The first thing you need to consider when choosing a credit card is how you will use this card? It could be that you are planning on using your card simply for making purchases instead of carrying cash around with you. This would mean that you would have to pay your bills at the end of every month. Under such circumstances, it doesn’t matter what rate of interest you are paying at.
Perhaps, the main things you need to consider here will be the bonuses available, and the period of interest-free time that you have. Bonuses include things like shopping discounts, air miles; cash back or even free insurance amongst many other perks.
The only time when you’ll actually have to sit down and consider interest rates is when you plan on withdrawing cash on your card, because in such cases, the interest will be calculated right from the time the cash is withdrawn. If, like most other people, you use your card to borrow money and don’t plan on paying off your monthly balance entirely, then it is time to look for a credit card that has one of those introductory 0% interest rates on purchases.
Choosing the Right Card
Here are a couple of pointers to help you make the decision.
- Balance Transfers – If you have balance on your card, then you can convert this into a 0% deal. However, this deal will only be applicable for a certain amount of time or until the balance is paid off in full. So, if you are planning on making any purchase on the card, you should first check to see what the interest rate is before you get charged. Also check if any fee is charged for transferring the balance.
- Rewards – There are many offers and incentives like loyalty points and cash back offered by many banks today. These are offered to attract new clients. However, it is advisable to first check the rates of interest charged as the levels of cash back are generally very low, and since you will be paying higher interest, this equation won’t balance out. It isn’t worth paying higher interest rates just for loyalty points or cash back offers, if you are not planning on redeeming them or if their monetory value is relatively low.
- Repayments – The monthly minimum repayment amount on most cards range anywhere from 2% to 5%. If you choose a card that has low minimum monthly repayments, then you should know that it could take you a pretty long time to pay back that balance, which in turn will cost you more in the bargain. However, if at all you miss a monthly payment deadline, then you will probably be penalized. The best way to avoid the risk of a missed payment is to go ahead, and set up a direct debit for the minimum monthly payment amount. However, if the funds are insufficient in order for the direct debit to be paid, then you will have to face the penalty fee.
- Cash – If you feel the need to withdraw cash from your card, then first check the rate of interest being charged. This will always be higher than the interest rate applied for ordinary purchases.
The Right Credit Card Company
Like with everything else, before you go ahead and choose a particular company, you must first know your facts – by researching and comparing. There are many online websites that allow viewers to compare different types of offers. The company’s method of calculating outstanding balances can make a world of a difference in the charges you will have to pay. Also, look at the fees that the company will be charging. There are cash advance fees, balance transfer fees and annual fees to name a few. These factors will definitely make a difference in the amount you have to pay. Though it sounds like a cliché, it is advisable to read the fine print in the agreement to check for other charges and fees.
So, when shopping around for the best possible credit card, always look for the best plan to fit in with your needs – and always make sure you fully comprehend the terms and conditions before signing on the dotted line!