Choosing a Credit Card
The likelihood is that you're being bombarded with offers for credit cards through the mail. Along with TV adverts, internet adverts and reviews and adverts in newspapers and periodicals we're all awash with offers for new credit cards. The question is, how do you wade through the morass of data to obtain the right kind of credit card for you? If you are in the hunt for a new credit card then there are a few key questons you should be asking yourself and a number of places you should be going to gain information.
What is the Credit Card for?
This may sound like an obvious queston, but it's one that many people fail to ask themselves. The truth is that the answer to this queston will almost certainly direct you to the type of card you should be looking for.
The first question is whether the card is for personal or business use... If it's a business-related card then you may want to look for a card that offers a cash-back for business purchases or membership to a discount buying club. You may want a card that offers airline miles if you're a frequent flyer. Note that even business cards will offer introductory discount rates these days. However, if you're looking for a card that will support long term use it is important to note what the final APR of the card is, rather than an introductory rate. Indeed, it may well be better to seek a card with a long-term mid-rang interest rate rather than having to seek the best offer every few months.
If you want the card for personal use you might want a card with a low credit limit and fraud protection for making internet purchases. Alternatively you might be seeking a card with balance transfer facility and a low introductory rate to reduce your outstanding borrowings. Also, if you plan to use the card instead of cash and cheques to pay for goods but then intend to fully pay the outstanding balance at the end of each month find out what the card's grace period is (this may vary from 28 days to as much as 45 days depending on the card). Again, if you're planning to pay off the outstanding balance every month the incentives offered by the card may well be more important to you than the APR as you're not intending to be carrying-over a balance every month.
The Interest Rate (APR)
This may well be an important consideration for you. Though many card companies will offer an initial interest rate that is quite low, sometimes even 0% for both balance transfers and new purchases for a designated period of time (usually between six and twelve months) you need to be aware that the interest rate may shoot-up quite considerably after this time. Also look for any hidden charges that the card may have, such as an annual fee or charges for cash advances.
Incentives
These days credit cards offer a whole range of incentives — anything from air miles to cash-back to points proffered for purchases. The problem with all these incentives is that you actually need to use your card to make any real gains in these programmes. If you know that you're going to be using your card then these types of incentive programmes may well be for you. However, they do have a tendency of leading one into the spiral of 'spend more to gain more' which is precisely what the credit card company wants to happen.
Sources of Information
If you're looking for a new credit card then you really should do your homework. Gather as much information about the card from the provider's website, from newspaper card comparison sections and from card comparison websites as you can. Then you can use the points discussed above to generate a checklist of all the features you need. You can then pinpoint the card that will provide you with what you need.