Choosing the Right Credit Card
for Your Financial Needs
Choosing
a credit card that works best for you is vital to your credit rating
Reach into your wallet or
purse, pull out a card, swipe, and you're done. It is very easy to use
a credit card. The problem lies in choosing a card ? and it has nothing
to do with the picture on the front! Choosing a credit card that works
best for you is vital to your credit rating. If you choose incorrectly,
you may find yourself in deep debt trouble. Here is some basic, yet
extremely important, information that will help you make the right
choice.
Your Money Handling Habits
Choosing a credit card that is perfect for one person may be a dismal
failure for you because your habits are different. When it comes to
choosing your credit card, you need to look very closely and honestly
at your habits.
For instance, do you typically carry a balance or do you pay off the
card at the end of each month? If you answered "yes" then you will need
to shop for:
A low Annual Percentage Rate (APR). The APR the interest rate you will
pay on any outstanding balances each month. The higher the rate, the
more you will pay in interest charges.
A fixed-low rate. This means that they will guarantee that your rate
will stay low. Oftentimes, a company will offer a low introductory rate
to get you signed up and then increase the rates drastically in 3, 6,
or 9 months. The problem with a guaranteed rate is that an annual fee
often accompanies it. You will need to decide if the lower interest
rate guarantee is worth the cost of the annual fee.
If you will be paying off your card at the end of each month, you will
not have to worry as much about a low APR since you will not be using
it. And with no need for a guarantee, you may be able to avoid yearly
fees. However, you will want to be sure to get a card with a grace
period.
Grace Period: Be careful to get a card that allows you to pay off your
bill at the end of the month with no finance charges. Those that don't
offer the standard grace period begin charging you interest the moment
you make a purchase.
Cash Advance Fees: Be aware that most cards charge interest, and
sometimes at a higher rate, for cash advances and this charge begins
with no grace period even if your card offers a grace period for
purchases.
You also need to decide how reliable you will be when it comes to
paying on time and keeping yourself under the card limit. If you are
often late paying your bills or often do not know how much credit you
have left, you will want to watch out for transaction fees and other
charges. Many card companies charge a late fee and an over-the-limit
fee. These can be substantial. Your best bet is to pay on time and keep
under the limit, however, finding a card with lower charges is a good
idea.
Here is another important question to consider when looking at your
money handling habits: Do you use the card rarely, occasionally,
regularly, or frequently? Those that use their cards for just about
everything instead of using cash or checks will want to look for credit
card protection. This way, if you lose your card or it is stolen, you
will not be responsible for any purchases made.
Finally, consider the different benefit programs that cards are
offering.
Do you travel? Then consider a card with frequent travel miles as a
reward. Or perhaps one that offers traveler's insurance.
Do you use your card for large purchases like electronics? You may want
to consider credit card insurance that will replace your equipment for
a specified period of time if it breaks down or gets stolen.
Are you saving to buy a new car? There are cards that offer new car
rebates.
Do you have a favorite charity? Many cards now support specific
charities, universities, and organizations by paying the entity a
specific amount with each purchase you make.
What matters most is to find the features that fit your pattern of
spending and paying. Don't get fooled by the gimmicks or the
advertisements. Know your spending habits, look at the small print, and
choose the card that is best for you. With all the different cards
available, you will be able to find the right fit for you.
Wesley Atkins Author © All rights reserved |
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