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Deciding on a credit card is not as simple as just filling out an application. You must know beforehand exactly what you are looking for in a credit card. You may be a student and require a credit card to establish a credit rating for student loans.
You may be looking to travel world and require a credit card to book reservations. You may be a business person who needs a credit card to keep track of expenses. Or you may be like millions of others, and simply want a credit card for its convenience.
What ever the reason, it is important to research credit cards, determine the features you need in a card and determine what is the right credit card for your needs.
(See below for more information.)
Before you apply for a credit card ask yourself some tough questions:
» What exactly do I want a credit card for? (Be honest with yourself on this one - otherwise you will not be able to determine which credit card is best for you).
» Which credit card features best accommodate your credit card needs? (ie. If it is for ease of general use - make sure you get a credit card that is widely accepted).
» Can I really afford a credit card?
» Will I be able to pay off my credit card balance each month? (To avoid paying hefty credit card interest charges - you need to keep your card as clean as possible).
» Do I really need a credit card?
» Will I be able to resist the temptation to overspend?
» Which credit card company should I select?
Knowing your credit card requirements and options is very important for your future financial status. It is easy to become overloaded with credit card debt - you need to make credit card decisions very carefully. Here are some points to consider when determining which credit card is best for you:
- Shop around and look for credit card companies that have low interest rates and no annual fees. Look at companies that offer reward incentives such as air miles, vacation discounts etc.
- Determine how much credit you need. Ultimately the amount of credit card debt available to you will depend on your credit rating (FICO), so if you have not built up your credit history, you might not be able to get large amounts of credit available at reasonable interest rates.
- Determine how you will use the card. Will you be using your credit card for a major purchase, for day-to-day expenses, or only in emergency situations?
- If you do not use your credit card for extended periods, will you risk loosing the card?
- Some credit cards offer a lower rate but have an annual fee whereas others may have a slightly higher interest rate but no annual fee. If you are only going to use your card in emergency situations - then a slightly higher rate and no annual fee might be your best choice.
- Think about your purchases and what you will require the credit card for. (Many credit cards, such as department store cards, can not be used widely).
- Will you carry a balance on your card or will you pay it off every month? This will help determine the type of card you require.
- Find out what types of membership benefits the credit card company offers, such as travel and product purchase insurance.
Once you have a clear understanding of what your needs are - and what credit card options are available to you, you will be able to make an informed decision. |
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