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Too many or just right? Here’s how that new credit card affects your credit

A newly embossed credit card can raise your spirits just like a decadent dessert or a sunny spring day. But is the shiny new card feeling worth the impact on your credit?

RELATED: Numbers don’t lie: 5 things to know about your FICO score

The answer depends on your spending history, borrowing goals and ability to handle spending power, according to credit experts like NerdWallet and Experian. 

Here's how a new credit card will affect your credit at every stage of the process:

That new credit card will have an immediate impact on your FICO score.

Applying for a credit card has an immediate impact on your FICO, or credit score, because the credit card issuer will check your credit report. 

This generates a "hard inquiry" that can cause your credit score to drop by a few points, according to Experian. "It's called a hard inquiry because it represents a potential new debt that doesn't yet show in the report as an account," the credit bureau noted. "That unknown debt represents possible risk." Each hard credit inquiry will stay on your report for two years, but most people regain the points within about six months of a credit card application. "But if your credit score was poor to begin with, those points might really count," NerdWallet noted.

It does matter how many cards you accumulate in short period of time.

Avoid applying for a new credit card in the three to six months before borrowing for a major purchase or mortgage. That way you can keep your score at its highest to get the best possible interest rate for the loans.

Applying for multiple credit cards in a short period of time isn't like applying for multiple home loans, because that is a situation where the credit bureaus expect you to comparison shop.

Instead, each credit card application incurs a separate "hard inquiry" and contributes to your credit-risk rating. "Several different inquires for new plastic in a short span of time will cause your credit score to drop significantly," according to NerdWallet. The blog encouraged those who have already applied for too many credit cards at once to realize their credit scores will bounce back. "Just be sure you pay on time and keep balances low and wait six months to a year before you apply for another one."

To estimate the impact of credit application scenarios without incurring hard inquiries, check out NerdWallet's free debt calculator and credit score simulator.

You may notice a dip in your score - but it could be brief.

According to Experian, when a new account opens, you may notice a dip in scores when it first appears in your credit report. "However, if you keep your balances low and make all your payments on time, your scores should rebound," the credit bureau noted.

Myths about new credit cards and your credit score

The whole topic of new credit cards and how they affect credit involves many myths, according to the Magnify Money blog. Avoid these sensible-sounding steps and use your credit cards in a way that will help build your credit score:

  • Myth: Just get prepaid or debit card instead of a credit card, since they don't impact your credit score. "There is a common misconception that carrying a credit card will ultimately lead to damaging credit card debt," Magnify Money noted. "However, for the responsible individual, a credit card offers one of the easiest ways to establish and build credit history."
  • Myth: Don't pay off your credit card on time and in full, since carrying a balance imoroves your credit. "If you're carrying a balance on your credit card and paying the minimum month-to-month because you heard you should, you aren't damaging your score nor are you improving it. But you are losing money each month in interest to your lender. Why throw away money?"
  • Myth: Only have one credit card. "Utilization" or "amounts owed" accounts for about 30 percent of your credit score and you want to keep yours as low as possible. "One way to make sure that happens is to have a number of credit cards open. That increases your total limit available, making it easier to keep your utilization low,” according to Magnify Money.

Equifax breach: You can sue if your data was exposed; here's how

Two class-action lawsuits have been filed on behalf of customers affected by a massive breach at Equifax.

>> Watch the news report here

Officials with the Atlanta-based credit reporting and technology company said a “cyber security incident” may have exposed the personal information of 143 million U.S. consumers.

The data that might have been accessed includes names, Social Security numbers, birth dates and addresses.

>> Equifax reports massive data breach that could affect 143 million in U.S.

Former Georgia Gov. Roy Barnes has partnered with a Florida firm for a class-action lawsuit. 

"This is not a windfall thing. These are real damages and real fears that folks have," he said. "There's no telling, but I guarantee you most of this information was auctioned off in just a matter of hours."

>> Equifax data breach: What to know

Barnes said that if you've been compromised, you are automatically a part of the class-action suit unless you opt out.

"You don't have to do anything. We have class representatives and there will come a time when we'll contact folks," he said. 

>> Equifax cyberattack: How to get a free credit report, protect your identity

He said he is going after what it takes to make things right. 

"What the money should be is what is necessary to hire someone to straighten out your credit so that you don't disrupt your life forever," he said. "And some money for the fact that (Equifax) negligently, and in violation of several federal statutes, allowed for this information to get out."

