Choosing The Right Credit Card
They come day after day after day. Sometimes two, three, or four at any given time. Credit card offers. The charge card industry is highly competitive and banks and other financial institutions are constantly sending out mass mailings in an attempt to lure potential customers to change credit card providers.
And while it is generally not better to regularly open new credit accounts, there are times when doing so can be advantageous. But exactly how do you compare all of the credit card offers to know that you are choosing the right charge card There are a few things that you need to compare and consider before making your choice.
The interest rate. Obviously the higher the interest rate, the more payable in interest charges. Therefore the lower the rate the greater. Many cards now offer zero-percent introductory rates for periods as high as a year. Transferring a balance to a card such as this can be an effective way to pay down your debt quickly. But you have to read the small print.
Credit card companies usually apply your payment towards the debt with the highest rate of interest first. So if your rate of interest on purchases is 12 percent, your payment is going to be applied to that balance until it is paid off and then you will start paying off the zero-percent portion. Due to this policy, many people realize little savings in transferring their good balance to a zero-percent card. To be able to take full advantage of the policy, you should not make any purchases about the zero-percent card. This will ensure that the balance will be reduced as much as possible before the introductory offer ends.
Reward programs are great ways to gain prizes or cash return by making purchases. Some cards will actually give you a small percentage (about a couple of percent) of your purchases back as cash. Others allow you to earn points that may be redeemed for all types of merchandise, airline tickets, or gift cards. Reward programs are a great bonus, as long as you aren’t paying extra for it. A higher interest rate will quickly eliminate any savings you receive through the reward program.
Annual Fees or Service Charges. I have never used a credit card that charges any type of annual fee. It simply makes no sense in my experience. There are so many credit card companies out there competing for my company, why should I have to pay for the privilege of using a particular card. Even if the card offers frequent-flyer miles or cash back, the annual fee will reduce or even eliminate the benefit gained. Look around and you can find a card just as good with no annual fee.
Keep these 3 things in your mind when you are comparing the credit offer and you can be reassured that you are choosing the right charge card.
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