In a market as competitive as credit cards, there’s a lot of different offers to choose form. Each will have its own pros and cons, so how do you sort the wheat from the chaff?
There may be a lot of cards to choose from, but it’s very unlikely that there’s a card out there with absolutely everything you’ll ever need. If such a card did exist, then you wouldn’t be comparing new credit cards now!
Know What You Want
Do you want to switch cards so that you can transfer a balance and pay less interest so that you can get your finances under control, or would you like to get rewarded for your loyalty? These are the sort of questions you need to ask yourself before you even start looking so that you know what offers to rule out and what to examine in more detail.
Apply For What You’re Eligible For
There’s a prestige around platinum and black credit cards precisely because the bar is set higher for approval. The moral of the story? Don’t con yourself into thinking that you can apply for a card with higher requirements than you can meet! Check what you need for approval before filing your application.
Credit Cards 101
Be Disciplined in Your Spending
Just because you have a credit card doesn’t mean you have to be in debt. If you can manage how you spend your money it is possible to use your card on a regular basis and stay out of debt by paying it off in full each month. The key to using any credit card is disciplined spending, otherwise known as living within your means!
Don’t Just Pay Back the Minimum Amount You Can
Even if you don’t use your card to spend irresponsibly, it’s important that you pay back your balance at the end of the month, or as much of it as you can. Repaying the minimum amount owed will allow your debt to quickly grow and mean that, assuming you don’t continue spending, it will take much longer to pay off.
Avoid Cash Advances
If you’re stuck for cash, it may be tempting to use your card to make a withdrawal from an ATM. However, this should be avoided as the interest charged is very high and you’ll also have to pay a percentage fee for the convenience. Manage your finances in such a way that you aren’t forced to use the card’s cash advance feature.
Aim for the Longest, Cheapest Balance Transfer Deal
If you’ve got an outstanding amount of money on your account that’s costing you a lot in interest and taking longer to repay than you would like, then a balance transfer credit card is a great way to get your personal finances back into shape. So if you are looking for one of these cards, look for one that combines a really low interest rate for a long period of time. In the UK, it’s not uncommon to get a 0% balance transfer for 12 or more months. One very important tip if you are using a balance transfer to get out of debt is to avoid spending on the card so that you don’t add to your problem.
If You Plan on Making Purchases, Focus on Purchase Rates
Many banks are offering introductory low interest rates on purchases, often as low as 0% for several months. If you have your finances under control and you want a card to continue spending with, but you want to save as much money as possible, then look out for one offering an introductory purchase rate.
Rewards & Getting Points as You Spend
More and more of us are waking up to the benefits of rewards programs – they’re a great way to be rewarded for your loyalty. So if you are looking for a rewards card, carefully consider what type of rewards you will actually use. After all, there really is no point in applying for an Airmiles credit card when you don’t enjoy travelling!