How To Choose a Credit Card

Credit cards are becoming increasingly impossible to avoid. Once you make the decision to get a credit card, you need to choose carefully, then use your credit card wisely.

A quick set of things to consider when choosing a credit card include:

The interest chargeable - this varies for all the credit cards for which you are eligible. The rate may not remain fixed indefinitely, but it makes sense to find the one charging the lowest rates.

The fine print - read fine print carefully, especially about any ther charges that may be charged to your card, such as late-payment fees, annual fees.

Grace period - each card usually provides a free interest period for around 40 days before any finance charges kick in. Make sure this period works in with your paycheck schedule. Note that not all credit cards have a grace period. Find out more about different types of credit cards

Credit limit - some credit card companies have been known to allow credit limits beyond the financial capability of the card holder in the hope that they will build up a lifetime of interest charges - great income for the credit card issuer - terrible for you! Decide yourself what limit is appropriate for your income.

Services - compare other services and features provided by the credit card issuer, such as the cash back incentives, warranties, rebates etc.

Acceptability - different cards are accepted across the world and with various types of vendors. Make sure the card is usable for what and where you need to use it.

Finance Charges - make sure you find out the Annual Percentage Rate -the measure of the yearly cost of credit. Get proof of all charges involved in various types of transactions.

One crazy aspect of getting a credit card is that it is easier to get a credit card, and to get better credit terms if you already hold a debt loan and have a history of making timely payments against the loan. In other words, you have established a credit history. Sometimes even having a bad credit history helps, as at least the credit card company will be better able to assess your risk - and charge you more interest or set a lower limit!

If you end up with a bad credit history, get a small loan or revolving credit limit and consistently pay it off to reestablish your ability to pay your credit cards on time. And from time to time, pay off the balance completely. Mroe about credit management.

Next: Using Your Credit Card Wisely

Back To Top

Credit Card Index