Choosing a Credit Card-What to Take into Account

Choosing a Credit Card-What to Take into Account

 

 

 

A credit card is a handy financial item to have but it can also cause problems if it is misused. You need to think carefully when it comes to choosing a credit card and what to take into account about credit cards.

As a business you will need a different type of offering and places such as SureSwipe can help you with your needs.

Before choosing a credit card, here are a few things of what to take into account.

1. Your Spending Habits

You need to consider how you will want to use a credit card. Think about if you will be able to pay of the balance each month or will carry a balance from month to month. Also are you looking at a credit card for emergencies only or to pay for various types of purchases?

         i.            If you know that you will pay the outstanding balance each month then you do not need to be overly concerned with the interest rate. You should try choosing a credit card that has no yearly fee and a long grace period.

       ii.            If you believe that you will carrying a balance each month then you need to find a credit card with a low interest and a low introductory fee.

      iii.            If you plan on making various purchases with a credit card then you need to secure a good credit limit as well as look for a rewards program. If you intend to only use it for emergencies then a low fee, low interest and no frills card is best.

2. Interest Rate

When you see a credit card offer the interest rate will appear as the APR which is the annual percentage rate.

This rate can either be fixed or variable which is then tied to a financial indicator which will generally be the prime rate.

A fixed rate will remain the same month to month. The fixed rate will only change when it is based on specific factors like paying the balance late or exceeding your limit.

A variable rate will rise and fall month to month, which means you may not know what to expect.

3. The Limit on a Credit Card

A credit card limit is the maximum amount of money that your credit card issuer will allow you to borrow.

The limit that is granted to you will largely depend on your credit history and credit score.

You can damage your credit score by maxing out your card and the limit can be lowered. This will also incur a penalty.

4. The Fees and Fines

You need to be aware of the fees associated with credit cards when choosing a credit card. The fees that you need to take into account are transaction fees like balance transfers and cash advances.

You can also incur penalties and fines if you pay your monthly payment late.

You need to consider cards that have affordable fees. You can find offers that have a 0% interest for a period of time and other such deals that you can take advantage of when choosing a credit card.

5. Balance Calculation

If you intend to carry a balance then you need to take into consideration how the finance charge is calculated.

A common calculation for this is the average daily balance. The daily balances are added and then divided by the number of days that are in the billing cycle.

If the credit card has two billing cycles then you should avoid these as you will be paying more.

6. Rewards

There are reward programs offered by credit card issuers. As long as you do not pay for the rewards in terms of charges these can be a nice benefit to you.

The rewards can vary from cash to travel. These rewards are earned on purchases that you make with your credit card.

When choosing a credit card these factors are what you should take into account before you agree to any credit card offering.

A credit card takes responsibility and managing so that you improve your credit score and pay your balances. It is not an item that should be taken lightly and you will need to think about it and how you will use it.

The most important factor is to understand the credit card and its terms so that you know what you are paying and what you will gain.