Do you receive a ton of mail from credit card companies? With all the options out there it can get very overwhelming to choose the best credit card options that fit you.
So when you are choosing a credit card, here are 5 important tips to consider:
- Interest Rates: A credit card provides an APR, which is the annual percentage rate. This rate can be either a fixed or a variable rate. The rates have the ability to change based on triggers such as paying bills on time, going over credit limit, credit score, etc.For those of you who carry a balance it is important to look into a low interest rate and low introductory rate. Since you are not paying the balance in full, a high interest rate over time can add to a larger total amount owed in the future.
- Financial Habits: How will you be using your credit card? Will it be strictly for emergencies or used to pay for everything?
- If you’re using the card for emergencies look for options with low interest rates and low fees.
- If you’re using the card to purchase most of your daily needs look for options that offer a high credit limit and a great rewards program.
- Credit Limit: This is the amount your credit card company is willing to let you borrow. The amount that you receive depends on your credit score. This can range from hundreds to thousands of dollars. After a few months to a year of showing consistency, your credit limit can increase.
- Fees and Penalties: These are a few ways credit card companies can gain benefits from you. Common fees for your credit card are from transactions. These may include balance transfer fees or cash advance fees.
Penalties are no joke. Credit card companies will charge you if you go over your credit limit or have late bill payments. To avoid these charges be sure to pay your bills on time or set up an automatic pay to never be late again!
- Incentives: Many credit card companies offer reward programs to their customers as a perk for using their card. Look for a program that offers flexibility such as cash back or travel points that you can easily earn and redeem. Keep in mind to read the fine print of each reward program since there may be restrictions and reward expirations.
Now that you have gained the 5 most insightful tips you can confidently apply your knowledge to determine what type of credit card option will best fit you. Comparing your credit card options will allow you to see the differences between each credit card company in order for you to make your wisest decision.