Dealing with bad credit? You’re not alone. For this reason, certain financial institutions have made it possible to qualify for a credit card despite your credit rating.
You are bombarded with credit card offers on the daily – in your mailbox and even when shopping in a number of different stores. To apply for a credit card is easy, but have you ever really stopped to wonder which one is the right credit card for you?
Special offers and discount deals can be enticing, but they shouldn’t seal the deal on which credit card you’re choosing. By obtaining the right information and shopping intelligently for a credit card, you can easily save several hundreds a year!
Types of Credit Cards
First and foremost, you need to understand what kind of card you’re looking for prior to filling out any kind of application. There are many types of credit card types such as low interest credit cards, no fee credit cards, rewards cards, balance transfer cards, secured cards, student cards, business cards and more. Make sure you’re choosing a credit card that fits your needs.
Credit Card Usage
When it comes to choosing the credit card that best fits your needs, one of the top factors you should consider is your usage type. Are you looking to keep your personal and professional transactions apart? A business credit card is good for that. Are you still a college or university student applying for a first card? A student credit card will offer you great advantages.
Whether or not you plan on paying your credit card balance in full every month is something else you should take into consideration. If you plan on carrying a balance over month to month, make sure you’re looking at a credit card with a low interest rate.
APR (Annual Percentage Rate)
APR is known as the percent applied to any balance you carry on your card beyond the grace period. Grace period is the period of time between the end of your billing cycle and your due payment date. With a revolving balance, the higher your APR, the more you’ll pay for using your card. Make sure you check out the APR on all cards that might be of interest to you because they’re generally different depending on the service provider. Even more so, annual percentage rates can vary on different transaction types such as balance transfers and purchases so ensure you’re reading the fine print!
Length of Grace Period
A grace period on a credit card is known as the period of time between the end of your billing cycle and the date you are required to make a payment. Simply put, a longer grace period is always better because you have more time to pay your bill without being charged interest. Grace periods are usually directly expressed in writing on your bill, for example, “21 days from billing date”.
Keep in mind that if you already have a due balance on your credit card, grace periods on new purchases may not apply.
Depending on the type of credit card you are looking for, you’ll have to deal with additional fees such as annual fees, late fees or even balance transfer fees. When applying for a credit card, you should know exactly what fees you may be charged, how much they can cost, and under what circumstances such fees can be applied.
Calculating the Finance Charge
Every credit card service provider calculates their finance charge differently, which could affect how much you’re paying to use your credit card overall. Certain credit card companies will only focus on the current month’s balance while others calculate using both current and previous balances. In some cases, new purchases count toward the calculation and other times, they don’t. You can avoid finance charges as a whole by paying your entire balance every month.
Credit Card Limits
Depending on your financial situation as well as your credit history, you can be approved for a credit card with a higher or a lower credit limit. Credit limit directly affects your purchasing power – permitting large transactions or not. If you’re new to credit cards, you’ll most likely be approved for a card with a low limit, which is probably best until you get a hang of the ropes.
Plenty of credit cards offer reward programs such as points toward purchases, in-store discounts or even airline miles for travelling. Although these reward programs are enticing, you should make sure you fully comprehend how the reward program works and what you need to do in order to reap the benefits.
Applying for a credit card is a lot easier said than done. There are numerous types of credit cards, each offering their own pros and cons. It is up to you to evaluate and weigh the variety of credit card options that are available to you and respond to your unique financial situation.