Submitted by dan dan on Sun, 03/29/2009 - 20:40

Choosing a credit card that works best for you is vital to your credit rating. If you choose incorrectly, you may find yourself in deep debt trouble. Here is some basic, yet extremely important, information that will help you make the right choice.

Your Money Handling Habits

Choosing a credit card that is perfect for one person may be a dismal failure for you because your habits are different. When it comes to choosing your credit card, you need to look very closely and honestly at your habits.

For instance, do you typically carry a balance or do you pay off the card at the end of each month? If you answered “yes” then you will need to shop for:

# A low Annual Percentage Rate (APR). The APR the interest rate you will pay on any outstanding balances each month. The higher the rate, the more you will pay in interest charges.

# A fixed-low rate. This means that they will guarantee that your rate will stay low. Oftentimes, a company will offer a low introductory rate to get you signed up and then increase the rates drastically in 3, 6, or 9 months. The problem with a guaranteed rate is that an annual fee often accompanies it. You will need to decide if the lower interest rate guarantee is worth the cost of the annual fee.

If you will be paying off your card at the end of each month, you will not have to worry as much about a low APR since you will not be using it. And with no need for a guarantee, you may be able to avoid yearly fees. However, you will want to be sure to get a card with a grace period.

# Grace Period: Be careful to get a card that allows you to pay off your bill at the end of the month with no finance charges. Those that don’t offer the standard grace period begin charging you interest the moment you make a purchase.

# Cash Advance Fees: Be aware that most cards charge interest, and sometimes at a higher rate, for cash advances and this charge begins with no grace period even if your card offers a grace period for purchases.

You also need to decide how reliable you will be when it comes to paying on time and keeping yourself under the card limit. If you are often late paying your bills or often do not know how much credit you have left, you will want to watch out for transaction fees and other charges. Many card companies charge a late fee and an over-the-limit fee. These can be substantial. Your best bet is to pay on time and keep under the limit, however, finding a card with lower charges is a good idea.

Here is another important question to consider when looking at your money handling habits: Do you use the card rarely, occasionally, regularly, or frequently? Those that use their cards for just about everything instead of using cash or checks will want to look for credit card protection. This way, if you lose your card or it is stolen, you will not be responsible for any purchases made.

Finally, consider the different benefit programs that cards are offering.

# Do you travel? Then consider a card with frequent travel miles as a reward. Or perhaps one that offers traveler’s insurance.

# Do you use your card for large purchases like electronics? You may want to consider credit card insurance that will replace your equipment for a specified period of time if it breaks down or gets stolen.

# Are you saving to buy a new car? There are cards that offer new car rebates.

# Do you have a favorite charity? Many cards now support specific charities, universities, and organizations by paying the entity a specific amount with each purchase you make.

What matters most is to find the features that fit your pattern of spending and paying. Don’t get fooled by the gimmicks or the advertisements. Know your spending habits, look at the small print, and choose the card that is best for you. With all the different cards available, you will be able to find the right fit for you.

I wanted to add something about the credit card protection. A lot of cc companies offer these plans but most people aren't aware that VISA actually cover's all charges associated with a lost or stolen cc. I'm not sure about the others but I bet they have some sort of protection as well.

Some credit cards offer other benefits that most people aren't aware of. I also know that if you purchase an airplane ticket with a VISA card than you are automatically coverred for a $250,000 accidental death or dismemberment insurance is you were injured during the flight. There are a lot of little weird things like this most don't know about.

Good info though dan dan, people should always consider their options before applying for a credit card.

Sat, 04/11/2009 - 12:27 Permalink

Hi dan dan

Welcome to the forum

This is the really a nice information provided by you on the subject matter of choosing a right credit card.As most of the guys choose their card in hurry and at the end of the day just blame for not getting a proper service. so one need to aware beforehand in order to get a better service from the credit card company.

Keep us informed.

Mon, 04/13/2009 - 12:47 Permalink

I know one thing for sure that if one is using for the purpose of online payment then paypal, alerpay, moneybookers, are the best way to pay instead of giving one's credit card information.

One can link one's credit card to these merchant bankers and thus save one's confidential information along with oneself.

Tue, 04/28/2009 - 12:41 Permalink

I know my capital one has a plan to were if you lose your job they make your payments. It cost .97 per $100 of your balance but it's nice to have considering how bad the econamy is and with people loseing there jobs every day.

Fri, 10/23/2009 - 16:25 Permalink

Choosing a credit card is really very tough, because in all banks some hidden charges are present and the representative never disclose it.

Wed, 04/28/2010 - 17:42 Permalink