Choosing the right credit card
Your credit score may just be a little number, but it packs a big punch. A low credit score can keep you from getting a car loan or mortgage. Furthermore, you credit score may haunt you for a long time if it drops. If you have good credit scores, defintely it opens more doors for you. This is only one reason why it is essential to think about which credit card you apply for before you do.
Every time you apply for a credit card, the company has to check your credit score. this is not a good thing. Numerous inquiries from credit card companies look bad on your credit report because it looks as though you are scrambling to open lines of credit, which can be a sign that you are struggling financially. Of course, this may not be the case. However, credit scoring companies all look at it the same way.
To avoid scarring you credt score with credit card applications by chooisng the right card. Choose a card that matches your lifestyle and works for you instead of against you. If you plan to pay off your balance each month, you might want a charge card instead of a credit card. American Express offers a number of charge cards with flexible spending programs that are perfect for people who plan to pay off their balance each month. Some also offer flexibility so that if you have an emergency you can use the card and pay off big charges over time. Most credit cards offer reward points everytime you use the card. On the contrary, American Express charges an annual membership fee for having the card.
If you seldom use the card but with plans to make big purchases, which requires you to pay off overtime you rather get another card which allows you to carry big balance overtime. Of course there cards require you to pay interest on everything you buy. Interest expenses can get very high.
Other kinds of cards include:
1) A check guarantee card, issued by your bank, that you can use to ensure that your cheque will be honoured up to a certain limit.
2) A debit card, issued by your bank, where whatever you spend is immediately deducted from your bank account
Do you need a credit card?
a) A credit card means you don’t need to have big amounts of money around and risk of losing it.
b) A credit card means you can purchase items over the internet.
c) A credit card means you can make purchases abroad without having to worry about local currency.
d) A credit card gives a room to spread the cost of a large payemnt over several months.
e) A credit card is useful in an emergency. For example, an unexpected repair to your house or car.
What You Need To Consider:
1) APR (Annual Percentage Rate)
This is the rate of interest that you will pay on any outstanding balance.
2) Special Introductory Rates
You may be offered a low or 0% rate of interest for a limited time (Up to 6 months) when you sign up for a new card. A cash withdrawals may be charge with a higher rate.
3)Transfer Balance Rate
Card companies sometimes offer a lower interest if you swap your balance from another credit card to theirs.
4) Free Interest period
Do not forget to check when interest payments will begin. Will you pay interest from the day of the purchase? Or will you have interest free days befroe you begin to pay? For cash withdrawals, there is usually no interest free period.
5) Cashback and Rewards
Some cards over points or rewards for every pound spent on the credit card. Make sure that these are relevant to you. For example, there&’s no use collecting airmiles if you never fly.
6) Minimum Repayment
Always check what the minimum monthly repayment will be. If you borrow £1000 on your credit card the monthly minimum repayment will probably be in the region of £25. But if you only pay this amount each month it will take a long time to pay off the balance and cost a lot in total when you include the interest payments.
7) Yearly Fees
This is the fee that the credit card company will charge you yearly for using their credit card. Some of the credit cards do not have annual fee, so always consider this when choosing which is best for you.
Late Payments
There will be an extra charge, as well as the interest owed, if your payment is late. Charges may even be more than the amount you owe so be extra careful to check waht the charge is, and to ensure that all your payments are made on time. A good way of doing this is to set up a direct debit from your current account.
9) Exceeding Your Limit
You get also additional charge if you exceed your credit limit.