>> Read more trending news

Barnes said among many demands is that Equifax have its security audited, tested and trained and that the company purges information it doesn't need. 

WSB-TV's Nicole Carr visited the Clark Howard Consumer Action Center, where volunteers have received nearly three times their normal call volume with concerns about Equifax.

Volunteers said more than 500 calls came in Wednesday and 99 percent of them were about Equifax.

"I've been here for 20 years. This is the busiest day we've had," said Consumer Action Center volunteer Lori Silverman. 

She said volunteers are working to ease fears about the data breach. 

"Because 140 million people are trying to freeze their credit, the sites are crashing and they're unable to thaw their credit. That's a difficult situation to be in," she said. "We're recommending (everyone) hang tight. Hopefully, all of the hysteria will slowly go away and within the next couple of weeks you'll be able to freeze your credit."

The Consumer Action Center recommends you freeze your credit through Credit Karma. Equifax has rescinded fine print that kept consumers from suing them if they signed up for their free credit file monitoring and identity theft protection. 

"Now they say they're backing off of that, but I would advise everybody: Do not interact with Equifax right now," Barnes said. 

Click here for Barnes' advice on what you should do.

Equifax is waiving credit freeze fees for 30 days

Following the Equifax data breach that has potentially exposed the personal information of 143 million Americans, money expert Clark Howard is urging everyone to freeze their credit.

Many people have said Equifax should pay for security freezes because the credit reporting agency created this giant mess.

Equifax temporarily drops credit freeze fees

Read more: Equifax hack: 5 things to expect when you freeze your credit

Now, several tweets from Equifax’s account on Monday confirm that the company will waive the fees for placing and removing security freezes, at least for now:

What happens after 30 days? We’ll have to wait and see. Clark said on the radio show that he would like to see Equifax pay for these fees over the long haul.

“I hope as the lawsuits come up with Equifax that one of the things they’re forced to do is reimburse all of us for the cost of credit freezes and thaws that we have to do for the rest of our lives,” Clark said.

Equifax’s data breach website doesn’t have any additional details on the fee waiver, as of Tuesday afternoon.

It’s important to point out that placing a credit freeze with Equifax isn’t enough. You will still likely need to pay a few bucks to complete the process with Experian and TransUnion.

I was able to freeze my credit with all three bureaus in 17 minutes using Clark’s step-by-step guide.

Read more: Credit Freeze Guide: The best way to protect yourself against identity theft

Why leaving a water bottle in your car could be dangerous

On scorching summer days, taking a nice cold bottle of water for your drive seems like a natural fit.

But it could lead to startling consequences, firefighters say.

Read more: Why you need to read the label on your bottled water

One Oklahoma fire department and a power company in Idaho recently demonstrated how a partly filled water bottle could magnify the sun’s rays and start a fire.

David Richardson, of the Midwest Fire Department in Oklahoma, told KFOR the sunlight “uses the liquid and the clear material to develop a focused beam, and sure enough, it can actually cause a fire.”

“The sunlight will come through (the bottle) when it’s filled with liquid and act as a magnifying glass as you would with regular optics,” said Richardson.

A test at the fire department, outside a car, showed sunlight going through a water bottle raised the temperature of a piece of paper to 250 degrees, KFOR reported.

Representatives from Idaho Power also showed the same potential problem in a Facebook post in July, with a video showing direct sunlight going through a water bottle leaving smoke and burn marks in car seats before the bottle was removed.

While the risk of fire is relatively small, officials recommend keeping water bottles out of unattended vehicles, KFOR reported.

Read more at KFOR.

Watch: Pathogen alert: Why you may want to rethink your drink at fast-food restaurants

How Much Should You Spend on a Wedding Gift?

wedding gift needs to serve multiple purposes: You want it to say “congratulations” and avoid giving the impression that your wallet has been to one too many other celebrations this season.

There’s no easy answer to the question of how much is the right amount to spend on a wedding gift, but if you’re looking for guidance, these tips can help.

If you say no

If you’re invited to a wedding and RSVP no, you’re technically not on the hook to buy a present, according to lifestyle and etiquette expert Elaine Swann. Having something from the registry sent to the couple is a nice gesture, but not mandatory.

If you say yes

If you say yes, you’ll be expected to provide a gift. The difficult part is deciding how much to spend on it.

If you’re the kind of person who likes to compare, consider what other guests spend. The national average cash gift amount is $160, according to the 2016 Wedding Season Report by cash-giving platform Tendr, although regional averages vary. In Arkansas, the average gift is $73, while it’s $245 in Vermont.

