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Choosing The Right Credit Card

By: Jeff Durham - Updated: 29 Nov 2012 | comments*Discuss
Choosing Credit Card Introductory Credit

It's very easy to spend money on a credit card but not quite so easy to choose the right card for you. Choosing the correct card that suits your circumstances is vital to your credit rating and, if you choose the wrong one, you could end up in serious debt difficulties.

When it comes to choosing a credit card, therefore, it's important to consider your spending habits honestly. For example, do you typically carry a balance over to the following month or would you be paying the card off in full each month? If you don't pay off the balance in full each month, it's important to look for a card with a low annual percentage rate (APR). The higher the rate, the more you'll pay in interest charges. A fixed-low rate option means that they will guarantee that your interest rate will stay low. Quite often, a company will offer you a low introductory rate for perhaps 3, 6 or 9 months but sometimes this fixed rate comes with an annual fee you have to pay for having the card, whether you use it or not or you may get enticed by 0% interest for an introductory period but once that period is over, the usual APR might be far higher than on other cards.

If you're paying off the card in full each month, you don't have to worry about the APR rate but you will want to ensure you get a card with a grace period. By that, it means you can pay off your card at the end of each month with no additional charges to make as some cards charge you interest from the moment you make a purchase. Others will give you a grace period for purchases but not for cash advances so you need to ensure the card is the right deal for you.

You also need to decide how reliable you'll be when it comes to paying on time and keeping yourself within the card limit. If you are often late in paying your bills and/or you're unsure as to how much credit you have left, you will need to watch out for late payment charges and 'over the limit' fees.

You should also look at your money handling habits. In other words, do you use cash as often as you use a credit card or do you more or less use your card to pay for most of your purchases and settle it later? If the latter, you will want to look at credit card protection charges in case your card is lost or stolen.

Just like with other financial services, credit card providers often entice customers to take one of their cards by making attractive offers. If you travel, for example, it may be worth taking out a card that offers you frequent flyer miles or free travel insurance. If you tend to purchase costly electrical goods, it may be useful to have a card that provides you with additional insurance coverage should the item break down. Or perhaps a card company that is affiliated with a charity to whom you have a strong empathy which will donate X amount of pence to the charity for every pound you spend.

Older people and those who are retired are not excluded from applying for credit cards. After all, the companies want your business and, as long as you have a good credit rating and can prove you have the ability to repay what you borrow out of any pensions, savings or other sources of income, your application will still be welcomed. However, a word of caution, it's important to ensure that you can still meet the repayments so you need to build these in to your weekly or monthly budget plan and that you only have a card with a limit which you can comfortably manage. If in doubt, speak to an independent financial adviser.

What matters most is that, no matter what your circumstances, you find a card with the features that fit your own pattern of spending and saving. Don't get fooled by glossy advertising or gimmicks. Know your spending habits, look at the small print and choose the card that is best for you. There are plenty of credit card comparison sites on the Internet and, with so many different cards to choose from, you will be able to find one that fits your own specific needs.

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