If you’re in the market for obtaining credit, picking the right card can be an overwhelming task. You can apply for cards with your bank, online, or even in your local store. With so many providers trying to get your business, how can you make the right choice first time? Here are five tips to help you choose the credit card that’s right for you!
Consider your needs
Think about why you need a credit card. Do you have a balance from another card that you’re looking to transfer? Or are you looking to make a big purchase and would like one with an extended interest-free period?
Many companies offer generous interest-free periods to entice you buy. Average deals can range anywhere from 3- 18 months, and this can be a great incentive if you intend to pay a set amount to your card every thirty days. Similarly, a 0% balance transfer deal can be an attractive proposition if you are currently paying a lot of interest on existing debt.
Beware of hidden costs
Be sure to read the fine print of your credit agreement, as lenders can be very unforgiving if you stray from the terms and conditions. They may charge for missed payments, and impose late fees should you forget to make your monthly payment. Likewise, going over your agreed credit limit will always incur a fee, as will withdrawing cash from an ATM. ATM charges usually don’t have any interest free leeway, so you start racking up interest right away.
Do you get rewards?
Some credit cards offer loyalty points or frequent flyer miles, so think about if and how these rewards would be of benefit to you. Cash back cards are a popular choice as they as they pay you every time you shop. For example, you could earn 1% cash back for each purchase you make, so if you’re not a big traveller, this could be a more prudent choice for you.
Shopping with your credit card can also offer built-in insurance for purchases giving you added peace of mind, so it’s worth considering if you intend to buy electronic items or buy goods online.
If you frequently shop at one particular store or chain of stores, then a store card can offer multiple incentives. Your loyalty can be rewarded with exclusive deals on store merchandise and unique card holder only benefits.
Be aware though that store cards are not accepted everywhere and take into account how this would affect you. Also, store cards typically have higher interest rates and lower credit limits, so think about how this would suit your spending habits.
Similar to credits cards, charge cards such as American Express and Diners Club give you the same convenience of paying by credit card, but without the worry of accruing interest. Charge cards enable you to pay for goods and services interest-free, but the balance must be paid in full each month or additional fees will apply. Such cards usually carry an annual fee, but they often have no pre-agreed credit limit, so you have the freedom to buy virtually anything you want. They occasionally give you the opportunity to collect points and also offer exclusive, luxury deals for card holders. Typically, you must earn a minimum of around $30,000 per annum to be approved for a charge card, and you should be certain in your ability to pay off your balance each month.
Navigating the financial landscape on a monthly basis can be tricky, and credit cards can be a fantastic tool to help you manage your day to day finances when used responsibly. Taking a prudent approach and managing your credit so you get the most from it can mean the difference between racking up unnecessary fees and taking advantage of user benefits.
It’s also worth noting that your credit isn’t the only aspect of your financial landscape that you should be taking a prudent approach to. If you transfer money abroad on a regular basis you may be paying more in fees and associated costs than you really need to. Check out Ria Money Transfer’s payment methods and see if we can help you transfer money to friends and loved on