Credit cards are financial instruments that make life easier for consumers; they are also known or referred to as plastic money. It provides a convenient line of credit for consumers which can be used to pay for purchases and services. One of the biggest setbacks of this instrument is the interest rate that can accumulate over a period of time.
Most often, consumers just pick cards from random issuing companies without counting the cost. That is the reason why many people end up in debts that could have been avoided if they had taken time to do their due diligence.
There is a plethora of financial institutions that offer this financial product and their terms and conditions though similar do have slight variations. Truth be told, some of these ‘slight’ variation can make or mar one’s finances. For this reason, this article will share tips on how to choose the cheapest credit card for you. This means that the information we will share, will help you get an option that will be the best for you. Click here for more information on some common terms and conditions you may come across.
Factors to Consider When Choosing a Credit Card
The major factor that affects the benefits that one can get from using credit cards is the interest rates. But truth be told , there are also other factors that can add up and make a little credit become a mountain of debt.
We will look at the following factors to consider when choosing and applying for a credit card:-
Purpose of the Card
It is pertinent that you determine what you want to use the card for. Do you want something that you will be using for daily purchases? Do you want something that will help you spread out the payment for a purchase over time? Do you want to be able to buy stuff online or you want something for your frequent travels?
Critically analysing these issues and coming to an honest conclusion will help you choose the right card for you.
How You Intend to Pay Back
Determining how you intend to repay the card debt is an important factor to consider before applying for any card. If you can repay your debts in full every month, then you should be considering options with free interest periods. Even in the case where the interest rate is not much of an issue, you can consider options that have many perks and rewards.
Conversely, if you foresee that you would not be able to pay in full and on time each month, you need to seriously look for cheap credit cards. By cheap we mean options with low interest rate. This will save you a whole lot of hassles and also some money in the long run.
Annual Percentage Rate (APR)
The APR of a card is the total sum it will cost you if you do not pay off the amount owed at the end of each month. It is therefore necessary that you checkout the APR of as many options as possible. This will help you find the cheap or billig options, as the Norwegians will describe it and then pick the one that is the cheapest out of them all. Bear in mind that factors such as charges, fees and perks and reward also affects how inexpensive or costly a card may be. Therefore you need to put all these factors into consideration.
Some issuers have a yearly fee that come with the use of their card. The fee is usually added to the amount that is due on a monthly basis. You have to pay an interest on the fee in addition to whatever sum you spend unless you make your monthly payments in full.
This is the lowest sum that you are required to pay monthly if you cannot make your monthly payment in full. It is therefore necessary to know the minimum payment of whatever card option you are considering. This will help you determine that you wouldn’t be overwhelmed by the repayment minimum.
Introductory Interest Rates
This is usually an incentive given by issuing companies in which the card holder starts out by paying very low or no interest at all. Some companies have a one year 0%APR period while others have a 6 month period. Those that have low interest period also have it for maybe a year or 6 months. After this period, the interest will increase to the regular interest that the issuer charges.
So while you are getting excited about the 0% APR or introductory interest rate, ensure that you find out how long it is. Compare the duration that this introductory interest rates will last so that you can take advantage of the offer with the longest duration.
Bonus Points and Rewards
A good number of cards come with different perks and incentives but the points for these rewards most often depend on the amount you spend. You can use these points to make purchases depending on the terms and conditions of the card. Ensure that you know how these rewards can be accessed so that you do not get a card with a reward system that is worthless to you.
You need to find out the charges that you will incur by using the card. Some of these charges include late payment penalties, foreign transaction charges and fees for going over your credit limit. A full understanding of these charges will help you determine the actual cost of using the card.
Cash Back Options
This is a situation where money is paid back to your account based on the amount you spend. Find out whether you qualify for this incentive or how stringent the criteria for qualification are. In the case one requirement for qualification is full monthly repayment, you might be better off looking for anoffer with low interest rate instead of cash back. You can watch this video: https://www.youtube.com/ for more insight into cash back options.
Getting plastic money that will help keep your finances on track depends on you taking out time to check out as many options as possible. We have shared tips on factors to consider and we believe that adhering to these tips will stand you in good stead.