Choosing a Credit Card
Knowing which card is best for you
There are hundreds of different credit cards to choose from and it may take quite a bit of leg work to find the one that suits your lifestyle the best. The first thing you really need to know is what you want the card to do for you. Are you going to be using it strictly for purchasing goods and services, or are you looking to build up a catalog of rewards and incentives? Whatever you’re using the card for, you should be looking to get the best deal available. To do this, you’ll need to understand how credit cards work and do some comparison shopping.
You also need to ask yourself and the credit card company a series of questions before making your decision such as:
- Is my credit rating good?
- Will I be paying off the bill in full every month?
- How long is the grace period?
- How are the finance charges calculated?
- What is the interest rate?
- Is it fixed or variable interest?
- What is the credit limit?
- What type of card is it?
- Does the card have rewards and incentives?
- Are there any annual fees?
- Does the card offer credit insurance?
- What is the minimum monthly payment rate?
- Are there any late fees and over-limit fees, etc?
- How will I be notified of any rate and/or contract changes?
If you’re going to use the card for purchases only, pay your bill off in full every month, and aren’t interested in rewards and other features, it’s a good idea to find a card with no annual fees and a decent grace period. The grace period is the number of days you have to pay your bill in full before paying any charges. However, most credit cards don’t offer a grace period for cash advances and balance transfers, only on purchases. If you’re not going to be paying the bill off in full, you should be looking for a card that has a lower interest rate. If you don’t have the greatest credit rating you may have to settle for a card with a higher interest rate.
If you’re going to be using the card to make a lot of transactions, make sure the card’s credit limit is high enough. If you have a low limit and find yourself going over it, you’ll likely be charged a fee.
Find out the types of cards offered, such as secured, regular, or premium. Secured cards require a security deposit and the larger the deposit, the higher the credit limit will be. These cards are typically offered to those who have limited credit records and to people who have had past credit trouble. Regular cards don’t require a security deposit and come with limited features. They usually have higher credit limits than secured cards, but lower than premium cards. Most premium cards such as gold, platinum and titanium versions provide higher credit limits and have extra features such as extended product warranties, travel insurance and emergency services.
If you’re looking for a card with rewards and incentives, make sure they’re useful to you. You don’t want to be paying any extra fees for features that you’re never going to use.
Once you’ve narrowed down what type of credit card you’re looking for, you’ll need to compare several brands to find the ideal card for you. There are many Internet sites that can help you do this. You simply fill in some questionnaires and the site will give you a list of different cards to choose from.
