Choosing the right credit card is a very difficult task with so many lenders willing to offer you one. You need to find out which one best suits you. Here are ten tips that will help focus your mind and decision on choosing the best card for you. Always remember that your credit rating will effect the amounts, and some terms and conditions that you may be offered.
1. Over the Limit Charges This charge occurs when you go over you credit limit and can sometimes hit you with a very large charge. How ever giving that you have the option to go over you credit limit can seem an added bonus it will cost you in the long run. Some cards will not let you go over you limit others do. For example if you are in a shop buying goods or services with you card and you are allowed to go over your limit it will save you the embarrassment of having your card declined in front of staff and customers but this saving grace remember will cost you. Be sensible and keep track of your card usage and your limits. The better you manage your card the better it will work for you.
2. Late Charges Nearly all credit card lenders will have in place set fee for late payments, this is there way of making more money out their good will as to say to lend you the money in the first place. It also acts as an deterrent for borrowers to make late payments. The charges will vary for different lenders and some may even vary on the amount you should of paid back or on the amount of your total balance. Late charges have been under the spotlight a lot in recent years with some lenders charging very large charges. They really should only be charging a maximum of 12 to cover any administration costs of you not paying on time and in some cases you may be able to claw back some of this cost if it seems a bit too much. Also keep a watch on your interest rate some lenders have been known to raise the interest rate once a lender starts making late payments.
3. Annual Charges Annual charges are usually found on those credit cards that offer large rewards or to those borrowers who have a bad credit rating. You should always check the small print of all credit cards to make sure that you do not get these charges as they can be quite large. Most cards these days will happily not charge you annually but some still do. Also be aware that even if you do not use your card you will still be charged your annual amount. This type of card unless it has a fantastically low interest rate will not benefit those borrowers who use their cards on rare occasions.
4. Balance Transfer Charges If you are likely to run a high amount on your card or you are stuck with high interest rate charges transferring your balance to another different credit card can be a good idea. You can see this as a way to keep down interest payments as others lenders will usually offer good deals when transferring over to them like 0% interest on the transferred balance for the first 3-6 months and no fees to transfer to balance over.
5. Fixed Interest Rates Fixed rates are a very good incentive to take a card if you can get offered a good low rate. The amount will usually be slightly higher than a variable rate but is more secure if you are buying lots of small items that are likely to be paid off quickly. If the national interest was to rise above you fixed rate you then would be paying a lower rate of interest than the national rate therefore saving you money if there are turbulent times. Check the small print to see if there is room for a rate negotiation if the national interest rate falls way below what you are paying, some lenders will allow you to lower the fix rate.
6. Variable Interest Rates This is an important fact when considering a card as it can save you money if the national interest rates are low and/or change. When the national rate changes this can be passed on through your card and even lower your interest rate, but as with a fixed rate card you may get a low rate to start with but will not benefit from any interest rate cuts that could of benefited you. If national interest rates rise however this can catch you out and you can end up paying large amounts due to the rise. This is a more risk option to take it the national interest rates are unstable so always have a look at what the national rates have been and are doing to help you decide if you want to take a little gamble.
7. Reward Schemes These schemes are there it entice people to take their product and can be deals such as low interest rates, money back, coupons or even cash bank facilities to use on your card. How ever always read the small print as most rewards do not come with out a clause added to it. So before you look at the great enticements offered read the small print and be sensible.
8. The Lender Look into what different lenders can offer you always shop around as all the different lenders will offer many options on their own cards. When choosing a lender make sure that they are reputable and look at their company as a whole. See how they have performed and see how they predict the coming years to be for business. Its well worth knowing who’s money you are borrowing and that they are not cow boys who will hit you with large charges and interest rates.
9. Protection Protecting your card should be one of the main reasons you chose the card you do, with increasing levels of identity theft you need to make sure that your lender will give you the maximum security to help prevent any chance of fraud. Always check the lenders procedures on lost, theft and illegal use of your card to make sure if its not your fault you will not end the being the one who pays.
10. Credit Ratings – Your credit rating will also be a big factor on the kind of offers a lender will give you, it shows the lenders everything about you financial history and from this matching against their strict guidelines they will give you a credit limit that they think best suits you and best protects them from losing lots of money. Every time an enquiry is made into your credit history it will lower your rating especially if it is done on a regular basis. The lower your rating gets you can expect not such a big limit on your card or as good perks offered to those with excellent rating. You can improve your rating when you have the card buy making sure all your bills are paid in full and on time, the more you pay back the better you rating will get.
So now use every thing you have learnt, and next time you are thinking of getting a new card, or even changing your existing card, remember a few of the points above. You should be equipped with enough knowledge to get the best card deal for you from all those on the market.
Good luck and remember just be sensible, read the small print, make the regular payments and you should have no problems with your new card.