Choosing the best card during all the stages of your life.
To navigate the road of life successfully, it helps to have financial tools that fit your needs. When choosing a credit card, there are a few features you should always look for: enhanced security features (such as reimbursement for any fraudulent card transactions), 24-hour customer service, and online account access. Here are a few other pointers for choosing the best card at various stages of life.
College students have unique credit requirements. At this stage, you should be looking for a basic card with a credit line of $500 or less. There will be plenty of time after graduation for higher credit lines and rewards programs. You’ll want to take full advantage of online services, especially if you attend school away from home. You may be able to go online to pay your bill, view your statements, and even set up automatic e-mail and mobile alerts to remind you of your due date and account balance.
Two can live as cheaply as one, they say, but married couples still have to use credit wisely. Now may be a good time to consider a credit card that offers rewards for purchases you make with your card. Choose a card that offers a variety of redemption options, including cash, brand-name merchandise, gift cards and worldwide travel.
If your plans include children, saving for college will be a top priority. Just as there are credit cards that offer cash back or travel rewards, there are some credit cards—known as 529 cards—that have incentive programs geared specifically toward educational savings. A percentage of your purchases is deposited into a special 529 savings account, which earns interest on a tax-deferred basis until the child is ready to use the funds for college.1
Managing Credit Tip #10
Reviewing your credit report can help catch errors, reduce fraud, and show you how to improve your credit score. You can request a free annual credit report at www.annualcreditreport.com.
Buying a home
For many of us, a home represents the largest financial transaction we will make in our lifetime. Because in the early-to-mid years of the mortgage repayment cycle, so much of your monthly payment is applied to interest charges, paying even a small amount extra each month towards the principal balance could make a big difference in reducing the total interest charges paid over the life of the loan. That’s the idea behind a mortgage rewards card. Every time you use the card to make a purchase, you earn cash back. But unlike other types of cash rewards cards, the cash is automatically applied directly to your mortgage account to help pay down the principal balance. Over the entire term of your mortgage loan, the savings could really add up.
At retirement age, more than ever, you need to choose a credit card that fits your lifestyle. If you enjoy traveling, consider a card from your favorite airline that offers you miles as a reward for your everyday spending. You also may be able to get a rewards card through your investment advisor that could help you build your retirement nest egg by offering cash rewards deposited automatically into your investment account.
Whether you’re just starting out, busy building a family or enjoying life’s golden years, the right credit card could make things easier and more convenient. Use it responsibly by keeping your balances low and making your payments on time, and your credit card could be a valuable financial tool during all of life’s seasons.
What's next? Weighing the benefits of credit card extras
1 To be eligible for the favorable tax treatment afforded to withdrawals from Section 529 accounts, expenses must be for “qualified higher education expenses” as defined by the Internal Revenue Code.
Before you invest in a 529 plan, request an official statement and read it carefully. The official statement contains more complete information, including investment objectives, charges, expenses and risks of investing in the 529 plan, which you should consider carefully before investing.
You should also consider whether your home state or your beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 plan.
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