Credit Cards and How To Choose Them

It may seem like a simple question but its important to take into account a few factors when choosing your credit card. If you are in the enviable position of being able to pay off your card every month then you are amongst the few. If like most you don’t then we can offer you some guidance.

1.Interest rates: This is the most important factor to consider when managing your credit card debt. Every day we are offered 0% introductory rates for 6 to 9 months. These are usually for balance transfers and are a great way to transfer high interest loans or credit card balances to a 0% interest rate. Watch out for statements, which only refer to the monthly interest rates as well. Something like ‘rates of 1.5% per month’ on your statement may not sound like much but this is equivalent to 19.6% per year!

2. Annual fee: Most cards now do not charge an annual fee. Make sure you get a card that does not charge these fees.

3. Cash advances or withdrawals: This usually represents very poor value for money. Credit Card companies will charge in the region of 2% per month. If you can avoid it do not use this facility.

4. Reward points or Loyalty Schemes: These kinds of cards are gaining in popularity. Air miles and cash back rewards are being used to entice customers. Many people base their credit card choices on these kinds of benefits. If you read the fine print you will find that you have to spend are large amount to qualify for the points. Saying this if you are a frequent traveller paying for your air ticket with your credit card will help you build up substantial air miles.

5. Insurance: All credit cards should come with insurance, which covers you for fraud or theft that results in your card being used before you can cancel it. With the rise in the number of people buying on the Internet nowadays this is a vital requirement. The consumer credit card act outlines what the credit card company should be liable for. Some credit cards also offer free travel insurance, again a handy benefit if you are a frequent traveller.

6. Gold and Platinum cards: These may look good in your wallet or purse but they usually not the most competitive cards on the market. Firstly you have to earn a certain salary to qualify, although surprisingly these salary levels are set pretty low. There is also an annual fee for the use of the card, which in today’s market is a cost you shouldn’t have to pay. Don’t be blinded by the image there are many cards out there that offer far more.

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