Posted by ryan on 13/04/09 at 11.59am
There are many options available to consumers who are interested in applying for credit cards. So many, in fact, that it may be confusing to try to figure out which one is right for you. Here are some suggestions to help you narrow down the list so that you can find the right one for your needs.
1. Your Usual Credit Card Habits
Take some time to think about how you really use your credit cards, as opposed to how you would like to use them. Ideally, you may want to avoid carrying a balance at all. If the reality is that you are likely to do so, then you will probably want to look for a card with a low interest rate.
2. How Interest is Calculated
Some cards will calculate the interest on the amount of your balance over the last cycle, while others will use the last two billing cycles to calculate this amount. Find out when the interest starts to accrue on the unpaid balance. There may be an interest-free grace period for a certain number of days following a purchase, and you can time your payment accordingly.
3. Amount of Fees Charged
Some credit card companies will offer a lower interest rate, but you are required to pay an annual fee for the privilege of having a credit card account with them. Keep in mind that this fee will be charged whether you are actually using the card or not.
Also, for balance transfer cards, keep in mind that some cards have balance transfer fees and some do not. This can make a big difference.
4. Reward Programs Available
Part of comparing different credit card offerings is to look at the type of rewards each company offers. There are many kinds to choose from, and here are a few examples:
Air miles may be an incentive to apply for a particular card, but you need to find out whether the miles have an expiration date attached to them or if they can be used indefinitely. Avoid cards that place a cap on the number of air miles that you can collect.
The reward points offered by some credit card companies may be collected and used to get tickets to sporting events, movies, music, and video game rentals. This may sound like a good deal, but you would likely have to charge a lot of stuff on your card to qualify for the rewards. Buying what you want outright may be a better idea than trying to accumulate enough points to get something really big.
5. Notice of Changes to Your Account
It’s a good idea to use your credit card regularly to keep the account active. Some companies have lowered credit limits or changed other terms because the account is not being used often enough. Others have increased the rate of interest they charge if you are late a certain number of times with your payment. You will also want to read the cardholder agreement to determine whether the credit card company must give you notice in writing before changing the terms of your agreement and how much notice they are required to give.