Credit cards offer plenty of benefits and convenience. And these days, there are cards for everyone. With so much variety, choosing a credit card can quickly turn into a daunting task. But it doesn't have to be. By reviewing your needs, you can easily match a credit card to your lifestyle. Here are three things to consider as you choose a credit card.
Check the Interest Rate
Every credit card has an annual percentage rate, or APR, attached to it. If you pay off the balance each month, this will not affect you. However, most of us do occasionally carry a balance, so finding a good APR is important.
Many cards come with an initial low or 0% interest rate. After a period of time, varying from a few months to a year, the regular interest rate will be used. Some cards offer low interest rates, while others charge a higher one.
You will want to check if the card has a fixed or variable interest rate. A fixed rate is one that will not change unless the issuer notifies you. A variable interest rate is usually attached to another rate, such as the prime rate. As the prime rate changes, the interest rate on your credit card will also fluctuate. There are often limits included, which define how high or low your rate can go. Check the fine print of the credit card application to get a better understanding of the interest rate and how it works.
Look at the Finance Charges
Most credit cards have a number of finance charges included. Some charge an annual fee for carrying the card. This can range from $25 to $75, and sometimes more. Other costs may be incurred through balance transfers, cash advances, late payments, or by exceeding the credit limit. These may or may not affect you, depending on how you use the card.
Besides the fees, you will want to look at the grace period. This is a free period that allows you to avoid finance charges by paying off the balance before the due date. Some cards have a long grace period, while others do not include one. By reading through the terms and conditions, you will better understand the charges attached to the card.
Compare Additional Benefits
Participating in a reward program can help you accumulate additional benefits quickly. Some cards give you cash back when you make purchases. This usually ranges from 1% to 6% of the amount spent. If you spend a lot of time driving, a card with gas rewards will be very advantageous; similarly, if you travel frequently, you can earn valuable airline miles through a credit card that offers miles or points for travel with your purchases.
Some cards can be used to consolidate debt. Look for one with a low charge for balance transfers and a 0% APR introductory rate. Then transfer your balances onto the card. If you can, try to pay off the entire debt before the 0% APR offer expires.
By evaluating your needs, you can decide what to look for in a credit card. Search for one that fits those needs and then apply online. The card will soon arrive in your mailbox. Use it wisely, and you'll enjoy the convenience and benefits of having a credit card.
