Credit card offers are everywhere from your mailbox to the TV so how do you go about picking a good one? If your thinking they can’t all be the best then you would be correct but the best credit card for you will depend on how you use the card and your financial position so it’s important to know what to look out for.
Intro APR: This is the introductory interest rate. Check if the rate applies to balance transfers from other cards only or on new purchases as well. You also need to check how long the offer lasts for and any fees on balance transfers that may apply. To prevent people making too many transfers many credit card companies are now charging a percentage based fee for balance transfers.
Standard APR: This is the interest rate that you will pay on standard purchases. If you know that you will pay your bill in full each month then the interest rate may not be an issue but if you don’t pay your bills in full each month then you should consider a low interest credit card.
Interest Free Period / Grace Period: This is the number of days you get interest free on new purchases. It is normally shown as ‘up to’ a number of days, such as ‘up to 55 days’. The reason it says ‘up to’ is because they show the maximum number of days you can get interest free. The length of time stated refers to the first day of your billing cycle through to the day your monthly credit card bill is due. Therefore if you purchase something near the end of your billing month you may get far less time interest free. There are a few cards with no interest free periods. Avoid these cards like the plague as you will already be paying interest by the time your monthly bill arrives.
Cash Advance Rate: Credit cards offer the convenience of accessing cash through a cash advance. However, this convenience often comes at a high cost with many card issuers charging extra high interest rates on cash advances. In addition there may be an ATM fee of several dollars and interest is normally payable from the day you withdraw the cash. Unless you have a card designed for low cost cash advances they are best left for emergencies only.
Annual Fee: Many cards now charge no annual fee but if you want more rewards or benefits then an annual card fee may apply. Make sure you are aware of any annual fees before you apply and do a rough estimate to work out if the value of rewards or interest saved will outweigh the cost of the annual fee.
Rewards: Reward credit cards are growing in popularity and have branched out into many different types such as frequent flyer point cards, fuel discount or cash-back. By paying for most of your day to day expenses and major purchases through a rewards credit card it is possible to earn some worthwhile rewards but don’t cut caught up in earning rewards. Never buy something just to boost your rewards as the value of the rewards you get back is only ever a fraction of what you spend. Also, you will be paying interest every month if you don’t pay your bill in full and on time each month. If this sounds like you then you could benefit the most from a low rate credit card and do without the rewards. You will probably find the money saved in interest will be far more than the value of any rewards you could have earned.
Credit Required: Think about the credit rating of the cards you apply for. For example Gold or Platinum credit cards are clearly positioned for those seeking a high credit limit and have the income to justify this. If you’re on a low income and apply for such a card you will almost certainly get rejected and your credit rating will be damaged further.
Now you know what you are comparing you can make an informed credit card comparison and find the best credit card for your needs.
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