How To Select The Best Credit Card For You
February 7, 2008 – 7:31 pmIf one were to actually sit down and compile all the various credit cards offered by the multitude of financial institutions in the world, the end result would be an encyclopedia containing an untold number of thousands of different credit cards. Now, some may be wondering how can there be thousands of different credit cards when there are only four types of cards that can be issued: Visa, Mastercard, Discovery and American Express.
Well, those are the major credit card provider companies, but these providers must work in concert with a multitude of lending institutions and this is where the sheer number of different cards derives. Now, this brings about the question as to which card is best for you. The answer to this question can be somewhat complex as there are a number of benefits to each card and each of these benefits may appeal to one particular person but not to another.
However, while there are variants on the specifics of these benefits and differences, they all do exist within a general framework of common generalities. As such, a brief overview of these general areas will be examined so as to provide a checklist to consider when selecting a credit card.
Annual Fees – An annual fee refers to a yearly cost for having the card. Some cards have very low annual fees, some have annual fees that are very high, and others have no annual fee at all. Most people opt to go with cards that have no annual fee or low annual fees and there is absolutely nothing wrong with this notion as people should only pay for something if they see an inherent value in it.
Of course, it is also important to see what the annual fee is covering. If the card comes with numerous perks such as insurance on purchases, rewards, etc then the annual fee may ultimately be worth it in the end. If there is no perceived benefit to the annual fee then such a card might as well be “skipped.”
Interest Rates – Interest rates should always be an area that should be examined critically before selecting a card. Quite honestly, there is no reason to select a card that has an interest rate that is outrageous. After all, how can you pay the principle on a credit card if the interest rate is upwards of 25%? This would be a nightmare! So, stick with cards that have low or fair interest rates as you will be much better off in the end.
Penalties For Late Payments – All credit card companies have penalties for missed payments and all human beings can be forgetful and may miss a payment. As such, you need to see what the penalties are and if they are acceptable. Some cards charge a minimal penalty (say $30 on the next statement) and others will charge huge fees, raise your interest rates a great deal or even briefly suspend usage of the card. It is never best to be caught by surprise or to accept terms that are not agreeable to you. As such, always see what the penalties are in advance before selecting the card.
Insurance – Does the card offer insurance or payment protection if your card is lost or stolen? Does it insure purchases if the manufacturer refuses to issue a refund or exchange? Many cards offer these benefits and if they appeal to you, you should look for these types of cards.
Perks and Rewards – Many cards offer a number of great rewards such as frequent flyer miles for airline trips; points towards purchases at retail stores; discounts at certain grocery chains; etc. If you are a frequent purchaser of a certain retailer and there is a credit card that offers rewards for this retailer, then perhaps you should seriously consider selecting such a card as it will save you money.
Again, there are a number of factors that go into selecting the proper credit card for you. If you follow the criteria in this article, you will surely find a card that best suits your needs.
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