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Important Factors to Consider When Selecting a Credit Card

In today's consumer society people are flooded with offers about credit cards. However, you should not jump into the first one that has been offered to you or the one that looks better. Instead, you should make a careful research beforehand, which will save you many dollars of your hard-earned money. Here are the factors that should affect your decision.

Credit Card Type

First of all, when you are offered a credit card you should determine its type (such as standard, premium, secured, prepaid, etc.). There are many different variations of credit cards on the market you should careful analyze before filling in the application form.

Credit Card Use

You should determine the way you are going to make use of the card. If you plan to fully pay your balance every month, then it is better to select a charge card. If you plan to use your credit card for balance transfers, then select a card that has low interest rates on these transfers. A card with a low interest rate should be selected in case you plan to carry balances from one month to the other.

Grace Period

Another thing you should examine is the grace period. This is the time period during which you will not be charged a finance charge. After this period, the latter will be added. The grace period is expressed as the amount of days before the billing date. The shorter the grace period, the worse, because you are given less time to cover the bills you have accumulated during the month.

Credit Limit

If you are new to credit using, it is wiser to begin with a lower credit limit so that you develop the needed credit discipline for spending.

Credit Card Fees

Credit cards don't come for free so always make yourself familiar with the fees you will have to pay. Some of the most commonly fees observed in credit cards are:

  • Late fee
  • Over the limit fee
  • Annual fee
  • Balance transfer fee
  • Cash advance fee

Annual Percentage Rate

When you choose a credit card you should look at its annual percentage rate (APR). This is the percentage you are charged when your balance is above the grace period that is determined beforehand. You should also look at the APRs that are applied to the various balance transfers, cash advances and purchases.

Finance Charge Calculation

The way a finance charge is calculated should also affect your decision making, since the model applied by the company will have an effect on the amount of finance charge you have to pay.

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