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Making the decision to get a credit card can be a very big step. With so many things to keep in mind, choosing which one to get can seem like a daunting task. With things like interest rates, annual fees and other factors to consider, this is one decision that shouldn’t be taken lightly.
Fortunately, we have a few suggestions on how to make this easier for you. Here are a few things you need to keep in mind before choosing a credit card.
Annual Percentage Rate
The Annual Percentage Rate or APR is essentially the interest rate you need to pay when you aren’t able settle your credit card’s balance in full. Different credit cards offer varying APRs, so make sure to check the terms being offered by the issuer.
Some cards even offer an introductory APR, which chargers cardholders with a lower interest rate when paying off the balance. This usually lasts for the first few months to a year, depending on the credit card. However, make sure to always pay the minimum amount due since the APR might revert to its default rate if you fail to do so. You could also take advantage of a lower APR by transferring your balance from another credit card and pay it using the new one.
Additional Fees and Charges
Even if you fully pay your balance every month, it’s still possible that you might get charged by fees imposed by the credit card issuer. This is why it’s important to always ask about additional charges that come with each credit card. Common charges include transaction fees, balance transfers, cash advances or making a payment by phone.
It’s also a good idea to check how much the penalty charges costs for paying a late bill or by going over the credit limit. It might not be worth getting a card that offers seemingly attractive perks, but charge exorbitant fees or penalty charges.
Card Type
Two of the most common types of credit cards that are accepted practically everywhere areMastercard and Visa. They are mostly interchangeable, so getting one or another shouldn’t matter much in the long run. However, if you’re considering getting a card that is neither but comes with a lot of other advantages, just make sure that it is accepted at any of the merchants that you’ll be regularly using it on.
Credit Limit
The credit limit dictates how much you’re allowed to charge your card on a monthly basis. In general, it’s a good idea to get a card with a high credit limit. Of course, the caveat here is that this is more advantageous if you plan on paying off your credit balance in full at the end of the month. Being able to borrow a larger sum every month means that the interest rates are also subsequently higher, especiallyif you only decide to pay the minimum amount. Just keep this in mind if you decide to get a card that offers a substantially high credit limit.
Perks and Rewards
This is what entices a lot of people to get a credit card. Many credit card issuers offer amazing rewards programs to help draw customers in. Generally, the more you spend using your credit card, the more “points” you accrue that can go to things like rebates, frequent flier miles, retail purchases and more. To find out how you can maximize your rewards, try to find out which establishments can help you rack up points. Places like gas stations, supermarkets or online retailers usually apply here. As long as you ordinarily buy at these places, then you should be able to avail of these rewards.
When Choosing a Credit Card
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