One good way of viewing a credit card is to look at it like a chainsaw. A credit card can prove to be a very useful tool and help you a lot, but if you start using it improperly, then it can do some serious damage, not to your body, but to your financial health.
Interest Rate (Get the Lowest)
The most important factor in choosing a credit card is the interest rate charged if you don’t or can’t pay off your full balance each month. This is how much you will be charged if you carry a credit balance. Look for the APR or ‘Annual Percentage Rate’; they are required to disclose it. Sometimes the credit cards have attached variable interest rates, but the vast majority has a fixed interest rate. This way you will know exactly what you have to pay in case you carry a balance month to month.
You need to ask yourself different questions regarding the interest rate. First of all whether this is fixed or variable, for how long will you have this rate and what is the exact percentage you have to pay in case you take out a cash advance or leave an unpaid balance.
When you want to get a good deal, you should look for those credit card offers that have a smaller interest rate. While there are other factors to take into account, the interest rate always plays an important role.
Secured or Non-Secured (Get Non-Secured)
There are non-secured credit cards and secured. Most of the time, credit cards are non-secured. When choosing a credit card, you may not have the choice between non-secured or secured. Credit card companies may require those with bad or no credit to put up collateral for the credit card to ‘secure’ it. It’s likely that after a while of steady and on-time payments, that collateral will be returned to you. If not, you’re still building up legitimate credit history and the good credit score that comes with it. Eventually you’ll be able to qualify for a non-secured credit card. If you do have a choice, choose the non-secured. Why put up collateral when you don’t have to?
Annual Fee (You Don’t Want an Annual Fee)
The annual fee is a common add-on for credit cards. When you apply for a new credit card, you should look for those offers where there are no annual fees, but if you cannot find them, then you should just look for the smallest fee around.
Co-Signer? (You Don’t Want a Co-Signer)
Sometimes it’s difficult for new adults, students or young people without a job to get a credit card without a co-signer. It may be a necessary requirement to obtain your first credit card. If it is, find a relative or close friend willing to co-sign for the credit card. A co-signer is someone who already has a credit history and likely good credit. If you do not pay at least your minimum balance each month, your co-signer is liable too. That could mean collections and negative marks in their credit report.
Credit Limit (You Want the Highest)
A credit limit is the maximum amount of money that you can receive from the credit card company. Every time you are looking for the best offer available, you should get the cards with the highest credit limit available. The limit that is given to you is based on several factors. In many cases, one of the most important is the ability of an individual to make the payments, but there is also the credit score that plays an important role.
Late Payment Fees (You Don’t Want These)
You need to be familiar with all the terms of the credit card that you’re about to get. Take a close look at the fees and charges available. Compare what’s available at different cards and get the best one.
Over Limit Fees (You Don’t Want These Either)
The over the limit fees are charged when you are going to exceed the credit limit you have. In the United States it’s prohibited for the credit card companies to charge you these fees, unless you have opted for a credit card that has them. There are plenty of offers available where there are no such fees and those are the ones you should consider.
The standard over the limit fee is around $39. To find the fees for your existing credit cards look at your billing statement.
Rewards (Yes, You Want Lots of Rewards)
When you are applying for a credit card, you will want to get rewards. These rewards can come in the form of cash back on your purchases, introductory 0% interest rate, airline miles, or others. It’s great to have a card with a good rewards program, especially if you are a big spender.
Choosing a credit card should be based on research. These days there are many people that sign up for credit card deals just like they go and buy a bag of potato chips. If you do not pay close attention to the small details, you might end up getting charged too much money. A credit card should fit your needs and spending habits.