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Your Beginner’s Guide to Playing the Credit Card Game

blog-a-beginners-guide-to-playing-the-credit-card-gameThe credit card game is a little bit like a choose-your-own adventure. Do you want airline rewards? Take the path to your left. More interested in cash back? The door is behind you.  Sure you might meet some villains along the way, but there’s a treasure chest at the end.  If you act responsibly rather than impulsively, you can take advantage of some great rewards. To get you started, here’s a beginner’s play book.


Step 1: Choose your goal
If you have credit card debt already, you’re best bet might be credit debt consolidation. Look for a card that has a lower interest rate than your current credit cards and that waives the balance transfer fee for the first few months. Consolidating your credit card debt can help you manage your monthly payments, save on interest rate costs and potentially keep your credit utilization ratio lower. To get started, read this article about balance transfer cards.  If you’re really feeling buried, peer-to-peer lending is also an option to consolidated debt. Find more information here.


If you don’t currently have a lot of credit card debt and you have a history of paying all your credit obligations as agreed, you have a lot of options. To help you choose a credit card, consider what type of benefits fit your current spending habits. There’s a plethora of credit card benefits out there: cash back, airline miles, discounts, gift cards, hotel points, etc. Just don’t choose a card that doesn’t match your current spending needs. If an airline rewards card offers you 5,000 points if you buy a ticket within the next 3 months, but you’re not already planning on buying a ticket, then this probably isn’t the card for you. To help you choose wisely, we have organized many popular cards by rewards category.


Step 2: Self evaluate
Before you start applying make sure you know where you stand. Check your credit reports for any errors, view your FICO® Score and research what interest rates you likely qualify for. Then, consider your credit history. If you have a short credit history or low credit limits, you’re probably not going to get approved for a premium card. Instead, aim to make incremental steps in your credit card activity. Start with a card that’s easier to get approved for, and move up from there.  You can view credit cards that might be a good fit for your FICO Score here. The point is to know where you stand before you apply for a card. You want to make sure your credit is ready so you don’t get sucked into bad interest rates. View your FICO Score and credit reports here.


Step 3: Come up with a strategy
Are you taking a long term approach or are you going on a credit card application spree? There are benefits to both. When you apply for a credit card, most lenders will pull a credit report resulting in a credit inquiry which may impact your FICO® Score. If you don’t already have an extremely high FICO Score, it may be best to gradually apply for credit once a year.


If you apply for several cards in one day, often called a credit application spree, you may be able to get approved for many cards before any inquiries show up on your credit report. Take caution with this approach. You should only consider it if you already have a high FICO Score and if you do not plan on applying for a large loan within the next year. If you’re only foreseeable goal is credit card rewards, then have at it. Just remember to keep your balances low and manageable.


For either approach, it’s important to remember that your credit activity can impact your FICO Score. Things like length of credit history, amount of inquires and other factors. Read more about what’s in your FICO Score.


Step 4: Apply & track your progress
After you’ve researched and found the perfect credit card(s) for your needs, it’s time to apply. Depending on how many cards you’re applying for, it’s a good idea to come up with a system to track applications, credit limits, rewards, payment dates and so on. A simple spreadsheet, Google Doc or financial app are all fine options. Track your spending, enjoy the rewards and pay off your balances in a timely manner.


For more information and support from other credit card users, browse the credit card topics in the myFICO forums.


Kelsey Havens is a financial health enthusiast, consumer protection advocate and Content Manager at myFICO.



About Kelsey Havens

Kelsey Havens is a writer, financial health enthusiast, consumer protection advocate and Content Manager at myFICO. Connect with her on Google Plus: +KelseyHavens


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    Your Beginner’s Guide to Playing the Credit Card Game

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