Credit Report Repair

Picking the Best Credit Card

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If you want to make a credit card comparison to find the best one to suit your needs it is important that you have a clear understanding of the key features and terms.

While credit cards can be a quick and easy source of cheap or free credit if handled correctly, they can also be a very expensive luxury if you do not keep your discipline. Here we set out the key features and warn you of some of the potential pitfalls before you make your credit card application.

Credit card types

When you begin to research the credit card market you’ll find that there is a huge choice of products tailored to suit certain people and certain circumstances. You will find cards for students, people with bad credit ratings and Gold credit cards, to name a few. While these may have some features that appeal, it’s best to take a closer look before making any credit card application.

Annual Percentage Rate (APR)

APR is the rate of interest you pay on any outstanding balance and is a major factor in how much your credit card will cost you. In fact, this is the first thing you should look at when comparing credit cards. APR is usually somewhere between 10 and 20 per cent and if you think you will have an outstanding balance on your new credit card it is vital that you find the lowest APR you can. It could save you hundreds of dollars. Also, when comparing credit cards watch out for deceiving introductory APRs. These low rates will only last a few months, it is the normal rate that you will be paying after that which you have to compare.

Grace period

The vast majority of card issuers provide a grace period before they charge interest on purchases in the time after they issue the monthly bill. This grace period is usually 28 days, which means it is possible to have almost two months between a purchase and having to pay back anything on it. What is more, if you pay off your balance in full within the grace period each month you pay no interest at all. The grace period helps you manage cashflow and avoid interest fees so insist on at least the usual 28 days.

Credit card APR

If you intend to carry a running debt on your credit card you will want to familiarize yourself with how interest is charged on your card. Not all card issuers calculate interest and charges in the same way. These methods of calculation include; Adjusted balance, average daily balance, daily balance, ending balance, double billing and previous balance. The cheapest calculation method is the adjusted balance method but most issuers use the average daily balance method.

Fees and charges

When making a credit card comparison, fees and charges can make the difference between a great deal and a terrible deal. With the right choice of credit card and a bit of know how, you need never pay a cent. However, other cards will hit you with surprise charges such as annual fees and registration fees, and penalize you if you are late with payments or exceed your credit limit. Read the small print and be aware of all fees and charges before you fill out your apply for a credit card.

Rewards

Many credit cards offer rewards for using your credit card, such as cash-back, discounts and free air miles. While these can be beneficial and save you money in certain situations, rewards and incentives alone should not dictate which credit card you choose.

Editorial by Richard at creditcardapr.com.sg.com.au

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