Gift expectations also depend on your relationship: The closer you are to the bride and groom, the higher your financial obligation. “I think if you’re very good friends or family members, you’re going to probably want to give a little more than if you’re not as close to the couple,” says Diane Forden, the editor-in-chief at Bridal Guide magazine.

Another consideration? If you’re flying solo at the wedding, a smaller gift can suffice. Couples usually give more than individuals, according to Forden.

If you have other obligations

As a general rule, the more that’s required of you as a guest, the less that’s required when it comes to the gift.

“With a destination wedding, in my opinion, your presence is a present,” Swann says. “So for those who go out of their way to pay for airfare and hotel and all of the festivities around a destination wedding, then that’s your gift to the couple.”

You can also cut back on the gift if you’re in the bridal party. Between the showers, the bachelorette party and the bridesmaid dress, the whole process can be “financially crushing,” Forden says. If you’re feeling the pinch, she suggests chipping in on a group gift with your fellow bridesmaids.

» MORE: 11 affordable wedding gift ideas

If you’re on a budget

Finances always trump etiquette. There’s nothing wrong with selecting an affordable present — even if it’s the least extravagant item on the registry, or it’s not on the registry at all.

“People should never be ashamed about being fiscally responsible,” Swann says. “So if you cannot afford to get an expensive gift, then don’t do it. Hold your head up high and say, ‘You know what, my budget allowed me to get this beautiful card, and that’s it.’”

Don’t overthink it. There’s no right or wrong amount to spend on a wedding gift, and weddings aren’t about the gifts, anyway.

“The focus shouldn’t really be on gifts,” Forden says. “It shouldn’t be a gift grab. It’s a celebration of a marriage, and I do think a lot of brides and grooms are aware of that.”

Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

Does Your Spending Personality Match Your Credit Cards?

It’s easy to get caught up in credit card incentives, such as cash back, travel perks and sign-up bonuses. But if your credit cards don’t match your spending personality, you might not get the rewards you expect, or you might end up paying too much in fees.

One in five consumers carries a card that “has fees or rewards not aligned with their actual purchase habits,” according to J.D. Power’s 2016 U.S. Credit Card Satisfaction study.

And circumstances change. Even a credit card that was once compatible with your spending habits might no longer be the best fit. Identify your spending personality to determine whether the cards in your wallet are offering you the most value right now.

The jetsetter

If you travel in style often and want big rewards for your spending, a premium credit card will go further than a regular travel card. Some premium cards offer credits for airlines, hotels or airport security screening programs, as well as airport lounge access. They come with a large annual fee, but you likely spend enough to earn it back in the form of perks and a generous sign-up bonus.

The explorer

Travel is your hobby, but you’re not loyal to airline brands; you’re loyal to the best deals. General travel credit cards offer flexibility in reward redemption. Some charge annual fees, but you can often make up the cost in rewards, and the best cards don’t charge foreign transaction fees. However, travel rewards might lose value if you redeem them for anything other than travel.

The cash-back connoisseur

You like knowing the exact value of your rewards in cash, and you use plastic at every opportunity to earn more. Tiered and bonus-category cash-back credit cards offer higher rates on certain purchases and 1% on everything else. You could get more value by pairing one of these with a flat-rate cash-back card that pays 2% for all purchases. Minimalists should consider a single flat-rate cash-back card.

The balance carrier

Your paychecks aren’t always steady, so sometimes you lean on a credit card, and it’s not always possible for you to pay the balance in full every month. Still, you make sure you never miss a payment. Cash-back credit cards are tempting, but their high interest charges will outweigh your rewards. A low-interest credit card is more likely to save you money over time.

The self-starter

If you have bad credit or no credit, you probably have limited credit card options. Secured credit cards offer an opportunity for credit building. They require a security deposit that you get back after closing the account or upgrading to a regular, unsecured card. The credit limit is often relatively low, equal to the security deposit.

The survivor

You’re struggling to pay off debt, but if you have good or excellent credit, a balance transfer credit card can provide a way out. It allows you to transfer a balance from an existing credit card to take advantage of a lower interest rate. A card with a low balance transfer fee and a 0% annual percentage rate period can give you time to catch up on payments.

The optimizer

You’ll go to great lengths to get a good deal, including managing multiple credit card bills. Mixing and matching cards can be worth it as long as you save money. Just watch out for annual fees or interest.

