As, I'm sure you are aware, there are a lot of different credit cards available. The one that you select should reflect your own life style and spending habits. When looking for that new credit card you will want to get the best deal possible with the best credit card company. You will need to shop around to compare what offers are available and to find which one will work best for your situation and needs.
One of the first things that you need to think about and ask yourself is, why do you need a new credit card? Sometimes people decide to get a credit card for cash flow reasons. They use their credit card to make their purchases, while leaving their money in an interest drawing account. This way they are able to exercise buying power while at the same time allowing their money to grow. In order for this method to be effective you will need to pay your credit card balance off in full at the end of each month to avoid those extra fees that would defeat the whole purpose.
Other people desire to get a new credit card so they are able to get cash when they need it. They want to use their credit card at an ATM machine to get instant cash. This can be very handy when you are traveling. If this is your reason for wanting a new credit card you should pay particular attention to what fees a prospective credit card company charges for instant cash transactions.
A very important factor to consider before you obtain that new credit card is how you will be making the payments. Will you pay off the full balance at the end of each month or simply make the minimum required payment amount? If at all possible it is highly recommended that you pay off the full balance. If you are unable to do this at least consider paying an amount considerably higher then the minimum requirement. This will help to reduce the fees that you will ultimately pay.
When you compare what each credit card company has to offer be sure to look at what they charge for introductory rates, balance transfers, and any other fees that may be incurred.
Many credit cards will offer special incentives such as reward points for certain purchases or cash back offers that can be applied back to the amount you owe. Try to find a credit card that offers incentives that are pertinent to your spending habits so that you can take the best advantage of them.
Probably, the most important factor you will need to consider will be the APR or Annual Percentage rate. The APR will tell you what you will pay in fees when your grace period runs out. Most credit card will offer an interest free period, usually thirty days, wherein if you pay off the full balance no interest charges are applied to your account. APR rates can vary widely from one credit card company to another, so it is crucial that you make comparisons to get the best possible APR available for you. The lower the APR rate is the lower it will cost you to use the credit card.
Another important consideration is the minimum payment requirement. Most credit cards will have a minimum payment of about 3%. Keep in mind that there are some credit cards that offer a lower amount as well as many that will require much more. If you do not plan to pay off your balance in full at the end of each month this will be an important factor for you.
When you decide which credit card to get make sure that you are aware of exactly what your obligations and incentives will be. Credit cards can be very beneficial when used properly, but can lead to a debt trap if used unwisely. If you do some careful research before selecting which company to go with you will find the best credit card for you.
The truth is you need to be extremely cautious when applying for a credit card, as it is a complex web of fees, charges, and interest rates (not to mention hidden clauses and terms which are not only illegal but also financially dangerous) which can sink you deep in debt.
However, if you are convinced that you are responsible enough to use a credit card wisely, you should go in for one. But first, you will need a layman's crash course on credit card interest rates before you secure and swipe your card at the first opportunity.
Generally speaking, different applicants may get different interest rates. But usually the means for assigning interest rates on an applicant is based on his credit history. If your credit history is good, the interest rate that you are approved for will be a fairly good one. If this is not the case, you would have to work at improving your credit score.
This may be done the hard way, by taking the brunt of the compromised interest rate which the bank will assign to you, or to choose a plan with a lower credit limit so that the interest rate follows accordingly. A prepaid credit card could also be a viable option. But this method of rebuilding credit is hard to secure and it charges even higher interest costs.
Sure enough, there are low interest credit cards or even zero percent interest plans which are available, but as expected, there is a catch: most of these low interest cards have only a short, say six-month, period during which the interest is low. Once this introductory period is past, a higher rate takes its place. For a monthly or annual fee, service alerts are offered, informing the borrower as to when his low interest period is due to expire.
However, these plans tend to be short term in their outlook. They do not have the lasting appeal of some other plans.
Some credit cards can also be used in an ATM to take out funds within the credit limit, but the interest is usually charged from the date of withdrawal, and not from the monthly billing date. This means that the issuer gets a higher payback in interest rate from the transaction than usual.
Make sure that you are clear about the terms that your credit card provider is offering. Remember that interest rates could vary across providers. Some may lure you with teaser offers of low rates for a certain period, whereas the regular rates can get as high as 40 percent.
Since there are no fixed regulations concerning interest rates and penalties on late payments, some issuers forfeit the teaser rates if the borrower does not make the payment on time, and replaces it with a penalty interest rate. Some can even be so unscrupulous as to charge interest even if the balance is fully paid on the due date.
You should keep an eye out for the card that is the most affordable. However, the low rates are not enough. One must make sure that the other terms are not difficult to deal with.
Both D Slone & Ajeet Khurana 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.
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