Credit cards are handy tools for making purchases without your own cash. However, with many credit card issuers out there, many consumers find it difficult to select a credit card that can serve their needs adequately as well as being affordable.
Before you accept a credit card offer, it is advisable to take a little more time to think about the deal you are about to sign. The following questions can help you make a wise decision and choose a credit card that can meet your needs and minimize pitfalls associated with such offers.
What are your spending habits?
Many users simply sign up for credit card offers without considering the manner in which they will use it, which eventually exposes them to a number of risks. If you can pay off the card every month without fail, then you should get a card with no annual fee but with a longer grace period for settlement.
If you will accumulate balances for more than one month, it is advisable to go for a credit card with the lowest interest rate and a low initial settlement. Other areas you need to consider in relation to your spending habits include whether you will use the card for emergency and for every purchase you make.
With several credit cards out there, it pays in the end to get what is important to you.
What is the interest rate?
Interest rates on credit cards are either fixed or variable, often indicated as the Annual Percentage Rate in the offer. In a fixed rate card, you know your monthly rate because in most cases it does not change. A variable rate can change.
However, certain triggers can change even the fixed rates such as paying late for your card or exceeding your limit.
What is the credit limit?
This refers to the amount you can borrow from your issuer. It depends on your credit history and ranges from a few hundred dollars to tens of thousands of dollars. Work with a limit that matches your spending needs because if you exceed it, you will incur penalties.
What fees does the issuer charge?
While there are many ways credit card companies make money from fees, you can minimize the charges by choosing an offer without transaction fees or zero percent interest rate for extended months. Avoid offers with steep charges on late payments and exceeding limits.
In addition to the above questions, you need to consider how your issuer calculates interest and if there are incentives that they offer along with the credit card. With these tips in mind, you can select a credit card that meets your objectives.