What Kind of Consumer Are You?
When it comes to people who use credit cards, the range of people can consist of just about anyone. Depending on who you are, certain cards may work out better for you
- Are you the type of person who is prone to leave debt alone for a while? You might want to look for low APR cards to minimize the amount you have to pay
- Will you pay everything off in the month you buy it? A rewards card that gets you perks while having a higher APR might work for you since you won’t be charged interest if you immediately pay card balances off
- Are you a special type of consumer? Maybe you fly or drive around a lot. There are special rewards cards that target fliers and frequent drivers by giving them the best benefits. Those cards might be worth it if that sounds like you.
As was briefly mentioned, you want to factor in the interest rate of any card you consider. Certain cards have really low interest rates but hit you in other ways while other cards have high interest rates with fewer other fees.
How high of an interest rate you are willing to accept should largely depend on how quickly you will pay off your balance. Interest is charged monthly based on a calculation using APR and how many days since the last billing period. If your balance is empty at the time of credit card statements then you will theoretically not be charged any interest.
Maximum Credit Card Limit
Almost all credit cards have one, but the exact amount varies greatly from card to card. If you need a credit card that can run up a large debt without hitting over charge fees then you’ll want to factor that into picking a card out. If you only make a few purchases a month and you always pay it off, then this shouldn’t matter as much.
If a card has a really generous APR, a large limit, and incentives, then it probably has some kind of fee, yearly or otherwise. These fees affect people who spend very little with a card more than those who constantly use them since they are generally one time fees or only happen under certain conditions.
You should read the fine print to see if there are any fees that you are likely to accrue due to your spending habits before you get the card.
Billing Cycle Process
Some cards may calculate their finance charge differently than others. You should check the fine print to make sure that there’s no weird or unfavorable process that goes into finding out how much you’re charged. This also applies to the minimum payments owed. Make sure that you can make the payments before you start charging to the card.
Rewards & Incentives
If you’re a person who shops a lot, then a rewards card might be a good choice. Although these cards might have higher interest rates or additional charges, the extra free rewards that come from using the card can sometimes outweigh the penalties. Do the math before you pick a card and figure out which one saves you the most money.