Different people have different needs. Depending on who you are and your circumstances, the best credit card deal for you will vary. I will take you through the things you should be looking for, but for the best current deals I suggest you check Money Savings Expert regularly (http://www.moneysavingexpert.com).
Credit cards allow you to spend a certain amount of money at an interest rate that will be charged every month. The spending amount that is available to you can be seen differently. Some see it as an additional amount to spend, some see it as a ?risk-free' borrowing opportunity. Credit card spending is not a ?free' spending opportunity, as you will need to pay this money back. This money does not work like a loan, as the amount available to you is not all cash. However, it can be treated as a ?loan' and this concept will be explained later.
Other very important concepts that have to be understood before getting a credit card, is 0% offers. There are two kinds of 0% offers: on purchases and on balance transfers. The first one allows you to spend the money provided to you by the credit card without paying any interest for a certain amount of time. So, for example, if the credit card gives you a limit of ?500 for three months, then you can spend ?500 against this credit card and not be charged interest for the first three months since the credit card was opened. However, once this period of time expires, you will be charged the credit card interest rate. This interest differs depending on the credit card, so if you intend to pay this interest, then you ought to look for the lowest interest rate available. Paying interest can be avoided, unless you have already overspent too much and are using credit cards to pay off other credit card interest. In this case you should call some of the debt consolidation companies and try to get some your credit card debt written off. Another reason why you might be in the position of paying interest is because you forgot when your ?0% free time' ended. If this is the case, you will be informed about this with your first bank statement. Transfer your balance to a different bank or pay the debt off and avoid any further interest payments.
For those of you who don't have interest payments, you can take advantage of the 0% purchasing and make some money. You need a good credit history record to make this work and you also need to be disciplined. The easiest method is to do all of your normal spending against the credit card, while putting the money that is coming in into an interest-earning savings account. For example, if your credit card company lets you borrow ?2,000, and you have ?1,000 coming in as a salary every month, then put the ?1,000 into a savings account and do all of your purchasing with a credit card. There are a few things to watch out for: credit card companies will charge you for cash withdrawals; your cash limit is much lower then the full available credit; and choose a savings account from which you can withdraw easily. At the end of the 0% purchase period, you will need to return all the money that you have spent against your credit card. You should have that amount available in the savings account by then, plus interest. The interest gained is your earnings for this transaction. You can earn even more if you chose a credit card with a cashback deal. This deal will pay you interest on all of your purchases made with the card. However, you should remember, that this is a money-making technique, rather then a ?spend more' opportunity. There is a more complicated trick of making money from credit cards, details of which are outlined by Money Saving Expert (2006).
If you are making money from the credit cards, there is no need for you to get card protection insurance, as you should have enough money to pay off the credit card debt at any time. At the end of the 0% purchasing period, you can also transfer the balance to a different card provider. This is known as 0% balance transfer, but you will be charged a fee for these transactions, usually around 2%. However, these fees vary, so you need to check the conditions. There are a few things to watch out for: the credit limit offered by your bank also includes your purchases. For example, if the new credit card offers you a ?2,000 limit, with 0% balance transfer for 12 months and 0% on purchases for three months, and you have transferred ?1,500 from your old credit card, you only have ?500 to spend on this credit card. The second thing to watch out for is your credit score. "Most lenders' scoring systems aren't sophisticated enough to detect that you're playing this free-cash game. Yet multiple applications, especially at the same time, coupled with high outstanding debts, even at 0%, will diminish your ability to get competitive credit, so the most important thing is to spread card applications out" (Money Savings Expert, 2006).
However, if you are in the position where you are already fighting the interest payments, as has been mentioned before, the best thing to do is to call debt consolidation experts. In any circumstances it is best to pay off the most expensive credit and store cards first (i.e the ones that charge the highest interest rates). Furthermore, avoid opening any new credit cards to pay off the debt. Instead transfer your high-interest debt to lower interest rate credit cards. For example, if your credit card interest rate is 16%, while your store card rate is 25% per month, transfer the store card balance over to the credit card.
Whatever your circumstances, when you do open a new credit card always look for the longest 0% balance transfer and 0% purchase period, lowest transfer fee and interest rate charged afterwards. The limit offered to you will not only depend on your salary and credit rating, but also on the company that you go with.
Finally, do not forget ? don't play the credit card game if you cannot control it or have a high debt already.
Therefore, you should be happy to learn that making an online credit card application is as easy as child's play. You don't even have to make your way to some office of the lender in order to get your hands on a great card. When you are looking for the right credit card to apply for online, you need to bear a few things in mind, in order to get one that is suitable for all your financial requirements, at the best interest rates, so that the card won't eventually cost you a whole lot more money than you bargained for.
That last point is an important one. You should take a careful look at the interest rate that is charged on any cards that you are interested in applying for. Beware of introductory offers of a low interest rate which you will often find for taking up a particular credit card. Quite often, the rise in the interest rate after the first few months is quite steep and you could end up paying more than if you went for a card with a steady interest rate which is slightly higher than the one in the introductory offer on another one.
You should also find out about any fees payable and grace periods for which you might apply. You will want to know what fees you are liable for, for instance if you don't pay off your whole balance one month. Some of these penalties can cost you a lot of money ? the last thing you need when you missed your credit card repayment because you were having a tight month anyway.
Be careful to read any fine print of the conditions binding your application and the subsequent use of the card before finalizing your online credit application. That will give you the necessary information on the time you get to pay off your balance without incurring any interest charges.
It's a good idea to compare different options online. You are the customer here so you need to know all the options you have, in order to find one that best suits your needs before you apply for it online. You don't want to find out when it's too late that you jumped for the wrong one and could have got your credit much cheaper elsewhere.
Knowing all the necessary information is the best way to protect yourself from a bad decision when deciding what credit card to go for. Work out what you need and then compare the offers that will meet your needs, to get the best deal you can.
Both Verena Veneeva & Art Penz are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Verena Veneeva has sinced written about articles on various topics from Entrepreneurship, Health and Management. This article was written by Verena Veneeva professional writer working for You are free to reprint this article; however should you d. Verena Veneeva's top article generates over 60500 views. to your Favourites.
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