Credit cards are great if they are used carefully. But you need to choose the right credit card for you in order to get the best from them and to avoid ending up in debt.
When you are choosing a credit card, one of the first things to look into is the amount of interest that is charged on purchases after the grace period. Many, if not most, cards have an interest free period of at least 30 days during which your purchases do not accrue interest. If you don’t pay off the purchases in that period, then you will be charged interest on them, which can be very costly.
When you use credit cards, you should only use them to purchase items that you can truly afford. Some people fall into the trap of thinking that credit cards equal free money. If you have developed a credit debt that you want to reduce, then you should look for a card that offers a zero per cent balance transfer for a fixed term. This will allow you to pay of some of your debt.
There are various cards that charge an annual fee, while it might initially seem expensive, they often come with benefits. Some of these can be lucrative rewards schemes or free travel insurance and if you think you would make good use of those benefits, then the annual fee might be well worthwhile.
You should also be careful about the credit limit that you elect. If you are prone to spontaneous purchases that you later regret, then opt for a smaller credit limit to reduce your chance of overspending. If you would like to take advantage of rewards schemes and put almost everything on credit, then a larger limit might be necessary.
Before applying for a card, you should check out what late fees are charged if you make your payments late. These can add up to a lot of money, so being prompt with payment is very important.
There are so many different credit cards out there these days that come with different benefits, charges and fees that it is well worthwhile doing a bit of investigation to determine which one is going to meet your needs best. There are several websites that compare different credit card packages and can help you to decide on the card that matches your situation. Don’t rush into a card that is going to end up costing you a lot of money.