Credit card life stages: What kind of credit card is best for you?

You’ll make multiple decisions as you embark on your financial journey, and choosing the right credit card is one of the most crucial.

After all, while credit cards give you the ability to borrow funds for purchases, there’s so much more to them than convenience. They also provide a way to show potential lenders how well you can handle credit, and they can have other financial benefits if you use them strategically.

Whether you're looking for your first card, focused on building your credit or aiming for sweet premium perks, it’s helpful to understand which kind of credit card is a good match for your current financial stage.

Starting out: student credit cards

A student credit card can be a great choice if you’re a college student with a limited credit history and at least 18 years old. They’re typically easier to qualify for than other cards.

Most issuers of these kinds of cards require students to have access to income. This may include income from employment, investments and trust fund disbursements.

Find cards with low or no annual fees. In addition, look for cards that offer rewards that are aligned with your spending habits. You may be able to redeem your points for cash back, travel, merchandise or gift cards, for instance.

Building credit: starter and low-interest credit cards

If you’re establishing your credit or recovering from past financial setbacks, consider opening a secured credit card or a card with a low interest rate (as expressed by the annual percentage rate or APR).

A secured credit card is a kind of starter card in which you give the card issuer a refundable security deposit. Your credit limit will generally equal the amount of your deposit, which may be held in a savings account.

It’s an arrangement that reduces risk for the issuer and provides an opportunity for someone to get a credit card who may otherwise have trouble obtaining one. 

Meanwhile, credit cards with low interest rates are helpful for beginners who expect to carry a balance. (Although it’s more financially advantageous to pay off the full balance each month if possible.)

You can use both of these types of cards to establish a positive credit history and improve your credit score over time. For starters, aim to make timely payments. Also, try to maintain a low credit utilization ratio, which is the amount of credit you use in comparison to the total amount of credit extended to you. 

To ensure your hard work is recognized, make sure that your card issuer will report your credit card payments to the major credit bureaus.

Established credit: rewards and cash back credit cards

As your credit history strengthens, you can qualify for credit cards that maximize the benefits of your spending. These include cards that offer more lucrative rewards for purchases than starter cards. 

For instance, some allow you to earn 5% cash back on your purchases. Other popular rewards give you miles or travel points. They can help you save money on travel-related expenses like flights, hotels and rental cars.

While some cards offer a set amount of rewards on all purchases, others give higher rewards for spending in certain categories like travel, groceries, dining and gas. To earn more rewards, pick a card that aligns with your spending habits. If you typically go to restaurants for most of your meals, for example, choose a card with higher rewards for dining than for groceries.

Likewise, opt for cards that offer the kinds of rewards you are most likely to use. A card with competitive travel rewards won’t be advantageous if you aren’t a frequent traveler.

Pay attention to sign-up bonuses, introductory APR offers and redemption options to boost the value of your rewards.

Premium options: travel and premium rewards cards

Consider premium rewards credit cards when you achieve excellent credit and higher spending capacity—and are comfortable paying a higher annual fee.

These enable cardholders to earn even more luxurious perks and exclusive lifestyle benefits than typical rewards and cash back credit cards. Some offer more generous rewards for certain purchase categories, for example. Other benefits may include concierge services, elite status upgrades, airport lounge access and special statement credits.

Business needs: business credit cards

On a separate note, if you own a company, having good credit can also help you access a variety of business credit cards.

Consider cards that are tailored to your business’s expenses and financial objectives. You may appreciate a card with a low introductory interest rate for an extended time, for example, or one that has terrific cash back options. 

Learn more about Old National's business credit card options.

Choosing among a bounty of options

The right credit card is out there for you, whether you’re filling out your first application for credit or have a long and impressive record of creditworthiness.

If you’re unsure of which personal or business credit card to go with, an Old National banker can help. We can discuss your financial habits, credit score and lifestyle to guide you in the right direction. Schedule an appointment today.