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It’s a new year and a perfect time to get your finances in order. Whether your goal is to get rid of your debt or to go on more vacations, the right credit card can help you reach those goals. The best credit cards for 2018 are trying to outdo each other in the new year with better rewards and longer interest-free periods, so now is the best time to find a credit card that fits your new year goals. Here are the new credit card trends of 2018 and how to use them to your advantage:
One of the best credit card perks that many credit cards are using to draw in customers is a 0 percent intro APR for up to almost two years, meaning you won’t have to pay any interest on your credit card balance for that period of time. A few years ago, the industry was amazed that credit card lenders were offering no interest for up to 18 months, which seemed like an insane amount of time. Now, certain credit cards are offering 0 perent intro APRs for up to 21 months, or just shy of two years.
Some cards only offer the intro APR for new purchases, but some credit cards offer the perk for both new purchases and balance transfers.
Who this is good for: Anyone who needs to avoid interest. First off, people with high credit card balances on other cards who want to consolidate those debts can do a balance transfer to one of these cards and essentially stop paying interest on all of that debt for up to 21 months. This can be a great way to get a handle on your credit card debt and start paying down the principle without seeing the debt increase with extra interest.
The second benefit is for people who want to make a large purchase that they can’t pay for right now, but can pay it off within 21 months. Since you can keep the balance on your credit card without paying interest, you can postpone paying the entire sum with a 0 percent intro APR card. Just keep in mind that you will still need to pay the minimum balance each month to avoid any late fees.
It used to be that having a low interest rate was enough to make a credit card popular, but now credit card lenders are actually giving money away in order to gain new customers. The way that intro bonuses work is the credit card lender will give you a certain amount of cash back if you spend a certain amount within the first three to six months.
For example, a bonus of $100 might require you to spend $1,000 within the first three months of having the card. While most signup bonuses usually come in around the $50-$150 range, some credit cards, specifically travel credit cards, are offering upwards of $700 in intro bonuses.
Who is this good for: Anyone who uses their credit card a lot or is about to make a large purchase. The stipulation on this reward is that you have to spend a certain amount of money before you can receive the bonus. The higher the bonus, the more money you need to spend.
For example, if the bonus is $400, you might have to spend $3,000 within the first three months in order to get the bonus. If you don’t spend the money you don’t get the bonus. So if you generally put $1,000 a month on your credit card or are about to make a big purchase, a credit card with this kind of bonus makes sense. If not, you may be missing out on a perk that better fits your credit card usage.
Generally, credit card interest rates can hover between 15 percent and 25 percent, depending on your credit score and credit history. Now, however, some credit card lenders are offering even lower interest rates to entice more customers, especially those with excellent credit who can benefit from qualifying for the lowest rates. We’ve seen interest rates as low as 7 percent, although the more common low interest rate cards offer between 11 percent and 14 percent rates.
Your interest rate is determined by your credit worthiness, of course, so even though a credit card offers a lower interest rate, it doesn’t mean that is the interest rate you are going to get.
Who is this good for: People with excellent credit scores. If you have an excellent credit score, you are going to land the lowest interest rate. That being said, people with good or even average credit can also benefit from these credit cards, as they can see their interest rates drop from 25 percent to 22 percent or 23 percent. It may not seem like much, but if you rack up a lot of credit card debt, the couple of percentage points can save you big money in the end.
Giving customers cash back for spending money is not a new concept for credit card lenders; even the early forms of credit in the 1800s provided cash back incentives. Credit card lenders today, however, are trying to make the incentive even sweeter.
Generally, cash back rates start at 1 percent for all purchases and go as high as 5 percent for purchases in specific categories, such as groceries, gas or online retailers. In today’s market, you can find credit cards that offer up to 2 percent cash back on all purchases and up to 6 percent cash back for purchases in specific categories, which can be lucrative if you use your credit card correctly.
Who is this good for: People who are good at tracking their rewards. If you are an organized person and can keep track of which categories are the featured categories each quarter for all of your credit cards, you can end up making a lot of free money off your credit cards. If you don’t have the ability to be so organized, you can still benefit from a credit card that offers 2 percent cash back on all purchases.
Along with cash back and cash intro bonuses, credit cards are also taking advantage of people’s interest in travel. The same increase in cash back and intro bonuses translates to travel rewards credit cards. For a general travel credit card that offers a flat rate for all purchases, you can get up to 2 points for every $1 spent, which generally comes out to 2 percent cash back if you use your points as credits. You also get the same great intro bonuses: up to 50,000 points if you spend a certain amount in the first three to six months.
The branded travel credit cards area also offering great deals. You can get up to 5 points per $1 you spend on purchases from that airline/hotel/etc. and up to 100,000 in bonus points when you spend a certain amount in the first three to six months.
Who is this good for: People who travel a lot. We’re not talking just the jet-setters who fly to all corners of the globe. The benefit of the general travel rewards credit cards is that you can use your points on anything that falls into the travel category. Use Uber a lot? You can use your points on those purchases. Of course, the branded credit cards offer bigger rewards, so if you have an airline you fly with all the time or a hotel chain you love to stay at, getting those cards can definitely give you more rewards and perks than a generalized travel credit card.
One of the newest things that credit card lenders are offering is perks on credit cards for average credit. Generally, credit card lenders would never reward people with average credit, only giving them the option of one or two credit cards that had high interest rates. People with average credit either had to accept the limitations, or turn to things like credit repair to raise their score. The interest rates are still high, but some credit card lenders are now offering intro bonuses and other perks to draw more customers who have had credit problems in the past but still need a credit card.
Who is this good for: People with average credit, obviously. Keep in mind, the credit cards with perks are generally more difficult to get approved for, so if your credit is on the border of average and poor, you might not be able to qualify. If you can qualify, however, you will not only be building new, good credit with these cards, but getting some perks along the way.
Not many credit card lenders offer specific credit cards for students, but the ones that do have started offering better perks. In the past, student-specific credit cards were designed to teach young adults about credit by utilizing lower credit limits and lower interest rates so as to not bury new credit users under a mountain of debt, although those tactics didn’t always work.
Now, credit card lenders are learning the purchase power that the younger generation possesses and wants to encourage them with better credit card perks. Many credit card lenders are now offering cash back rewards on their student credit cards. The rewards are generally 1 percent on all purchases, but some are offering an additional percentage if the students pay their bills on time. Some lenders even offer small intro bonuses between $10 and $50.
Who is this good for: Students, of course. You have to be a student to qualify for these credit cards, so they wouldn’t really benefit anyone else. If you are a student, however, these credit cards are a good way to get your feet wet in the credit world before applying for bigger cards with higher credit limits.
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