What To Consider When Choosing A Credit Card
Credit cards have become a central part of our lives, and more so since the credit crunch hit. Credit cards are vital in allowing us to purchase items and pay it off later, they can help improve your credit, which is important when you look at things like mortgages, and they can help you get through tough financial periods.
But there are some very bad credit card deals out there, and as credit cards play such an important role in peoples lives it is important that people consider carefully what sort of deal is the right one for them, so they can compare and contrast credit card offers.
Before you even consider shopping around for a new credit card however you must first take a look at how you will be using the cards. Will you be using it only in emergencies – in which case monthly fees are not going to be appealing, but you could live with a higher APR. Or will you be using it a lot – in which case a low APR and a high grace period is in order.
But however you use your credit card make sure that you are considering these factors when you are comparing offers.
Fees.
Credit cards incur fees, and you need to look at what they are and how much they are for. Is there a signing on fee, or a monthly fee? How much do they charge you if you miss a payment? Fees are an important factor when deciding which credit card to get because many people forget about them, so some unscrupulous credit companies like to charge high fees here, safe in the knowledge few people will check before the sign up for the card.
APR – Annual Percentage Rate.
This is how much interest you will be charged on your balance every year. The lower the better as you will be paying out less each month.
Grace Period.
There is a grace period, usually expressed in days, in which no interest is charged on a new purchase. The longer the grace period the longer you will have to pay off the balance before it starts costing you extra money in interest.
Credit limit.
Every credit card has a credit limit, usually determined by your income and credit rating (taken from credit reference companies). Look at what you are offered and decide if it suits in with your purposes of getting the credit card in the first place.
Rewards.
Many credit cards offer rewards for being with them. Air miles, points redeemable at certain stores etc. But despite the adverts the model of how to qualify and claim these rewards is actually quite complex and varies from company to company. If the rewards are whats interesting to you make sure you look at the fine print, such as how much you need to spend per month to qualify for the rewards.
As you can see choosing a new credit card isn’t as straight forward as many think. It is an important decision and one that needs to be done right, by considering what you will be using the card for and all the information available to you. But by choosing the right card you will get yourself a good deal and one that will suit your life style. Consider the above points when making your decisions and you can’t go too far wrong.
Maxed out your credit cards? Avoid These Mistakes
There are numerous consumers that have no wiggle room and have maxed out their credit cards. Unfortunately, there are many mistakes that consumers make after the credit cards have been maxed out that can put them in financial jeopardy, decreasing the credit rating and even lead to stress within the household.
Use these tips to learn what mistakes should be avoided when you find yourself facing maxed out credit cards:
Mistake No. 1: Going over Your Credit Limit
Going over your credit limit can cost you, literally, over limit fees associated with credit card accounts often can be as much as forty dollars per month. Each month that the credit card is over the limit these fees will accumulate and add on to the balance of the credit card leading to a higher payment next month! These fees are often added on to the amount immediately owing – not the balance which is determined through internet.
Mistake No. 2: Continuing to Use the Credit Card
When your credit card is maxed out it is important to stop using it! Repaying the minimum payment and than using the card to shop is a mistake. At this rate it could take years to repay the balance on the credit card. Are you willing to take years to repay the credit card that was more than likely used to purchase frivolous items like clothing, entertainment and dinners out? Chances are, no! You should implement an aggressive repayment plan that includes repayment of the debt.
Mistake No. 3: Paying Only the Minimum Payment
At a credit limit that’s topped out and a high interest rate. The credit card can take decades to repay if the consumer is merely paying the minimum payment. It is important to create a repayment plan that includes paying at least two to three times the minimum payment that is due on the card.
Mistake No. 4: Ignoring the Debt Completely
When you ignore the debt on the credit card, it can lead to financial ruin as ignoring the problem can almost always ensure that it is going to get worse. Pay attention to statements that are arriving in the mail as well as ensuring that somehow the minimum payments are made to these obligations. Contact creditors to determine some kind of settlement or repayment plan that allows the creditor to receive their payments and the debtor to make the payment.