How many times have offers slipped away from you just because you didn’t have the cash to pay? How did you feel? Probably, you felt like dying.
Think of it this way: You have always admired a particular online course, then all of a sudden, there comes an offer that expires in 24 hours. You don’t have the money to purchase it within the 24 hours, but you will get your salary in a week. What would you do?
Well, that’s where a credit card comes in. You don’t have to be worried when it comes to such situations when you have a credit card. There is a problem though: you don’t know how to choose the best credit card.
Very well, here are the five things you need to think about when it comes to choosing the right credit card:
Spending habits
Financial discipline is one of the things you should first consider when you want to get a credit card. Ask yourself whether you will be able to pay your card every month or will you carry forward bills month after month? Another factor you should take care of is the purpose of the credit card. Are you going to use it strictly for emergencies or you’ll use it for everything?
If you are sure that you will be paying off your card in full each month, you will not have to worry about the interest rate. Therefore, you need to go for a credit card that doesn’t have annual fees to avoid the financial charges.
The Interest rate
The next thing you want to pay attention to is the interest rate. Typically, the interest rate will appear as the Annual Percentage Rate. It’s either fixed or variable. It’s your prerequisite to choosing the best for you.
If you are considering to go for a fixed rate card, then you will be able to know the interest rate you will be charged from month to month. On the other hand, when you choose a variable card, you will realize that your interest rates will always fluctuate. You can shop around here and select your perfect match.
Credit limit
The worst mistake is to think that you are going to get your credit card and borrow thousands of dollars. Sorry to disappoint you, but this will not happen.
A credit limit is an amount your credit card issuer is ready to lend you. Usually, this will depend on your credit history. You could be started with a few hundreds of dollars, then thousands of dollars when you have built your credit history.
Fees and penalties
When you have made the decision that you are going to get a credit card, then you must be prepared for fees and penalties. There will be transaction charges, penalties for late payments, etc. That is how your credit card issuer will make a profit. In short, you should be considerate and know that your credit card company needs to make a profit.
Balance computation method
If you are not planning to pay off your card every month, but wish to carry forward balances, then it is crucial that you know how finance charge will be calculated. Usually, average daily balance is used, but other methods could as well be used.
Final thoughts
A credit card is essential, but it requires you to be financially disciplined to enjoy its benefits. You must be ready to pay your card off on time.
