You have probably heard many people say to you throughout the years to never take out a credit card because it tempts you to start spending money which you cannot afford. Whilst this is completely true, it won’t affect you if you practice restraint and know when to stop.
Credit cards are actually a great way to up your credit rating, and often it is advised for those who are new to credit to take out a credit card and pay it off to up their rating. But how do you choose the right credit card out of the hundreds out there for grabs?
Choosing a credit card
The type of credit card you choose will often depend on exactly what you want to use it for. You could want to use it for a holiday, to buy things online or towards something for your house. You might immediately go for the best rewards credit card or the one with the lowest interest rate, but there is more to choosing a credit card than you think.
Think about what you can afford to pay back, and whether you will be paying off the whole sum at once or in small monthly installments. If you plan to use tor card for borrowing, and you won’t be paying off the full amount each month, you will have to pay interest on the amount, so you will likely want to go for a lower interest rate. If you will pay back the full amount each month, the interest rate might not be as much of an issue.
Here are some of the things you will want to consider when you are choosing a credit card:
- Annual Percentage Rate (APR)– you will likely have seen this value on adverts and been shocked at the higher rates, but so,e credit card companies and loan companies will charge you a huge APR. Make sure that during your search you look up this rate and try to go for the lowest.
- Minimum repayment – when you sign up for a credit card and cannot repay the full amount each month, you will have a minimum payment. Make sure that you can afford at least the minimum payment every month,
- annual fee – sometimes a credit card company will charge you an annual fee for the use of the card, make sure that you look out for this fee and prepare for it when it comes with your balance due at the end of the year.
- introductory interest rates – some credit card companies will offer you an introductory fee so that you pay less interest during the first months of having the card, then the interest rates will go up over time.
- loyalty points or rewards – you will likely be eligible to collect reward points and loyalty points when you stick with the same card for a while. After collecting these points you will be able to use them in order to spend on items in popular retailers and brands.