Wednesday, December 5, 2018

How to Choose a Credit Card

How to Choose a Credit Card to Suit Your Needs?


With more and more businesses offering the option of online or digital payment, owning a credit card has become more of a necessity rather than just a luxury. Card payments offer many perks such as cash backs and overcomes the need of carrying cash around every time you think of shopping. 

The problem arises when you search for a credit card and are bombarded with options that makes choosing one intimidating. 

Credit card for most of us is not something we go shopping for every few months. Thus, the following article will help you learn a few tricks on how to choose a credit card to suit your needs.

Important Factors to Consider When Choosing a Credit Card


It is necessary to first reason out why you need a credit card. A credit card can turn out into a double edged sword that can turn things nasty if you are not wise when using it. 

Let us consider certain factors that will help you choose a credit card that is just right for your spending needs.

1.Why Do You Need a Credit Card?


The first thing to consider is how you plan to use your credit card. Your spending habits are an important factor that will help you find the right card. For example:

  • If you need to build and improve credit score then you need to go in for secured credit cards
  • If you just need to carry balance around then go in for low interest credit card
  • If you need to transfer balance from account to account then you need balance transfer credit card
  • If you need to earn rewards for every dollar spent then you can go for rewards credit card
  • If you are a regular shopper then earning cash back will prove to be an added bonus. Thus, you need to go in for cash back credit card.

2.Choosing the Way You Repay Your Spent Bills


The key is to keep in mind how will you be paying off what you owe every month. This means you can choose a card that lets you pay the balance in full on a specified date every month. Such cards even offer an interest free period if paid in full till a certain time period.  These cards may give you incentive such as cash back and rewards if you are planning to pay the balance in full every month.

In case you are looking for cards for borrowing some repayment time, then you do not need cards that require payment in full. Then choose a card that allows repayment in EMI at the lowest interest rate. Keep in mind you need to repay the amount regularly on time.

3.Keep an Eye on the Annual Percentage Rate (APR)


Before you go for a card, ask about the APR. It is an important factor as it is the money you need to pay for borrowing on the card, in case you do not pay off every month. Compare the ARP for different card before you choose a card. You also need to consider the monthly card fees, charges, as well as incentives.

4.Annual Fee


Cards often charge an annual fee every year from the user. If you do not pay on time, you may have to pay interest as due over this annual fee. Thus, you may end up paying interest on the fee as well as the amount you spend if you have chosen an EMI repayment plan. Thus, make sure you read the fine prints before selecting a credit card to suit your needs.

5.Check the Extra Charges Applied


Many cards have extra charges added such as extra charge when you spend beyond your credit card limit. Or they may even charge more if you use the card abroad or become late in your monthly payments.

6.Does the Card Offer Loyalty Points or Cash Back?


You need to consider cards that refund some money back to your card after making purchases. Some cards offer Loyalty Points that can be used to buy certain goods, or spend on hotel bills, travelling tickets, etc. and avail discounts. There are cards that give cash back to your account after you spend a certain amount shopping.

Do not settle for the first credit card you come across. Consider different cards and even ask your friends who are credit card users. You should also consider credit card companies with a proper customer care service. There are credit card companies available that block your card the minute you report a theft or loss of card. Do your research well and then choose a credit card to suit your needs.

References:


1.https://www.moneysupermarket.com/credit-cards/choosing-a-credit-card/
2.https://www.moneyunder30.com/how-to-choose-a-credit-card
3.https://www.citizensadvice.org.uk/debt-and-money/borrowing-money/credit-cards/choosing-and-applying-for-a-credit-card/
4.https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/how-to-choose-a-credit-card
5.https://www.thebalance.com/how-to-choose-the-right-credit-card-960205
6.https://www.experian.com/blogs/ask-experian/6-steps-to-finding-the-best-credit-card-for-you/
7.https://www.discover.com/credit-cards/resources/things-to-consider-when-choosing-a-credit-card/

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