Credit cards are not only useful to make purchases or payments when you are short on cash, but they are good to have for many other reasons. They can help you build credit, pay off debt, finance day-to-day purchases, earn free rewards and even save a lot of bucks while paying for daily essentials. If you have never owned one before, it can be hard for you to choose the best one from lots of options available.
Picking and applying for a new credit card is a personal decision you need to make carefully. You should choose one as per your individual spending habits, current financial situation, and financial goals you want to achieve.
To help you make informed decisions, below we have created a checklist of important things everyone should look at when choosing the best credit card either for personal or business use.
Annual Percentage Rate (APR)
The annual percentage rate or APR is the cost a consumer pays for the money borrowed on a credit card. The APR is payable when you don’t pay the balance in full monthly. It is one of the most important things to consider when you want to apply for a new card. As there are so many cards available, one can compare APR for different credit cards to choose a card with a lower APR. along with checking APR, you should also check for other things like additional charges or fees, etc.
Introductory Interest Rates
An introductory interest rate is a special offer in which a user is allowed to pay off a balance with zero or lower interest rate for a given period of time. This is also known as introductory APR. Introductory interest rates are useful when you want to transfer the balance of your old card to a new card. In this way, you are paying no or lower interest while paying down your credit card debt. When comparing different credit cards, pick a card with 0% intro APR with a longer duration. You should also check for the interest rate you will be paying after the introductory interest rate period.
Some credit cards come with an annual fee for using the card. The annual fee is automatically added to the balance you need to pay. This means, that if you don’t pay the balance in full, you will be paying the interest rate on the balance due and on the annual fee as well.
Minimum Monthly Payment
When a consumer is unable to pay off the balance in full each month, the card provider asks to repay the lowest amount each month to pay down the balance in full. This helps credit card users avoid late fees and meet credit agreement. Hence, the user still needs to pay the interest rate on the payable balance. So, make sure to check the minimum monthly repayment for a card you consider.
Before you put a signature on the credit agreement, make sure to read the agreement for other service charges or fees that may also apply to the card. Other charges may include foreign transaction fees, charges for using credit above the given limit and late fees, etc. If you travel often and use your card in other countries, you should opt for a card with zero foreign transaction fee. This will help you save a lot of bucks whenever you swipe your card abroad.
Free Reward Points and Perks
A credit card could be a great saving tool if you choose and use one wisely. Some cards allow consumers to earn free reward points depending on the amount they spend every month. And then the earned rewards can be redeemed for buying similar products or on payments like reservation of air tickets. Before you choose a card, check it for free reward points and perks to take your savings to a whole new level. Also, check how and when the free rewards can work.
Cash back offer is all about getting a particular percentage of your spending back to your credit card whenever you swipe the card for payments or purchases. For instance, you may get 1% cash back on a purchase or payment you make using your credit card. Some card providers provide such offers when users pay off their balances in full every month.