Ten tips to choose the right credit card
Have you decided to apply for a credit card? That’s nice. No doubt these cards are useful and convenient way to pay for services in daily life. It provides you finance flexibility if used sensibly. One can use it for daily purchases, for business dealings, for managing debt problems and even for charity purposes. It can also be used abroad in foreign currencies through online network facilities.
But before applying for a credit card you must consider certain factors particularly if you are living in UK. As UK has one of the most competitive credit card market in the world so searching a right card that best meets your needs could be a time consuming process. So must keep in mind some special tips while choosing a best credit card. Info policy available with each credit card can also serve as a guide to compare between different cards.
1- Status Of an Individual
Choosing a credit card depends upon individual status. It means whether he or she is a student, a businessman, a middle class man, a retired person or a widow. Different types suit different persons. Standard credit card is available for everyone over 18 years while premium credit card offers comparatively higher credit with lower interest rates and some extra benefits. So you can choose a credit card accordingly to your priorities.
2- Reason For Applying
Why are you applying for a credit card? This question matters a lot. Is it for managing your financial pressure or for business dealings. Do you want to enjoy special offers and incentives available with it or you want to use it for emergency situations. Whether you want to reduce interest payment on other existing credit card through balance transfer or want to donate for charity programs. Ask these questions to yourself before applying for a card. If you are able to clear the bill in full each month then annual fee and length of interest free period are more important factors than interest rate. But if you want some cash advances to manage financial burden then you must consider fees for cash advances and related interest rate (higher for cash advances).
3- Interest Rates And Interest Free Period
You must have a complete detail of interest rates alongwith additional information about length of interest free period, interest calculation method, introductory low rates offer and APR. APR is annual percentage rate which expresses the cost of using credit card. Interest rates can also be increased or reduced over time. Monthly statement shows the current interest rate for respective card. In case of an increase in interest rate advance warning is given while in case of decrease in interest rate customer is informed within thirty days.
4- Rewards And Incentives
Rewards and incentives can also be another attraction to apply for a credit card. It includes cash backs, voucher schemes, price promise deal, travel insurance and purchase protection insurance etc. In cash back offer minimum percentage of cash is given back to you on spending certain amount. In voucher schemes vouchers or certain number of points are given to you which can be redeemed for future rewards. Price promise cover ensures refund in case of difference in prices if you bought an item on higher price and but later you found it on cheaper rate elsewhere. Through travel insurance you will find assistance in case of flight delay, lost of luggage and personal injury during travelling. While purchase protection insurance covers purchases in case of damage or loss for certain time period.
5- Paymant Structure or Repayment Policy
Payment structure also matters a lot when taking final decision in this regard. You must be fully aware of specified ways to pay off balance on credit card account. Different ways of payment include cash payment, using cheques or debit cards, direct debit option, telephone or internet banking etc. Most of the companies set up monthly minimum repayment percentage on your total balance that you are required to pay. This percentage can be a fixed amount or 2% to 4% of total balance. Knowing payment structure is very important as it is not a free money and you have to repay it through specified procedure to avoid any complexity.
6- Annual Fees
You should also consider annual fees (if exists), as some companies charge annual fees for holding their card which can also be paid in twelve monthly installments.
7- Online Transaction Facility
Credit card network is another factor to ponder over. Card company must offer 24 hour online transactions facility and must have a strong credit dealing network in your own country and abroad as well so you would have no problem in using credit card when and where you need it.
8- Default Charges
Default charges include extra payment in case of violating terms and conditions. Any kind of violation including late payments or exceeding credit limit can lead to the imposition of default charges.
9- Requisites for Card Qualification
Qualifying for a credit card depends upon certain factors including verification of your personal information provided in application form, previous credit history or credit rating (if exists), your overall ability to pay off the balance and above all your credit limit. If you get qualified then better otherwise some companies also offer appeal procedure in case of disqualification. So you can avail this opportunity as well for becoming qualified for a credit card.
10- Responsibility And Protection
Final and most important thing to remember is that credit money is a responsibility not a right. Credit card offers many potential benefits. It’s a flexible way of borrowing money in short time to manage any financial pressure. But if you use it as free money without moderating your spending habits it can also become a liability for you. It can damage your credit rating and can cost you much more than the actual balance.
So be responsible in your spending ways instead of ending up in serious debt complexities. In case of additional card holder, the main account holder who signed the agreement will be responsible for paying off. Protect your card against any fraud or theft and take benefit of Pin or Chip facility which is available around the world to ensure balance security. In fact UK is one of the first countries to provide this facility. In case of disable persons chip is provided with signature card. So safe your PIN and always use secure websites while shopping online.
But unfortunately if you don’t get qualified for a credit card then debit card could be another better choice. Popularity of debit card can be gauged by the fact that about 41 million (about 84%) people in UK are debit card holders while the number of credit or other charge card holders is around 31 million (about 66%). Debit card is considered the best option for cash withdrawal with no additional charges while credit card issuers charge withdrawal fees of about 2.5%. Most of the credit cards don’t provide any interest free period for cash transactions and incur additional interest and fees which gives debit cards an edge over credit card in such circumstances.
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