How do you find the perfect credit card for you and your needs?
With so many options, what should you keep in mind when choosing a credit card?
First, don’t be afraid to shop around and look at different banks and financial institutions when choosing a credit card. Although your bank may provide you with the current or savings account that is right for you, they may not have your perfect credit card match.
Before you start choosing a credit card here are some tips so you can identify what type credit card user you are.
Do you pay your balance on time and in full each month? Then a rewards-based system may be the best card for you. Essentially, you’ll be using a 20-30 day interest-free loan to pay for your daily expenses while amassing rewards for doing so.
If this is you, think about what will benefit you most either towards your daily expenses or aspirational purchases.
Grocery or shopping points. You can leverage your good spending habits to save on your monthly expenses by getting a card that gives you points or discounts for the things you buy regularly—groceries, petrol, etc.
The cash-back card. This is perfect if you want your funds to go a little further. Compared to other point-based systems, cash-back cards do not offer as much in terms of quantity. But they do offer something pretty appealing—cash! This system generally gives you from 1 to 1.5% cash back with a capped limit, allowing you to spend your rewards in any way you wish.
Travel cards. Planning a trip? Want to travel more? Pick one of the many travel rewards credit cards available, which reward you with airline miles every time you use your card. Your good credit can then be used to plan your next adventure or family getaway.
Entertainment cards. Always out on the town? Look for cards that offer discounts and cash back on dining and entertainment.
Do you only pay the minimum balance on your card each month? Are you in the process of paying off credit card debt? Then 0% balance transfer cards may be your best option.
These cards allow you to consolidate your debt and pay it off with more ease, as you are no longer paying interest charges. Generally, the 0% interest terms are often given for 3-6 months. If the debt is not cleared within that time period the interest rates are generally very high—possibly even higher than the card in which you had the original debt.
So before taking this option, look at the minimum interest payment you are making each month and see if there is any more that you can do to pay off the capital in the allotted time. If you are unable to pay the debt (balance transferred) in full before the 0% interest offer expires, make sure that you’ve compared your existing interest rate to that of the new card so you’re absolutely certain that a balance transfer is the most cost-efficient way to resolve your debt.
Going through a tough time? Planning for an expense you can’t quite pay in one go? Then look around for a credit card with the lowest interest rate allowing you to pay off the debt in the most efficient manner.
When possible, pay the minimum plus as much of a percentage of the capital as you are able to each month so you can level up from and become a Reward Reaper instead of a Temporary Debtor.
When choosing a credit card, make sure you are certain of what you are committing to. Always read the fine print, understand the interest rates, any annual fees, costs and eligibility for dependent cards, etc. As with all other financial matters, you must be aware and honest about your own spending habits and budget.
Did you agree with the points made in this choosing a credit card article? Share your thoughts with us in the comment box below.
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