No doubt that you are already inundated with many credit card offers. You may receive several in the mail every single day. It is tempting to sign up for every card that you are offered, but this would be a mistake. Before filling out those credit card forms consider several things. You need to be sure that you are financially ready to take on the responsibility of a credit card. Credit cards are not really bad if they are handled correctly.
Credit cards make life easier as you don’t have to carry cash every time you step out of your home. Just one card and you are good to go. They can be a useful tool, but too many people make mistakes with their credit cards. Prepare yourself earlier so you are ready to handle it correctly before signing up for a card.
Look at the Interest Rate
Many cards will lure you with the introductory rate of zero percent interest. This is to encourage you to build a balance that you will not be able to pay off during the promotional time. Your interest rate may jump up to fifteen or twenty percent after the introductory period is over.
If you are getting interested as high as 15% then keep looking for another card.
- In addition to the introductory rate be sure to look at the regular rate that you will be charged and choose a card with a lower rate.
- The best way to qualify for lower rates is to have a higher credit score, which means you do not utilize too much of your credit and you make your payments on time.
Look for a Card with No Annual Fee
There are so many credit cards available that you should not pay an annual fee in conjunction with your card. Many cards try to offer you cashback or other rewards as long as you pay an annual fee with the card. You should keep looking at rewards cards as some rewards cards do not charge the annual fee.
You can look online for a card without an annual fee and apply there. A good place to start would be with your current bank or credit union.
The credit card limit is the amount of money that the credit card issuer is willing to let you borrow. It could be anything from a few hundred dollars to tens of thousands of dollars that totally depends upon your credit history. It is for sure that you don’t want a situation in which you’re close to maxing out your credit limit. It will affect your credit score — and some credit card issuers have cut customers’ credit limits to an amount that’s lower than their current balance. Adding insult to injury, there’s a penalty when that happens.
Balance computation method
You need to understand how the finance charge is computed, especially for those who are going to carry a balance. This method is the average daily balance. This means that the daily balances are added together and then divided by the number of days in the billing cycle. Fend off from credit cards that calculate the balance using two billing cycles as this results in costing additional money in financing fees.
One of the best benefits of credit cards is amazing rewards programs. Your day to day purchases can earn you points, which you can apply for travel, retail purchases, cashback, and more.
To rack up the most points, pick a card that gives you rewards for where you spend the most, commonly gas stations, grocery stores, or certain shops or online retailers. Spending more just to get a reward likely won’t save you money in the end. So, be sure to spend on what you’d ordinarily buy
Fees and penalties
There are a lot of ways for a credit card issuer to make money off you. Certain common charges include fees for transactions, such as cash advances and balance transfers, or for asking to increase your credit limit. Also, there are penalty charges levied for going over your credit limit and paying your bill late. The issuer doesn’t decline your card, rather charges a fee that keeps on piling up every time you commit a mistake.
Credits cards are one of the biggest responsibilities in one’s life. You might have heard from people around you that credit cards are a tremendous help but it is better to figure it on your own.
You can also get credit card loans if you want. While loan application, the issuer essentially loans you the amount which you will be able to repay at a later date while being charged a definite interest rate. Also, cardholders can avail of pre-approved loans on credit cards within or over their credit limit.