If your credit card is no longer a match, it might be time to move on. But unless it charges an annual fee, don’t rush to close the account, because that could impact the length of your credit history — and your credit score.

Keep current cards active with the occasional, small purchase and use a new credit card to swipe your way toward your goals.

Melissa Lambarena is a staff writer at NerdWallet, a personal finance website. Email: mlambarena@nerdwallet.com. Twitter: @LissaLambarena.

Teachers: Here’s How to Ace Retirement Without Social Security

When it comes to saving for retirement, many teachers can’t use the standard lesson plan.

What’s different for them? Social Security coverage, or the lack thereof. About 40% of public school teachers aren’t covered by the Social Security system, according to the National Association of State Retirement Administrators.

That goes back to the initial draft of the Social Security Act in 1935, which left state employees out in the cold. Most states have since opted into Social Security for their public-sector employees, but 15 states haven’t. In those states, teachers and other state and local government workers are exempt from paying Social Security taxes and instead typically rely on a state-run pension plan.

+ Click to expand to see a list of the 15 states States where teachers are ineligible for Social Security AlaskaLouisiana CaliforniaMaine ColoradoMassachusetts ConnecticutMissouri Georgia (some areas)Nevada IllinoisOhio Kentucky (some areas)Rhode Island (some areas) Texas Why teachers aren’t covered by Social Security

The short answer: In part, it’s because they don’t pay into the Social Security system. But in some cases, even if they’ve paid in at some point in their career, Social Security benefits — including retirement, disability and survivors benefits — could be reduced if they also have a state pension.

The retirement and disability benefit reduction is due to a rule called the Windfall Elimination Provision, which is designed to block state and local public employees from collecting a pension alongside Social Security benefits. It does that by reducing Social Security retirement benefits. A separate rule, called the Government Pension Offset, can also cut into Social Security survivors benefits.

The Windfall Elimination Provision

You might wonder how Social Security can be reduced if you weren’t covered by the program in the first place. The answer is that it can’t. The Windfall Elimination Provision doesn’t directly affect you if you’ve never paid into the Social Security system; you simply won’t receive benefits.

But if you have contributed to the system — most likely because you paid Social Security taxes in a different job — and you now work for a state or local government in a role that doesn’t participate in Social Security, the Windfall Elimination Provision could reduce any Social Security retirement or disability benefit for which you’re eligible based on that past work.

Your Social Security statements likely won’t reflect that reduction, which is based on a special calculation. The maximum monthly reduction in 2017 is $442.50, limited to one-half of your monthly pension benefit. You will be subject to a smaller cut if you have 21 or more years of “substantial earnings” from a job in which you paid Social Security taxes. If you have 30 or more years of substantial earnings, your benefits won’t be reduced by the Windfall Elimination Provision.

How teachers can save for retirement

Teacher retirement options vary by state, but you’re generally offered either a pension or a defined contribution plan like a 403(b) or 457(b), or both.

Pensions have plenty of perks, most notably a guaranteed benefit in retirement that lasts as long as you live. But they’re also not without downsides. Many are underfunded or in debt, and they typically don’t travel well, requiring you to participate in the plan for a certain number of years before you’re vested (“vested” means promised the full pension benefit you’ve accumulated).

If you leave teaching or move to a different state before you meet the vesting requirement, you may forfeit any employer contributions. Contributions you’ve made — and often at least a portion of interest earned — are yours to keep. Generally, the longer you work, the larger your pension benefit.

All of this means it’s wise to supplement your pension. You can do that in a couple of ways:

1. A defined contribution plan

You may be eligible for a 403(b) or 457(b) plan alongside your pension. Both are similar to the private-sector 401(k) plan, in that they allow you to put aside money for retirement pretax. The annual contribution limit for 2017 is $18,000, with additional catch-up contributions in some cases. If you have both a 403(b) and a 457(b), those limits are separate. You may also earn employer matching contributions.

The money you contribute generally grows tax-deferred and will be taxed as income when you take distributions in retirement. Both plans may also offer a Roth individual retirement account option, which allows you to put away after-tax dollars and take retirement distributions tax-free.

One word of warning: 403(b) plans can be rife with fee pitfalls for participants, sometimes even more so than other employer-sponsored retirement plans. An analysis by human resources consultant Aon Hewitt found that those costs could add up to a cumulative leak of $10 billion annually. No matter where you invest, be sure to understand your fee costs by asking to see investment prospectuses or annuity contracts.

