The Basics of Choosing a Credit Card

 

Credit cards are a big responsibility. If you are thinking about getting a credit card, make sure that is the decision for you. While it can do wonders for your financial life, it can also cause a lot of damage if you don’t use it responsibly.

 

 

There are a few basic questions you need to ask yourself before applying for a credit card. In this article, we’ll discuss some of the basic information you will need to know before you choose a credit card.

 

Usage

Ask yourself how you plan on using a credit card. Which card you choose depends on your usage of it. Will you be using it for daily expenses or just emergencies? Will you pay the bill every month or do you plan on carrying the debt into the next month?

 

If you plan on carrying a balance from month to month you need to make sure the credit card you choose has a competitive interest rate and a long grace period. If you use your credit card daily, then you may want to choose a rewards or cash back credit card for the perks they offer. If you are new to using credit cards with no prior credit history, secured credit cards or a card with a low limit are great options.

 

Interest Rate

When selecting a credit card it is important to find out what the interest rates are. Does the credit card have a fixed or variable rate? A fixed rate will have the same interest rate each month while a variable rate can change over time. However, even a fixed interest rate can fluctuate if you pay your debt late or go over your limit. 

 

Charges and Fees

Before you apply for a credit card, make sure to read all the details in the terms and conditions of your agreement. See if there are any hidden charges applied to your credit card.

 

 

Credit Limit

Credit limit is the amount of money you can borrow with your credit card. Your credit history plays a big role in determining this limit. If your score is high, then your credit limit can also be high.

 

Compare Cards

Before you choose a credit card, make sure to compare all your options first. There are many credit card comparison websites that you can use that help tell you all the features and benefits of different credit cards, their fees and charges, their disadvantages, etc. Another way to compare credit cards is to look at their fact sheets. Compare repayment methods, interest rates, grace periods, annual fees and penalties. 

 

You can ask your credit card company to give you the best possible deal they can offer. The trick to getting the best credit card is to not rush to a decision.