Choosing the Right Credit Card
Choosing
a credit card isn't just a personal choice -- it's a lifestyle choice. There's
a credit card for just about everyone! But with so many different options available,
choosing the right credit card can be a daunting task. It doesn’t have to be!
By reviewing your needs and interests, you can easily match a credit card to your
lifestyle. Here are some factors to consider:
How
Will You Use Your Card? When
choosing a credit card, you need to consider you'll be using the card first. Are
you going to use it to replace personal cash flow? Some people do this by banking
their salary, putting all purchases on their credit card and paying it off before
interest is due. Meanwhile, their salary sits in a savings account accumulating
interest. In this case, you wouldn't be worried about your interest rate (or APR)
and may benefit more from reward credit cards.
Other
people may want to use their credit card for occasional luxury purchases, such
as going on holiday or spending a day out with friends. If you don't plan on paying
off these purchases right away, you'll want to make sure you get the lowest interest
rate possible when you carry a balance from month to month. You'll want to find
a good 0% APR or
low interest credit
card so you can save the most money over time and pay the least amount of interest. Some
people want to use their credit card to have easy access to cash or to make purchases
overseas. People who are planning to use their credit cards for cash advances
will need to choose a card that has a low rate for this type of transaction. Likewise,
if you're traveling-- look for credit cards with low (or no) foreign transaction
fees. What
Incentives Are Available? The
most important incentive to consider is the annual percentage rate (APR). This
is the interest rate you'll pay on new purchases-- and the cost of owning your
card. These rates vary considerably, so it is worth shopping around. In particular,
look for offers with the lowest APRs and longest 0% intro rates. Getting a longer
0% APR will help you save more money by helping you avoid interest charges for
a specified period of time. Participating
in a reward program can help you accumulate additional benefits as well. Cash
back credit cards allow you to earn 1% to 6% cash back from your everyday
purchases. If you spend a lot of time driving, a gas
credit card will be advantageous; similarly, if you travel frequently,
you can earn valuable airline miles (or points) through an airline
miles credit card. But keep in mind, reward credit cards tend to have
higher interest rates-- so make sure you know how you'll use your card before
you choose a reward. The
Conclusion
By
evaluating your needs and interests, you'll have a much easier time determining
which type of card is right for you. Although there are many options to choose
from, you can narrow down your choices by understanding how you'll use your credit
card and by comparing all the incentives different types of cards have to offer.
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