This article discusses the most valuable tips that you need to consider when comparing credit cards. We emphasise the importance of finding the right card to suit your needs and to not get caught up in the bells and whistles.
If you’re not familiar with the various types of credit cards out there, you may be using the wrong one. Choosing a credit card is quite simple, but there are a few things to consider. Thinking about how you’ll use your credit card will help you compare each option and choose the best card for you.
Our tips will help you to compare and select the best option available.
- Calculate how much you can pay each month
a) If you're able to pay the entire balance each month:
Think about a credit card with more interest-free days. This indicates that you won't pay interest if you settle the bill within a certain number of days. These cards might have an annual fee and a higher interest rate, but they may be worth it.
b) If you can’t pay the entire balance each month:
Look for a card with low interest and low annual and monthly fees.
- Look at the pros and cons of each card option
a) Rewards Schemes
Credit card reward schemes sound great because you may earn rewards just by using your card to make purchases. For instance, you might accumulate points you could use to pay for other things.
However, credit card rewards programs can feature higher interest rates and additional costs. You might spend more than you earn from them. Test whether the advantages you receive outweigh the extra charge.
b) Additional perks
Some credit cards offer "complimentary" extras like international travel insurance. Be mindful that extras typically cost money. Higher interest rates or fees may be used to offset the expense.
Other cards provide discounts on goods and services. Determine if the amount you will get justifies the additional interest or fees you will face.
c) Retail cards
Using retail cards to make purchases might be pricey. They usually have higher interest rates, and you can only use them in that particular store. Test whether the advantages outweigh the added cost.
To do this, check the expiration date of any interest-free deals made by stores. Check the purchase rate as well, as it can be greater than the rates on other credit cards for new purchases.
- Compare and choose a credit card that works for you
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Type of credit card |
Description |
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Low fee card |
These are practical cards with minimal to no annual fees and zero premium features. They are appropriate for people who regularly pay off their balance at the end of each statement month and only want a credit card for convenience. |
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Low-rate card |
People who don't always pay off their balance at the end of each statement period are better suited for basic credit cards with low-interest rates.
These cards are less likely to have 'premium' features like rewards programs or complimentary insurance.
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Frequent flyer cards |
Those who wish to use frequent flyer cards can earn credits for their purchases that can be used for flights and travel expenses through a specific frequent flyer program. |
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Reward cards |
By awarding users with rewards points that can be exchanged for money, gift cards, travel vouchers, merchandise, event tickets, and other items, rewards cards are intended to maximise users' spending. |
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Premium cards |
Customers who use premium credit cards receive various perks, including concierge services, free travel insurance, airport lounges, and more. These cards have higher interest rates and fees. |
There are plenty of things to consider when choosing a credit card. However, if you can identify your needs and know how much you can pay off each month, you’ll find the right card for you.
Being responsible with your new credit card is also important, as financial debt can be stressful. Choose the right card for your needs and reassess regularly. When those needs change, change your card type to suit.
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