Picking the right credit card for your needs appears to be a simple task, but often people are unaware of the associated pitfalls. With a credit card becoming a basic requirement in many countries we look at what you should consider before choosing one, and how picking the wrong option can result in higher fees and various other problems. With so much riding on choosing the right credit card we also consider how you should compare the various cards available.
Consider your spending habits
A credit card is tied to how much money you plan to spend in the future, but you current spending habits will help you pick the one with the right interest rates. So consider the amount you spend currently, and how it will rise in future when you have a family.
How to choose a credit card
Most people are not aware of the high interest rate they have to pay on outstanding balance carried from one month to the next. In some cases the interest rates can be high as 20 percent, soit is important that you find a credit card that offers a lower rate. Even if you earn rewards on purchases made using a credit card, they are often much less than the interest that you have to pay on a balance carried over, so look for other benefits such as – no annual fee.Also a credit card issuer will allow you to choose between, paying a minimum amount every month or a percentage of the balance due, so compare these options.
How to choose a credit card
Tied to a card is a credit limit that the issuer allows you to borrow. Even if you have a credit limit that goes up to several thousand dollars it is ideal that you do not exceed it. As going over the credit limit will cause harm to your credit score. So when choosing a card make sure that you are comfortable with the credit limit and utilize about 10 to 30 percent of it.
Opt for cards that offer cash back as rewards
When comparing different cards,you will notice that the rewards program offered by the issuer is frequently highlighted. The rewards program, however, can be littered with things that you will never need. So when choosing a credit card check if the rewards offered include cash back on groceries and gas or the opportunity to earn airline miles, as these are more useful that discounts on briefcases and smartwatches.
Check if a secured card is a better option
Several banks offer a credit card if you make a cash deposit. These cards are classified as a “secured” credit card and are the best choice if you do not have a credit history. Especially if you want to improve your credit score and get a loan in future choosing a secured card is better.
As you choose your credit card from the various options available, it is vital that you find out whether you qualify for it. Also consider a card that provides a sign up bonus as it is an attractive benefit and can result in your spending less of your own money during the first year. Importantly with the right credit card you can spend and pay off the balance, without having to frequently check whether or not you are paying more fees and interest than others.