salary.

Do people like being a cosmetologist?

It’s very common to pursue cosmetology as a career because of a passion for hair care, skincare, makeup, or nail care. This can be a fun and rewarding career path for anyone whose passions align with the services they offer. However, even if they love cosmetology, introverted people may find a full day of social interaction to be too draining.

Is it hard to get hired as a cosmetologist?

The Bureau of Labor Statistics projects 84,200 job openings for cosmetologists between now and 2034, and it anticipates a 5% growth in overall employment during this period, which exceeds the national average.

What is the highest-paid cosmetology job?

Cosmetologists such as celebrity makeup artists often earn competitive salaries, but they tend to be highly skilled and experienced. Those working in major cities can potentially earn six-figure salaries after building a loyal client base.

Is it expensive to become a cosmetologist?

Cosmetology programs generally cost between $10,000 and $20,000. This is lower than the typical cost of a four-year degree.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

Photo credit: iStock/Renata Angerami

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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