Choosing a Credit Card

You will be receiving numerous credit card offers either through mail or telemarketing calls. With so many cards on offer how to choose the right credit card? It never makes sense to take the first offer you get or choose one based on its face value. A right decision can save you hundreds and in some cases thousands of pounds.

Here are some guidelines that can help you choose the right credit card

Study the various credit cards available in the market
Log on to the Internet and you will come across many credit card comparison sites. Study their Annual Percentage Rate (APR), transaction fee, other charges etc. This will help you to come to a decision as to what credit card you should opt for.

How are you going to use the credit card?
You have the option of making a complete monthly payment or paying the minimum balance required per month as per the terms and conditions of the credit card issuer. If you are planning to pay a percentage of the total transaction per month, you should consider cards with low rate of interest. If, on the other hand, you plan to pay the entire balance for each month, you can consider a charge card. Again, you may want to use your credit card for balance transfers. In such a case, you should look for a card with a low rate of interest on transfers. In fact you also have companies that offer 0% interest on balance transfers.

What is the Annual Percentage Rate (APR)?
Credit card companies offer a grace period for paying the balance amount. Once you go beyond the grace period, you will be charged an APR or the annual percentage rate. When you study the APR, keep in mind that some companies have a different APR for different transactions. For example, there will be different rates for purchases, cash advances and balance transfers.

What is the grace period of the card?
Credit card issuers offer a grace period which is the amount of time you can take to make your monthly payment. This period is generally calculated based on the date of the billing date. In most cases, the grace period is 28 days from the date of billing. Needless to say, you will be subject to late fees and other penalties if you fail to pay within this period. When comparing credit cards, you should look for cards with longer grace period.
 
What are the fees and penalties?
Make sure you study the fees charged by the card issuer companies. These can include annual fee, late fee, and over the limit fee. Then there may be a fee charged if you request for an additional copy of your statement.

What is the credit limit of the card?
The credit limit will decide your purchasing power. If you are a first time user, you should opt for a card with a lower credit limit because there is always a tendency to spend as per the limit. Opt for a higher limit only if you are sure you are financially responsible and will not be tempted to shop beyond your means.