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.
The True Costs of Cash Advances
Taking a cash advance on your credit card is a dangerous game to get into. There are so many other sources that money should be obtained from – cash advances should be used as a last resort.
Cash advances are often available at any ATM that has credit card services and require a pin number which can be requested from the credit card company. This pin number is often issued after the card has been activated in a different envelope to ensure the highest level of security. Once you have committed this credit card pin number to memory, it is important to destroy the document.
Can this pin number be changed? A quick visit to the bank can change the pin number to something you are more familiar with. This act should not be advised as it makes it easier to take advantage of the cash advance from the credit card, which can lead to increased credit card debt.
Why do people choose to use cash advances? Although we are in a society filled with technology, there are still places that do not take credit or debit cards. These types of places are often local small businesses and some tourist attractions while travelling.
Cash advances taken from the credit card should be avoided while travelling, not only will you accumulate the fees for the foreign exchange transaction as well as the exchange rate but you will also accumulate the cash advance fees that come with the credit card.
It is important to know how cash advances on your credit card work before taking advantage of the loan. Cash advances are charged at an interest rate which is higher than the standard interest rate of the credit card. This interest rate is commonly upwards of twenty three percent, depending on the type of credit card that you have. Not only is it higher than the interest which is regularly charged, the interest rate is charged on a daily basis.
What does this mean for your interest charges the month that you have decided to take a cash advance? From the moment that the cash advance is taken, you are being charged these high interest rates. Cash advances should be avoided to ensure that you are saving money on finance charges and credit card fees on a monthly basis. It can be a dangerous cycle to enter in to that can leave the card holder owing much more than they originally borrowed from the loan.
There are many alternatives to cash advances from credit cards. Consider withdrawing money from the bank to keep in the wallet in case of emergency, or in case of travelling to a place that does not have credit card services. This, combined with the fact that money can be withdrawn from a bank account should replace the high convenience fees that come with taking a cash advance.