Which Credit Card is Right for You?
If you're in the market for a new credit card, there is a bewildering array of cards to choose from. There are even more incentive offers, so how can you decide on the card that is best for you? Here are some of the factors to consider.
What Kind Of Payer Are You?
The most crucial question is whether you are a person who clears the
credit card every month or whether you always leave a balance on the
If you pay up at the end of every month, then you can
go for a credit card that offers an incentive. If not, then you need
to look at the annual percentage rate (APR) on the card. If you know
what your typical credit card balance is, look at the illustrations
given by card issuers to give a guide to how much you might have to
repay over time.
Taking An Interest
Even with interest rates, you need to be careful. Although your new
credit card may come with a 0% balance transfer rate, this is not
the only rate to think about. Look at the rate on purchases or other
transactions to see what you might be paying. And remember that any
payments you make are likely to pay off the transferred balance
first, while any new spending accrues interest.
Hand in hand with the interest rate goes the interest-free period.
This is the delay between spending money on the credit card and
being charged interest. This can vary considerably depending on the
card you choose. The interest free period can be as much as 56 days.
And it's how you use it that counts. If you put major spending on
the credit card after the statement date, you have a month till the
next statement, and then a few weeks to make the payment. This can
be a good way of managing cash flow.
Look At The Fees
There are three types of fees that count with credit cards. The
first is the cash withdrawal fee. Many credit card issuers charge
you for withdrawing cash at an ATM. These fees can be around 2% of
the transaction. The percentage is even higher when withdrawing cash
abroad. If you must use the credit card, then you're better off
making one large withdrawal so you don't pay the minimum fee each
Getting Some Cash Back
Some credit cards offer annual cashback deals which are great for
people who clear their balance every month, but not so good for
others. If you don't clear your balance, the interest charged will
wipe out any cashback gains. There are also reward points schemes
that allow cardholders to earn money from their spending – and spend
it again with a variety of high street and online retailers.
Paying attention to these items will help you to choose a credit
card that will match your financial situation.