2. A Roth or traditional IRA

These are accounts you would open and fund on your own at an online broker. You can contribute up to $5,500 in 2017, with an extra $1,000 if you’re 50 or older.

With a traditional IRA, you make tax-deductible contributions, then pay taxes on distributions in retirement. With a Roth IRA, your contributions don’t get you an upfront tax break, but distributions in retirement are tax-free. Depending on your income, you may be able to combine IRA contributions with a 403(b) or 457(b), increasing how much you put away for retirement each year. Review the IRA contribution limits to find out, then learn how and where to open an IRA.

» IRA vs. 403(b) vs. 457(b): Get all the details in our retirement plan comparison

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

Mortgage Rates Thursday, July 20: Rates Lower as Fed Looms

Mortgage rates for 30-year fixed-rate loans and 5/1 ARMs both fell by one basis point today, while 15-year fixed loans remained unchanged, according to a NerdWallet survey of daily mortgage rates published by national lenders Thursday morning.

Both fixed-rate products and 5/1 ARMs haven’t been this low in several weeks.

The Federal Reserve meets again next week, and going by the futures market, the general consensus is that the target range for the federal funds rate will be left as is, especially after Fed Chair Janet Yellen’s remarks last week that low inflation levels merited further observation.

MORTGAGE RATES TODAY, Thursday, JULY 20:

(Change from 7/19)30-year fixed: 4.07% APR (-0.01)15-year fixed: 3.47% APR (NC)5/1 ARM: 3.87% APR (-0.01)

Get personalized mortgage rates

NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Emily Starbuck Crone is a staff writer at NerdWallet, a personal finance website. Email: emily.crone@nerdwallet.com. 

Why Credit Cards Are Serving Big Restaurant Rewards

Finding a credit card that offered big rewards at restaurants used to feel like ordering vegetarian at a barbecue joint: There weren’t many options, and they often weren’t appetizing. But with consumers spending more on dining than ever before, that’s quickly changing.

In recent years, Chase, Citi, Capital One and PNC have all launched cards with an effective rewards rate of at least 3% on dining, a step above the 2% that was once the maximum dining reward on many cards. These are similar to the rewards on gas, groceries and travel that cardholders have enjoyed for years. And for many users, they’re just plain practical.

“Everyone has to eat. You end up with a lot of people who say, ‘Look, I may not go to New York every week, but I certainly go to restaurants every week,’” says Robert Hammer, CEO of R.K. Hammer, a bank card advisory firm.

Spending on dining out is rising

When deciding what credit card rewards to offer, issuers try to determine which perks will entice people to apply for a card — and then use it regularly. So they pay close attention to how potential customers are spending money.

“We’ve heard directly from [our customers] how important mealtime is,” Mark Mattern, vice president of U.S. cards at Capital One, said in an email. That’s how the issuer came up with the Capital One® Premier Dining Rewards Credit Card, introduced in March 2017, which offers unlimited 3% cash back on dining and 2% on groceries. “We know that these are categories that people are spending more in and are passionate about,” he added.

Consumer spending trends reflect that. In 2015, sales at restaurants and bars overtook spending at grocery stores for the first time ever, according to a Bloomberg report citing Commerce Department data. Consumer spending on food services has also been steadily increasing, reaching an all-time high in 2016, according to the most recent data available from the federal Bureau of Economic Analysis. To credit card issuers, these trends present a business opportunity.

“Chase, Capital One, [Bank of America] — they don’t push things that don’t make money. It just doesn’t happen,” Hammer says.

The young and the wealthy are eating out

Issuers don’t offer bonus rewards on dining simply because they want a piece of dining purchases; they also want to appeal to a specific type of consumer. The two groups currently most sought-after by financial institutions — high-income consumers and young adults — happen to be prolific diners.

Among households with incomes in the top 20% nationwide, 49% of food spending went to food away from home, which includes spending at restaurants and fast food joints and on takeout, according to 2015 data from the Bureau of Labor Statistics. That amounts to $6,040 per year, more than 4.5 times what those with incomes in the bottom 20% spent in that category.

Millennials tend to dine out more frequently than other age groups. A December 2016 Gallup poll found that 72% of 18- to 34-year-olds had eaten dinner at a restaurant once in the previous week, the highest rate of any age group surveyed.

These two groups mean big business to credit card companies. High-income shoppers, of course, have more money to spend. That can generate revenue for issuers in the form of transaction fees and interest charges.

