Owning a credit card now a days is so common that every single one your acquaintance probably has one. And now you are looking to get one for yourself to enjoy the shopping freedom that it provides. However, it is vital to know exactly what you are getting for yourself. You should not be attracted by a few perks offered by credit card companies. Although some of these perks and offers may be very attractive, here are a few key things that you should consider before signing up for a credit card.
When getting a credit card do not just be attracted by the perks it offers. Always look for the total fees that they charge if you use their credit card. Credit card companies charge a variety of fees which include annual, closure, over-the-limit and late fees. You should always look in to this because all credit card companies do not charge the same. Let’s take a look into the type of fees your credit card company might charge you.
This is the membership fee that is charged annually for using the credit card. The annual fee can range from $25 to $250 depending on the type of the credit card you have got.
Many companies also charge a fee for closing an account. This is called the closure fee. This fee can range from $25 to $50.
When your purchases and expenditure pass the credit limit than companies charge you for the exceeding amount. Mostly the companies charge around $25 depending on the amount exceeded.
The late fee is charged when your payments are past due. Late payment of your bills can also result in an increase in your annual percentage rate.
ANNUAL PERCENTAGE RATE
The Annual Percentage Rate (APR) is one of the most important factors to consider when choosing a credit card. This is basically the interest rate applied to the outstanding balance. You should prefer a card that offers low interest rates. The APR on different cards differs and should be looked into when selecting a credit card.
The credit limit is the amount of money that is available for purchases, cash advances, balance transfers, fees, and finance charges. You should always consider the credit limit being offered by the credit card companies. Credits can start as low as $200 and go up to thousands of dollars depending upon your credit score and income.
SECURED VERSES UNSECURED CARDS
There are two types of credit cards namely, SECURED and UNSECURED. For Secured cards users have to pay a deposit in order to obtain credit. And the credit limit on these cards is determined by the deposit payed. The Unsecured cards on the other hand, are the most popular and widely used cards across the globe. Their credit limit is usually determined by your credit score and your income. You should careful in choosing the type of credit card you desire as it as a major affect on your financial stability.
The Grace period is another important thing that you should consider while choosing the right card. The grace period is the time required to pay you credit balance in full without incurring any interest charges. The grace period differs company to company. The ideal card will provide you with the grace period of 25 days or more. One thing to be kept in mind is that you if you carry your balance from month to month and do not pay in full you will be charged with an interest irrespective of the grace period. This does not include the new purchases that you make.
PERKS AND REWARDS
Although when choosing the right card for yourself, the perks and rewards aren’t supposed to be a priority. But if you have considered one while giving attention to all the points discussed above then there is no harm in looking at the perks and rewards. Many companies offer Reward Programs that offer Airline mileage and cash back on your purchases. Some also discounts at select merchants and credit registration which protect you if your card is lost or stolen. Once again, perks should only be a priority if you are frequent shopper. Otherwise forget the perks and concentrate on the points discussed above.
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