Ten points to consider with credit cards
Friday, 25 May 2012
As one of the primary forms of money lending used throughout the UK, credit cards are a common financial product. Yet, whilst they are readily available to customers of all situations they can vary a great deal and this makes it essential that consumers know what to look for when applying for their own credit card.
1. Interest
This is likely to be what attracts you to a particular card and therefore requires great thought. Interest rates are quoted at an annual rate so always take the time to work out how long you plan on taking to pay back the cost of your purchases. If choosing a card with fixed APR then investigate how long this rate is fixed for.
2. Duration
How long you intend to have the card for will determine what sort of credit card you need. For example, if you want a card for one-off purchases and intend to pay your balance in full every month; consider a credit card with no annual fees and a solid cash rewards program. If you are someone who leaves a balance on your credit card each month your main criteria might be having a lower interest rate to lessen the interest rate costs of holding the balance.
Always look at this in addition to how often repayments are needed and whether the date of these is flexible or not.
3. Rewards
When you apply for credit card always look at what rewards or extra benefits it comes with. Many companies now offer rewards for loyal customers and cash back credit cards offer you money back on your purchases, making them more beneficial.
4. Credit limit
This determines how much you can spend on your credit card. Make sure this matches your needs but don't be tempted to select the lender who offers the highest limit as this could encourage you to spend more than you can afford to pay back .
5. Support
Regardless of which lender you choose you need to make sure they offer sufficient support and help. Check the details of the company are accurate and always look for credit lenders who offer a 24 hour helpline.
6. Type of purchase
What type of purchases you intend to make on your credit card will also affect what sort of card you need. For example, if the card will be used primarily to pay for utilities such as gas, then it's worth shopping around for a card that provides gas rewards for every purchase. If you're a frequent traveler, and will more often than not purchase aeroplane tickets on your credit card, look for one that offers flyer miles as a reward.
7. Convenience
This is often one of the biggest attractions of credit cards and it is vital that you give it the consideration it deserves. Remember that whilst credit cards can be convenient to use when out and about, this could lead you to spend more than you intended. Set a budget for your credit card and stick to it as best as you can.
8. Additional fees
Always investigate the hidden fees associated with credit cards - such as for using them abroad or for making late repayments. Do your best to avoid these situations and choose cards with greater flexibility if you think you might struggle.
9. Protection
One of the main benefits of credit cards is that purchases made on them are insured. Always investigate this before selecting a card and make sure your spending has the protection it needs.
10. Credit ratings
For those with bad credit, credit cards can often seem unobtainable. However, poor credit credit cards are available so, if you are worried about your credit history, then investigate this option.
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