Rather than using cash, a lot of people today are using credit cards when shopping. A credit card is a very handy tool if used properly but it can also be very damaging if not used in the right way. A lot of people are opting for credit cards these days since they allow them to shop for products that they cannot afford to pay for in one go. People these days are going for credit cards since card providers help one get their money back in case a seller defaults on the delivery of a product or delivers a faulty item. These benefits are however to be enjoyed only if one is careful in their choosing of a credit card. This article seeks to educate the reader on some of the factors that he or she ought to consider when choosing a credit card.
Before you choose a credit card, ensure that you fully understand your spending habits. Ask yourself if you will be able to pay off the credit card each month without default and if you plan to use the credit card for emergencies or for all purchases.
Since interest rate is not an issue if you can pay off your card each month, look for one that does no charge any annual fee. It is important for you to look for a card with the lowest possible interest rate if you do not see yourself being able to pay off your card each month consistently. A low interest card is also suitable for a person looking for an emergencies card only. Choose a card with a reward system in place if you intend for it to be used in day to day spending.
The interest rate charged on a card is also a very important factor and as such should not be disregarded. It is vital that you understand that the annual percentage rate of a card can be fixed or variable. For a fixed annual percentage rate, you will know how much you are expected to pay from month to month.
A variable annual percentage rate type of card holder is not aware of the amount that a credit card company can decide on. Choose the card you are most comfortable with in this case.
Another factor you need to consider is a card’s credit limit. A person’s credit history is one of the determining factors when it comes to the credit limit given. It is important to note that there are penalties for maxing one’s credit limit and so before you choose any card, ensure that you know how much you spend on a monthly basis and stick to it after you acquire your card.