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Choosing a credit card is never an easy
job nowadays. Credit card companies have come out with throngs of
credit cards with various names. It makes us really confuse on how to
choose a right one for ourselves. Choosing a credit card is an
important step as it may help you to save on interest, charges, fees or
even help you to achieve your purpose of credit card use.
Determine the purpose of using a
credit card. If you are using it to pay your groceries, utilities etc
and going to pay back in full every month, you may look for those
providing you cash back facility. If you intend to do a balance
transfer, try to look for those charging low interest on the
transferred amount.
Identify types of card. There are many
types of cards in the market. Standard credit cards, premium credit
cards, business credit card, prepaid credit cards, secured credit
cards, limited purpose cards, charge cards, student credit cards and
many more. Make sure you get the right credit card to fulfil the
purpose of getting a credit card. Ask the credit card officer about the
functions of the credit card you are about to sign up.
After the grace period, the residue
amount of your credit card will be charged with interest. If you are
not paying your monthly due amount fully, then make sure the types of
credit card you are holding is charging a low annual percentage rate (APR).
Different types of credit cards are charging different APR on purchase,
balance transfer and cash advances. Make sure you find out yours.
Know the fees involved. Fees are part
and parcel in a credit card. Annual fee is the most common. Credit card
companies will impose a fee on you annually for using their services.
If you do not pay back on time, you will be penalized with late
charges. If you use beyond your credit line, you will be charged with
over-the-limit fees. Cash advance fee will be imposed on those who do
cash advance transactions. Know your fees well and try to avoid them.
Some credit card companies offer lifetime annual free waived credit
card, which is good to have.
Know how the finance charge of your
credit card is calculated. There are difference ways of financial
charge calculation, namely average daily balance, adjusted balance,
two-cycle average daily balance, previous balance and ending balance.
Each of them will give you different impact on your credit card
balance. You need to find out which benefits you the most.
Understand the minimum payment
requirement of your credit card. Some people like to choose credit card
with low monthly minimum payment, so they do not have to pay much every
month. But if you really want to take charge on your credit card debt,
choose the one with higher monthly minimum payment. It forces you to
pay off your debt faster. This should be the way.
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