Choosing A Credit Card
If you’re thinking of applying for a credit card, there are
several important things to consider
Probably the most important is whether you are going to pay off
the entire balance on your card every month, or whether you
might sometimes leave a balance outstanding
In the latter case, the interest rate on the card will be your
most important consideration This is normally expressed as an
APR (annual percentage rate) The APR is the interest rate you
will pay on any outstanding balance every month The higher the
APR, the more you will pay in interest charges, so your first
priority will be to get a card with a low APR
Many cards offer low or zero interest introductory rates, but be
careful – once the introductory period (typically six to nine
months) is over, the rate may rise substantially If you are
confident that by the time the offer period is over you will
have paid off the entire outstanding balance, this may not
matter to you However, you must be honest with yourself here
If you know you are likely to spend more once you have the card,
you need to look carefully at the normal APR as well
On the other hand, suppose you are confident that you will be
able to pay off all your expenditure every month in full With
most credit cards, if you pay off your entire balance by the due
date each month, you won’t be charged any interest, and you
won’t therefore need to worry about the APR Instead, you will
want to take into account other factors such as the following:
Acceptability – Is the card widely accepted? Mastercard and Visa
are the most widely accepted cards in the US (and world-wide)
American Express is also relatively popular With other cards,
check that they are likely to be accepted at the types of outlet
you plan to use
Fees – Apart from interest charges, some card issuers impose an
annual fee This is now the exception rather than the rule, and
if you are sure you will pay off your balance every month, you
should look for a card that does not charge an annual fee
Credit Limit – Every card comes with a pre-set maximum spending
limit Obviously, you want this to be high enough to cover your
likely monthly expenditure However, if a high limit will be too
much of a temptation for you, a card with a lower spending limit
may be preferable
Cashback – Many card issuers offer cashback as long as you clear
your balance every month That means for every dollar you spend,
your card issuer will give you back some money, usually once a
year The amounts vary, but typically range from 05 to 2 per
cent of total spending There is often a cap on the total amount
you can get back in a year
Other Perks – A range of other perks can be found Some cards
offer frequent flier miles Others offer discounts on gas or new
cars Still others – so-called affinity cards – make a small
payment to a charity or other organization every time you use
them If your decision on a card comes down to which perks will
be best for you, try to put a dollar value on each one, based on
your lifestyle and likely expenditure
In summary, before choosing a card, first decide whether or not
you will be paying off your balance in full If not, a card with
a low APR should be your priority If so, look for a card with
no annual fee and other benefits you want, eg cashback,
discounts or travel miles
Having decided on the type of card you want, take the time to
study the market and see what is available Do not simply fill
in and return the next credit card application form that arrives
in the mail Credit card comparison sites such as
com can make this easier for you by listing all current
card offers for you to choose from, and also have a range of
articles offering unbiased advice and information
Tags | applying, card, charges, express, introductory, issuers, months, percentage, priority, result, things
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