Choosing a credit card can be a difficult decision, after all, there are thousands of credit cards available from various financial institutions offer different rewards programs. The credit card should be chosen on the merits that benefit the consumer and fit in with their lifestyle and spending habits. Here are some things to keep in mind when choosing a credit card – whether it is your first or your fifth credit card:
What is the Interest Rate?
The interest rate of the credit card can directly affect the expense of the credit card on a monthly basis. The interest rate should be as low as possible – or as low as your credit rating will allow. Consumers with high credit ratings are offered lower interest rates than those consumers that have a lower credit score.
The interest rate will be multiplied by the balance to come up with the minimum payment amount. Keep this in mind if you intend to carry a balance on the credit card that you are choosing. Credit card companies have three tiers of interest rates; premium interest rates, elite interest rates and standard interest rates.
Maintain a high credit rating to get the lowest interest rate.
Are Rewards Programs Available with the Credit Card?
If the credit card comes with the choice to collect rewards, there are three options for these rewards; cash back rewards, rewards points which are often given for each dollar purchased with the credit card and travel rewards that can help you to collect points with your favorite airline or travel rewards system.
There are many rewards cards available, the choice is up to you – many programs offer flexible redemption programs to change which types of rewards are redeemed through the program. Look for a rewards card that has no monthly or annual limits on the amount of rewards that can be redeemed or earned as well as a rewards credit card that comes without a separate enrollment fee – aside from that of the credit card.
What Types of Fees Are Associated with the Credit Card?
For most credit cards, there is more than just an annual fee associated with the credit card. The annual fee is the usage fee for the credit card and is often put into place when cards are associated with rewards programs.
There are many other fees which should be priced before using the credit card to ensure it is used wisely; over-limit fees, late fees for payments that have not been received on time and balance transfer fees. Knowing these fees and the amounts that they could cost the card holder has a sobering effect and could help to avoid bad credit card behavior.