With the continued availability of credit cards, selecting the most suitable one for your financial needs can be challenging. The ideal place to begin planning about a credit card is to consider the purpose that it will fulfil for you.
Do you need a credit card to pay for online shopping or buy a holiday vacation? Depending on how you choose to pay off your dues, you can apply for different credit cards.
Choosing the right credit card to meet your financial needs is of prime importance. Let us take a look at a few factors which should be analysed before picking a credit card.
Annual Percentage Rate: The APR refers to the cost of borrowing that you will have to incur on the card if the entire balance of the card is not repaid at the end of the month. You can browse for different cards and check those options which carry the lowest APR. However, this is in addition to other factors listed below.
Minimum Repayment Amount: Every card entails repayment of a certain minimum balance at the end of each month. Depending on the card, it may either be a percentage or a basic amount.
Annual Fee: Most cards carry an annual fee which is added to the due amount on the card. If you are not going to use your credit card for multiple purposes, it makes no sense to get a card with a high annual fee charge. The optimum choice, in this case, will be to choose a card with a low charge on it.
Miscellaneous Charges: Your credit card may be linked to several additional charges. Going over your credit card usage could amount to a high cost at the end of the year. Hence, it makes sense to compare different cards and check which one of them carries the lowest charges.
Return Or Loyalty Rewards: Using a credit card brings you the benefit of earning reward points with every purchase or spend through the card. Once you have collected a certain number of points, you can achieve several rewards in exchange for them. Depending on your card, these rewards could differ and bring you separate benefits.
Cashback Returns: Some cards offer a feature of returning money to your card based on what you have spent. Your credit card may or may not let you qualify for such cashback offers, and there may be some terms attached to the benefit of cashback. It is a good idea to check these features before choosing a card so that you do not end up with fewer services than what you can get.
Once you have assessed the above-mentioned factors and made a comparison between the options available to you, how would you determine which card you should settle with?
Here are some scenarios that you can consider and select the best low-interest credit cards for your use. They should be considered in addition to the factors mentioned above while deciding which credit card is most suitable for you.
Selecting A Credit Card To Suit Your Requirement
If You Are Looking To Downplay Your Debt
In this scenario, a 0% balance transfer card may be most beneficial for you. You will not need to pay interest on the card, and you will be able to pay down the debt which exists. Most of these cards come with a long period of interest-free durations.
On the contrary, a 0% money transfer card may be most helpful if you have an existing loan or overdraft. Their work is almost similar to a 0% balance transfer card; the only difference is that you can move money from the card directly into your bank.
In both cases, once the transfer has been made, you can use it to pay off the pending amount.
If You Are Looking To Improve Your Credit History
Some credit cards offer the benefit of building a credit history and are most suitable for those who have a poor credit history. The rates of interest on such cards are usually high, and the allowed credit limit is low. By paying off your due balances at the end of each month, you may be able to improve your credit history by using such cards.
If You Are Looking Forward To Making Heavy Purchases
Often, making significant expenses through your credit card may prove to be useful in terms of cashback offers and rewards. However, this purpose’s right card is a 0% purchase card that offers interest-free periods during the introduction phase.
As long as you can pay off the amount that remains due on your card before the interest-free period ends, you will be able to benefit by repaying the amount in instalments without ever having to pay any interest.
If You Want To Earn Better Rewards
Rewards and offers come in galore with most credit cards. However, depending on your purchases’ nature, it makes sense to pick a card that rewards you suitably to make such expenditure.
While a reward card may score points for you, which can be redeemed to get better deals on future purchases, a cashback card will benefit you for every purchase you make on such a card. Similarly, an air miles card will benefit you by bringing rewards that can be redeemed on air travel.
However, what you should note with these cards is that while they offer good returns in terms of rewards and cashback, they do come at a cost. The rate of annual charges and interest is higher on such cards in comparison to other cards.
To Sum Up
Comparing credit cards on the basis of their interest rates, annual charges, other charges, and rewards is vital. Further, you should assess the purpose for which you want to get a credit card so that you can make the most of your card while using it.
It is possible to avail of a credit card even with bad credit and improve your credit score for the future. As long as you select the right credit card to meet your financial requirements, you will be in benefit.