How to choose the right credit card for you

Your credit score may just be numbers, but it packs with a huge punch. A poor credit score can keep you from getting a mortgage or a car loan. In addition, your credit score may haunt you for a long time if it suddenly drops. Of course, if you have a good credit score it opens a lot of doors for you. This is just one reason why it is important to think about which credit card you apply for before you do.

Every time you apply for a credit card, the company has to check your credit score. This is a bad thing. Several inquiries from your credit card companies look bad on your credit reprt because it looks as though you are rushing to open a credit line, which can be a sign that you are struggling financially. Of course, this may not be the case. However, credit scoring companies all look at it the same way.

To avoid scarring you credt score with credit card applications by chooisng the right card. Choose a card that matches your lifestyle and works for you instead of against you. If you plan to pay off your balance each month, you might want a charge card instead of a credit card. American Express offers a lot of charge cards with flexible spending plans that are perfect for people who plan to pay off their balance every motnh. They also offer some flexibility so that if you have an emergency you can use the card and pay off large charges over time. In addition most of their cards offer you reward points for using the card. On the contrary, American Express charges an annual membership fee for having the card.

If you seldom use the card but with plans to make big purchases, which requires you to pay off overtime you rather get another card which allows you to carry big balance overtime. Definitely these cards requires you to pay interest each time you purchase. Interest rate can get very high.

Other kinds of cards include:

1) A check guarantee card, issued by your bank, that you can use to ensure that your cheque will be honoured up to a certain limit.

2) A debit card, issued by your bank, where whatever you spend is immediately deducted from your bank account

Do you need a credit card?

a) A credit card means you don’t need to have big amounts of money around and risk of losing it.

b) A credit card means you can buy items over the internet.

c) A credit card means you can buy abroad without having to worry about local currency.

d) A credit card gives a room to spread the cost of a large payemnt over several months.

e) A credit card is useful in an emergency. An example of these is unexpected car repair or house repair.

What You Need To Consider:

1) APR (Annual Percentage Rate)

This is the rate of interest that you will pay on any outstanding balance.

2) Special Introductory Rates

You may be offered 0% interest rate for a limited time (Up to 6 months) or low when you agree to sign up for a new card. A higher rate of interest may be charged for cash withdrawals.

3) Balance Transfer Rate

Card issuers may offer you a lower rate of interest if your swap your balance from another credit card to theirs.

4) Free Interest period

Remember to check when interest payments will begin. Are you willing to pay the interest from day of your purchase? Or will you have interest free days befroe you begin to pay? For cash withdrawals, there is usually no interest free period.

5) Cashback and Rewards

Some cards over points or rewards for every pound spent on the credit card. Make sure that these are relevant to you. For example, there&’s no use collecting airmiles if you never fly.

6) Minimum Repayment

Remember to check what the minimum monthly repayment will be. If you borrow £1000 on your credit card the monthly minimum repayment will probably be in the region of £25. Paying only the minumum amount due will take more time to pay the total balance and it will cost you more considering ther interest.

7) Yearly Fees

This is the fee that the issuer will charge you every year for using their credit card. Not all credit cards have an annual fee, so remember to consider this when you are choosing which one is right for you.

Late Payments

There will be additonal charge, as well as interest owed, if you pay late. This charge may even be more than the amount you owe so be very careful to check what the charge is, and to ensure that all your payments are made on time. One of the good way is to set up a direct debit from your current account.

9) Exceed Your Limit

You may also be charged a fee if you exceed your credit limit.