7 Tips for Choosing the Right Credit Card

There are times when the money in your bank account just cannot stretch far enough to cover certain expenses. To help offer more financial freedom, many people turn to credit cards for large purchases or to make ends meet. However, before you apply, here are 7 tips for choosing the right credit card:

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1. Determine exactly why you need a card.

Getting a card is a decision not to be taken lightly. Before you begin, it is important that you know why you need a card and if owning one will help you. While they can be used to build credit, credit cards can also hurt your credit if you do not manage the debt correctly. However, cards are handy for emergency situations and larger purchases that you have the funds to quickly repay.

2. Learn about different card types.

There are many types of cards available, such as:

• Standard credit cards
• Premium credit cards
• Limited purpose cards
• Business credit cards
• Charge cards
• Prepaid cards

Depending on your needs, as well as your credit history, some types of cards may suit you more than others. For example, standard cards can be used almost anywhere while limited purpose cards can only be used in specific places. Both standard and premium cards also offer student credit cards, reward cards, cash-back cards, and more.

3. Choose the best credit limit for your needs.

When determining what card is right for your needs, you have to look at the credit limit. While credit limits vary depending on the card type and your credit history, it is also important to know beforehand how high you want to go. In some cases, you may be offered a higher credit limit, although this is not always beneficial. It is also important to be wary of no-limit credit cards because they can actually negatively affect your credit by appearing to be maxed out.

4. Find the lowest interest rates (annual percentage rates).

The annual percentage rate (APR) refers to the total interest rate on a card for a year. Different cards offer different interest rates, so it is crucial to do comparison shopping between companies. However, remember to be wary when being offered introductory rates because they can skyrocket later.

It should also be noted that the APR may vary even between cash advances, balances, and purchases on your card, so it is crucial to know all the numbers.

5. Become knowledgeable about the additional fees.

The types of fees attached to cards vary between companies. However, additional fees may include:

• Late fees
• Annual fees
• Overdraft fees
• Over-the-limit fees

6. Check how long the grace periods are.

The grace period is the amount of time you have to completely pay down your balance before a finance charge is applied. The grace period is typically expressed as days from a billing date. Because of the finance charge, it is better to find cards that offer longer grace periods.

7. Thoroughly read the terms and conditions.

To protect yourself, it is essential that you read and understand the terms and conditions attached to any card. If there are terms that you do not agree with, then you should avoid getting the card. By reading the terms and conditions, you will be aware of your rights as a consumer.

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Having cards in your wallet can prove to be a lifesaver when times are tough. With these 7 tips for choosing the right credit card, you can get the help you need while learning how to be a smart shopper.

Sam Jones, the author, has a number of UK credit cards and is always on the lookout for new and better deals.

Source: http://www.howimportantisyourfinance.com/2012/12/15/7-tips-for-choosing-the-right-credit-card/

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