It’s not easy to choose the best option for the credit card. There are a lot of possible options, so most of us need some guidance in order to choose low rate, flight miles or the rebate points, or to check the benefits of annual fee versus lower rate. The offered features will help you to make up your mind.
Choose the card matching your spending type
People divide on the debtors and the transactors, and these two groups tend to spend their money differently. That is why they both need different credit cards for the various perspectives. The person who is disciplined enough actually pays the card payments each month and never falls into the debt. These people do not spend more then they can afford. On the other hand the people with other habits will experience significant problems with the cards of this kind.
If your balance is paid in term, the interest won’t be applied. Still if you miss the payment date, you will get the disadvantages o charges and sometimes even loose the privilege of the interest free option and be charged right after making the purchase.
The other feature is not to do the cash withdrawal since it will be charged anyway from the moment you take the money.
When purchasing the credit card it’s important to decide, which type of it you need.
- Unsecured cards offer the unsecured amount of money defined according to your credit history.
- Secured card offers the amount of money defined in the agreement of the bank and the card owner. This enables you to make small purchases each month while being able to pay them off easily.
Other features of the credit card
Here are the various features accessible with different credit card.
- Rebate cards can be the source of the monetary rebates which are usually the amount of the made purchase. They can be from 1 to 3 percent.
- Point cards offer the significant points that can be turned into bonuses like the additional payments for the goods of the free airline miles.
- Affinity cards offer the services of the current company or institution with the significant discount. They can also grant the access to the special services.
- Co-branded cards are also close to previously mentioned affinity cards and show the partnership in-between the companies.
Before purchasing the card get the information about the costs of the card, the additional services and available features.
Possible finance charges
1) Interest rates
The company checks out your credit history order to see what rates they can offer. The rates are important for those who want to keep balance on their card. If you’re planning on paying off monthly, forget about interest rates.
2) Introductory rates
These are also teaser rates that are available for the defined period of time, after it the other rates come into action.
3) Calculation of Interest
It can go by three methods stated below:
- Adjusted balance. This is the best benefit for the cardholder since here all the payments of the month are subtracted from the balance you obtained from the precious month. The new purchases are not being calculated.
- Average balance. This method counts the average daily balance. It gets added each day and then divided on the quantity of days.
- Previous balance. This method offers the calculation of the payments at the end of the billing cycle.
When you get to selecting the credit card, check out 6 thing:
1. Your habits
How you’re going to pay for the sums you use? Here are 4 main ways:
- to pay the full bill monthly not to worry about the interest rate at all;
- to carry the balance, where you will crave for the lowest rate if possible;
- to use the card for everything you buy and look for the solid rewards or wide credit limits;
- to use the card only in case of emergences, with the low fees and low interest.
It’s important to understand how you’re going to use the card, so that you will choose the best option.
2. The interest rate
The interest rate of the chosen credit card is known as the annual percentage rate (APR). It can be variable or fixed. The fixed one is paid monthly; the terms of paying the variable rates are more flexible.
3. Credit limits
This is the amount of money the company or bank is ready to offer to you. The amount usually depends on your credit history.
4. Penalties and fees
Some charges are going hand to hand with using the card. These can be transactions, cash advances, the ability to make payments by phone etc. The fees are also various, so you shall look for the most suitable ones.
5. The method of balance computation
This is needed or case of carrying the balance on your card. Usually for this option the daily balances are added together.
The reward programs for the card holders are the usual thing. This is a nice benefit to attract your attention to the certain card.