How to Choose a Right Credit Card Provider

Choosing a credit card that best satisfies your need is essential in today’s world because almost everything runs on credit. There is credit card offers available everywhere, from your mailbox to the internet and to the shops and stores you go for your shopping and groceries.

So, if you want to stay in the loop and pay for your expenses through credit, then having a credit card is a great way for you to keep the cycle running. There are various offers and discounts that are offered to you on subscribing for a new credit card, but you need to make sure that the credit card you opt for is the right one for you.

Another important point you need to understand and keep in mind regarding these credit cards is that although they are a very handy tool they need to be used properly, otherwise they have the capacity to inflict terrible damage to your credit score and your financial position and stability.

Therefore, it is always advised by the professionals to do a little research about each credit card provider that is available to you and consider the following factors mentioned below on this blog regarding providers and recommended usage.

Spending Habits

One of the most important factors you need to really focus on, apart from what the provider has there to offer you, is that how you intend on using the credit card. There are various different ways that are listed below.

If you are going to use your credit card for almost everything you buy, which makes it your go-to-card, select a provider whose card offers a solid rewards program that you can benefit from in the future. Also, it is able to offer you a generous credit limit so that you can do your shopping without any hassle.

If you are going to pay the bills of the credit card in full every month then the issue of interest rates shouldn’t be your main focus. You should look for a provider that charges no annual fee and a longer grace period so that you don’t get hit with a finance charge.

If you plan on carrying some or whole of your balance to the next month, then a provider whose card charges the lowest possible interest rate and low introductory rate should be your first choice.

If the card is going to be used in rare cases, like only in emergencies, then look for a card with low fees and great low-interest rate.

Classifying yourself into either one of these categories will set the path for you to decide on other factors that are available with the card.

The Interest Rate

The interest rate on the credit card appears as the Annual Percentage Rate, the APR. This rate is an indication of the actual percentage costs accrued over a year, which includes other extra charges charged on the card.

APR can either be a fixed rate or a variable rate. If it is a variable rate it means that it is tied to some other financial indicator. This financial indicator is most commonly the prime rate, and therefore, the rate can fluctuate on these cards.

The rate on a fixed-rate card is fixed, therefore you have an idea of how much you are required to pay each month. However, there are certain triggers that can even lead to changing the rate on the fixed rate cards. These triggers include paying late, going over your limit, or the issuer decides to change the rate.

Credit Limit

A credit limit means a limit that is assigned to you by your provider on your card that indicates how much your provider or your issuer is willing to let you borrow. This usually depends on your credit history, where a strong credit history can provide you a maximum amount of credit limit.

Many of the credit card providers set a credit limit of their customers that is lower than their current balance to avoid hurting their credit score if they are not able to pay and to avoid facing a penalty when this happens.

Fees and Penalties

It is always recommended to check the credit agreement before selecting a credit card provider for yourself to identify what other charges are applied to the card apart from the standard rates. Some of these common charges that are included in this agreement are transaction’s fees, making payments by phone, using the card abroad, going over or asking to increase your credit limit, or making late payments.

Therefore, always stay alert and sharp when signing in for a card and look for the ones with reasonable fees and those who do not charge extra for a rewards program, as there are plenty of providers who don’t charge extra for this feature.

Balance Computation Method

You need to be well aware of the methods and calculations that are used to compute the payment charges on your card’s bill. Average daily balance method is the one that is used very commonly where daily balances are added up together and then divided by the number of days in the billing cycle. Stay away from credit cards that compute the balance using two billing cycles; this ends up costing you more money in financing fees.

Incentives

Reward and other benefit programs are offered to customers by many providers to attract them towards the selection of their cards. These include loyalty points or rewards which add up depending on the amount you spend. These points that are accumulated can be used later to buy goods.

Some providers even offer cash back facility where you get refunded depending on how much you spent. Others offer points for travel that are easily earned and redeemed.

Depending on what type of incentive attracts you the most you can choose the right credit card provider for your own self.

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