How Do You Choose The Best Credit Card for You?
To find the best offer for you, you should consider the following three most important
points:
* Think about your payment style.
* Make sure you understand a plan's key terms.
* Know your credit rating.
Your Payment Style
The best credit card for you depends mainly on your personal credit habits. How you
use the card and how you intend to pay the bills when they arrive is important in
determining the card best for you. Smart consumers find the best deal for their
budgets and repayment style.
1. Will you pay off your balance in full every month?
If you pay monthly bills in full each month, the interest rate a card charges may be of
less concern to you. Instead, reducing the amount of the annual fee or other fees
will be more important. In addition, you should consider the cards that offer more
benefits and rewards such as rebates, extra warranty protection or airline mileage
bonus. Also make sure you card offers a grace period for paying your bill without
paying a finance charge. Your best bet is a card with no annual fee and the kinds of
rebates or rewards you expect to use the most.
2. Will you carry a balance?
If you carry a balance, you will want to consider cards with low interest rates. The
APR and the method of computing your balance are key factors. Look for a card with
a low interest rate and the right mix of rebates or rewards to justify any fees.
Credit Card Plans
Shop among the various plans of credit card issuers. When you're looking for a
credit card, be sure to understand credit card agreement terms and learn which
terms and conditions apply. They can make a difference in how much you pay for
the privilege of borrowing. Consider and compare key credit terms, including the
following, before you select a card:
* Annual Percentage Rate (APR)
APR is the interest rate reflecting the total yearly cost of the interest, expressed as a
percentage rate. The lower the APR, the less you will need to pay in interest if you
do not pay your balance of at the end of each month. The card issuer must also
disclose the periodic rate -- that is, the rate the card issuer applies to your
outstanding account balance each billing period.
* Grace Period
Grace period allows you to avoid any finance charge by paying your balance in full
before the due date. If there is no free period, you will pay a finance charge from the
date of the transaction, even if you pay your entire balance when you receive your
bill.
* Fees and Other Charges
Most issuers charge an annual fee, cash advance fees, late payment fees, and over
your credit limit fees.
Your Credit Rating
Do you know how good your credit rating is? Credit card issuers determine whether
your credit card application will be accepted and what kind of credit card terms you'll
receive depending on your credit rating.
Thanks to availability of FICO credit score, now your online application is processed
usually within 60 seconds. They check your credit score after receiving your
personal information. You'd better check your FICO credit score before they do.
More importantly, you can raise your credit score if you find any reporting errors
before your apply.
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