Super Fitness Health BlogImportant Things to Consider When Choosing a Credit Card
A credit card is a convenient tool, but it could also create terrible damage if used incorrectly. So choose the right card and follow some safety rules. Written here are some things to consider before getting a credit card.
1. Spending Habits
Determine how you intend to use the card. Are you the type of person who’ll pay off the credit card each month without fail, or do you expect carrying a balance every month? Are you going to use your credit card only for emergencies or to pay everything?
If you plan on paying your bill in full from month to month, the interest won’t matter. Look for a card with a longer grace period and without annual fee, to avoid finance charge. If you’re expecting to carry a balance, you would want the lowest interest rate possible as well as a low introductory rate.
If you plan on using this card for your every day needs, look for a credit card offer with generous credit limit and strong rewards program. If you’re planning to use the credit card in case of emergencies only, look for a credit card with low fees and interest rate.
INTEREST RATE
The interest rate appears as the annual percentage rate or APR, on a credit offer. It could either be a variable rate or a fixed rate that’s connected to a financial indicator, which is commonly the prime rate. With a credit card with fixed rate, you will be able to know what the interest rate will be from month to month. A credit card with a variable rate could oscillate. But even with a credit card with fixed rate, the interest rate can rise or fall based on some factors, such as paying off any credit card late or going beyond the credit limit. Or because the the issuer of the credit card makes some adjustments to it. Yes, they can do so, after you receive a notification.
CREDIT LIMIT
Credit limit is the amount of money that the card issuer is willing to lend you. Depending on your credit history, the credit limit can be a meager amount to big amount. You must avoid situations where you are close to maxing out the credit limit, otherwise, you will hurt your credit score. And some card providers cut the credit limits of customers to an amount that is lower than their existing balance. When such occurs, you can be penalized.
4. Penalties and Fees
There are several ways a credit card issuer can make money off you. Some of the common charges include transaction fees, such as cash advance and balance transfer, or making payments via phone, or asking to increase the credit limit. You could also be charged for a late payment and going beyond the credit limit.
For free legal advice on financial and banking matters, visit CCLSWA.org.au by following the link provided.
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