Millennials, meanwhile, bring growth potential, a point underscored in Chase’s most recent annual report. “[Millennials’] wealth is expected to grow at the fastest rate of all generations over the next 15 years,” writes Gordon Smith, CEO of consumer and community banking at Chase. The majority of new cardholders with the Chase Sapphire Reserve℠, which features rich dining rewards among several other benefits, were millennials, according to the report.

Would you like rewards with that?

Credit cards with supersized dining rewards benefit issuers, certainly. But if you use yours responsibly and pay the balance in full every month, they can especially benefit you. If you’re deciding which credit card to use for restaurant excursions, and all of your options offer 3% back on dining, look for these features:

  • No annual fee: It generally doesn’t make sense to pay an annual fee just for dining rewards. Many cards these days offer 3% back on dining — and other perks — and don’t charge an annual fee.
  • Unlimited earnings: If you spend big bucks on dining, choose a card without a spending cap. The Capital One® Premier Dining Rewards Credit Card, launched in 2017, and the AARP® Credit Card from Chase, relaunched with dining rewards in 2013, are both good options.
  • Other rewards and benefits: Dining rewards might be your main objective, but many of these cards offer other perks. Choose one with the benefits that best fit your spending habits. If you’re a commuter, find a card that supplements your dining cash back with gas rewards. If you also frequent the supermarket, get your dining rewards with a side of grocery bonuses.

Getting more cash back, points or miles on dining purchases is great, but it doesn’t have to be the only useful benefit your card offers.

Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.

Does Your Spending Personality Match Your Credit Cards?

It’s easy to get caught up in credit card incentives, such as cash back, travel perks and sign-up bonuses. But if your credit cards don’t match your spending personality, you might not get the rewards you expect, or you might end up paying too much in fees.

One in five consumers carries a card that “has fees or rewards not aligned with their actual purchase habits,” according to J.D. Power’s 2016 U.S. Credit Card Satisfaction study.

And circumstances change. Even a credit card that was once compatible with your spending habits might no longer be the best fit. Identify your spending personality to determine whether the cards in your wallet are offering you the most value right now.

The jetsetter

If you travel in style often and want big rewards for your spending, a premium credit card will go further than a regular travel card. Some premium cards offer credits for airlines, hotels or airport security screening programs, as well as airport lounge access. They come with a large annual fee, but you likely spend enough to earn it back in the form of perks and a generous sign-up bonus.

The explorer

Travel is your hobby, but you’re not loyal to airline brands; you’re loyal to the best deals. General travel credit cards offer flexibility in reward redemption. Some charge annual fees, but you can often make up the cost in rewards, and the best cards don’t charge foreign transaction fees. However, travel rewards might lose value if you redeem them for anything other than travel.

The cash-back connoisseur

You like knowing the exact value of your rewards in cash, and you use plastic at every opportunity to earn more. Tiered and bonus-category cash-back credit cards offer higher rates on certain purchases and 1% on everything else. You could get more value by pairing one of these with a flat-rate cash-back card that pays 2% for all purchases. Minimalists should consider a single flat-rate cash-back card.

The balance carrier

Your paychecks aren’t always steady, so sometimes you lean on a credit card, and it’s not always possible for you to pay the balance in full every month. Still, you make sure you never miss a payment. Cash-back credit cards are tempting, but their high interest charges will outweigh your rewards. A low-interest credit card is more likely to save you money over time.

The self-starter

If you have bad credit or no credit, you probably have limited credit card options. Secured credit cards offer an opportunity for credit building. They require a security deposit that you get back after closing the account or upgrading to a regular, unsecured card. The credit limit is often relatively low, equal to the security deposit.

The survivor

You’re struggling to pay off debt, but if you have good or excellent credit, a balance transfer credit card can provide a way out. It allows you to transfer a balance from an existing credit card to take advantage of a lower interest rate. A card with a low balance transfer fee and a 0% annual percentage rate period can give you time to catch up on payments.

The optimizer

You’ll go to great lengths to get a good deal, including managing multiple credit card bills. Mixing and matching cards can be worth it as long as you save money. Just watch out for annual fees or interest.

If your credit card is no longer a match, it might be time to move on. But unless it charges an annual fee, don’t rush to close the account, because that could impact the length of your credit history — and your credit score.

Keep current cards active with the occasional, small purchase and use a new credit card to swipe your way toward your goals.

Melissa Lambarena is a staff writer at NerdWallet, a personal finance website. Email: mlambarena@nerdwallet.com. Twitter: @LissaLambarena.

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