Choosing the Right Credit Card
The huge range of credit cards on offer can make it difficult to find the one that best suits your financial needs. Different cards will suit different people: the key to choosing the right credit card is finding the one that suits your spending habits. Many people are paying too much in interest charges and losing out on potential rewards because they did not choose a card that suits their spending and repayment patterns. Before applying for any card you should consider how you wish to use the card and whether or not you will be likely to default on repayments.
If you repay the full outstanding balance on your card each month, the interest rate is largely irrelevant because you will never pay interest charges. In this case, you should choose a card which has no annual fee and provides benefits such as cashback or discounts on purchases. Reward cards offer cashback or loyalty points every time you use your card. The points that you collect can be used in various stores to obtain discounts on goods and services. For more information see Reward Cards. Alternatively, you may wish to donate money to your football team or charity each time you use your card. For more details see Affinity Cards.
If you tend not to repay the full balance each month, you should look for the card with the lowest interest rate. Some card providers offer new customers zero percent interest on purchases and balance transfers. However, you should ensure that you read the terms and conditions carefully, to ensure that the interest rate that applies following this initial interest-free period is not excessive. Ideally, you should aim for an interest rate that starts low and stays low. Most cards will have an interest-free period on new purchases: usually from the date of purchase until the date that repayment is due. Some of the better cards will give you up to fifty-six days interest-free. For more details see Interest Rates.
If you have significant credit card debts already, you should aim to move this debt to a zero percent balance transfer credit card. These cards offer an extended interest-free period. This means that any repayment you make on the balance will go towards clearing your debt, as opposed to covering the interest charge. If you cannot obtain a zero percent balance transfer because your applications are refused, try to find a lower rate credit card deal instead. This will ensure that you are charged less interest and will remove the need to shop around for a better deal when the introductory interest-free period comes to an end.
If your credit card applications are refused, you may wish to apply for a specialised credit card. These credit cards offer particular benefits for certain groups of customers. If you have a poor credit history for example, there will be a credit card deal designed to assist you. Choosing this credit card and using it sensibly will enable you to improve your credit rating, if you show that you can now make repayments on time and generally in full.
