Know Your Financial Personality Before You Choose a Credit Card

There are many different things that you’re going to take into consideration when you’re trying to get a credit card. You’re going to want to review the interest rates on purchases, balance transfers and cash advances so that you can choose the card with the best deal. You’re going to want to compare rewards programs so that you can get the most back for the money that you spend. And you’ll want to factor in specific perks and drawbacks for each card. You probably already know all of this. What you might not know is that the most important thing that you can review and consider before choosing a credit card is your own financial personality.

There are benefits and flaws to each credit card that is out there. The key is to know enough about yourself to understand which credit cards are going to play to your own financial strengths and minimize your financial weaknesses. Here’s a look at some of the most common financial personalities and the cards that are right for them:

• Impulsive / Indulgent Spending. This is the kind of person who doesn’t tend to plan well regarding spending. Instead, they’ll engage in frequent impulse buys or treat themselves to big expenses they can’t afford. The important thing to look for in a credit card here is low interest rates on purchases. This is more important than rewards or balance transfer rates because where you really spend a lot of money is on the immediate buy.

• Planned spending. In direction opposition to the person who loves impulse buys is the person who plans out every expense. If you’re the type to stick to a budget then you can benefit from credit cards that offer long-term plans. Rewards cards are perfect, especially those that are linked to savings account or investment plans. Since you probably already pay off your card in full each month, the interest rate won’t matter as much here.

• Disorganized spending. Sometimes you pay your bills on time and in full. Sometimes you forget that your bills are due until the utilities start shutting off. The credit card for you is the one that doesn’t penalize you a lot. Look for cards that let you avoid high late fees and over-limit fees.

• Inexperienced with spending. Some people don’t have problems so much because they’re disorganized as because they’re young and not yet used to paying bills. If you fall into this category, you should look for credit cards that are going to teach you to be smart with your finances. Student credit cards are ideal if you’re in school. The no-credit credit card may also be an option.

• Specific spending. Some people are so habitual that they always spend their money in the same few places. If that sounds like you, then you’re going to want to look for rewards cards that emphasize that spending. If you always spend on gas, get a gas rewards card. If you’re a frequent traveler, look at travel rewards. Alternatively, look at cards that offer double points back on your top areas of spending.

If you know what kind of financial personality you have, you’ll know which credit cards you need.