Do not Forget about Credit Score before Choosing a Credit Card Deal
10/15/2007 | Choosing Credit Card
Sooner or later you make a decision to apply for a credit card. After you have finally made up your mind, you start to look for the best one. Today's market is full of offers ready to face various customers' needs. Although there is a great variety of credit cards, not many new cards have been recently introduced into the market.
Choosing a credit card is not as simple as you may think. There are several factors you need to consider before making an application. Especially as there are so many credit card offers. In order to make the right decision ask yourself several questions.
First of all, before making a credit card deal, understand what kind of card is it. Is it a secured or unsecured card, premium or limited purpose credit card? Whether it is business credit card or student plastic. Do not get confused.
The second question is how you are going to use your credit card. Are you planning to pay off your balance in full each month? If yes, then you can apply for rewards credit cards. Do you plan to carry a balance from month to month? Then you should better look for a card with low interest rate. If you plan to make a balance transfer choose a card with low interest rates on balance transfers.
Find out what is the annual percentage rate for your card. APR is an interest rate applied to your balance. Usually there are different APRs on balance transfers, cash advances and purchases. Default APR is usually higher, so pay special attention on it. Make sure you know all the interest rates.
How long is the grace period? Grace period is an amount of time after a payment due date. It is important to know exactly how long it is because during grace period financial fees for the convenience of using the credit are not charged. It is usually calculated in days.
Look through the fees. You need to know how much the fees are. The common fees are: annual fee, late fee, over the limit fee, cash advance fee and balance transfer fee. Of course they vary from card to card and generally depend on type of a credit card.
How is the cost of your credit calculated? Different banks use different methods. The two most common methods of calculating your finance charges are the average daily balance and double billing cycle.
You must absolutely be aware of your credit limit. The fact how you treat your credit limit may influence your credit score. It is wise to stay below 50% of your credit limit. And it is best to stay below 30%.
What rewards are at your disposal? There are credit cards that offer rewards. Make sure you understand the structure of the rewards. This includes the amount of purchases you have to make in order to get rewards. Is there a cap to bonuses? Do they expire? Finding that out beforehand will help you avoid disappointment.
Well, the outcome of credit card usage depends only on you. You should employ your rational mind and go ahead and explore the credit card market.
