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.
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