How To Know You Are Getting The Best Rate On Your Credit Card
Friday, September 29th, 2006
These days, shopping around for the right credit card can be as exhilarating as shopping itself. Because of the many kinds of credit cards offered by many companies, it would not be a good idea to just grab and sign the first application that comes your way. You need to carefully put many things into account because the right card might just save you hundreds of dollars on fees and charges.
In choosing which card can provide you the best rates, first, you have to ask yourself some of these questions:
- What will you use the credit card for? Is it for your monthly bills? Are you not after the frequent flyer miles? Then your best choice could be a card that carries no annual fee.
- Are you the type to carry over balances each month when you make payments? Then a credit card with low interest rates might be suited for you.
- Will you need cash advances? Then look for one that carries lower cash advance fees. Next, determine what kind of a card is it.
There are three kinds of cards you can look into:
- Regular cards – This kind is what many people use
- Secure cards – These are perfect for those just starting to use credit cards, it has a set amount and you are to fund it first before using.
- Premium cards – These cards carry higher credit limits and extra features like travel insurance and product warranties.
Compare the APRs
APR, or the Annual Percentage Rate is the interest you have to pay when you take out cash advances or carry over your balances. They can come in one purchase, or are applied in tiers, depending on the card. They may also be added as a penalty on cases when you delay your payments. This interest may make seem to make small impact especially when you are used to carrying over your balance when you make payments, but it could be a huge difference if you compute for how much you pay in total over the period of one year.
Compare the grace period
Card companies vary their policies when it comes to late payments or carried over balances. Some offer twenty five days, others for less. Some cards do not offer grace periods for cash advances, but immediately charge an interest for late payments. That interest also varies from card to card.
Compare finance charges
Finance charge is the amount you pay for using the credit service. This is dependent on your APR or the outstanding balance and may vary from company to company when computed for charges. Some companies charge a minimum fee.
Compare the fees
Companies usually have one or more of the following fees:
- Annual fee for availing of the card and its services.
- Cash advance fee. It may be a percentage of how much you’ve advanced or you could be charged a flat rate.
- Transfer fees deducted when you transfer balances to another card.
- Late-payment fees asked from payments done after the due dates
- Other charges like: - Over-the-credit-limit fee - Credit-limit-increase fee - Set-up fee
Still, other companies charge you extra for using their facilities or paying bills via telephone. This information must be outlined to you by the credit card company when you inquire about their services.
Compare the features
Credit cards carry a variety of features. Not all of these features may be of use to you. Some may also offer a better deal than another kind. Ask yourself these questions.
A. CASH ADVANCE – Is the cash advance accessible to any ATM or do you have to specifically go to the company to receive it? Are the fees reasonable? How much is the limit set for cash advance?
B. CREDIT LIMIT - How much is the limit given to you? Does it include all of the features in the maximum total amount coverage?
C. OTHER FEATURES:
- Are there rebates for some purchase that you will make? Do they carry the points system?
- Do they offer frequent flier miles or free minutes worth of overseas calls?
- Do they provide additional warranties when you make purchases?
- Do they provide insurance and discounts when the card is used for travelling? Are they accepted for car rental insurance?
- Do they also offer insurance to absorb some payments in the event that you become unemployed or disabled?
- How about in cases of loss or stolen cards? Will you need to pay a fee for this?
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October 2nd, 2006 at 2:57 pm
[…] » Get the best rate on your credit card. […]