Tips On How To Choose The Right Credit Card
With a wide range of credit card companies out there, it is sometimes difficult to make the right choice. The fact remains that you have to shop around and find the best credit card to suit your needs. To do this you have to have a thorough knowledge about the features of credit cards, how to compare costs and features, your rights as a credit card user, how to file a complaint in case there is a problem with your credit card etc.
The first thing you would have to do when choosing a credit card is to think about how you are going to use it.
1. If you plan to pay your monthly bill and features like "flyer miles" etc do not interest you, then you should go in for a "no annual fee credit card that has a longer grace time/period".
2. If you are planning to get cash advances by using your credit card, then a card that has lower fees and lower APR (annual percentage rate) on cash advances should be picked.
3. Pick a card with low interest rate or APR if you find yourself carrying over balance from one month to the next.
The Annual Percentage Rate (APR) states the interest rate you will have to pay if a balance is carried over or transferred from another credit card or you take a cash advance. A credit card can have several APRs - for balance transfers, for purchases you make, for cash advances - but the APR for purchases are usually lower than the APR for balance transfers and cash advances. Tiered APRs are different rates that are applied to various levels of your outstanding balance, Penalty APRs are what you will have to pay if payments are late, Delayed APRs are those rates that will come into effect in the future etc.
Some credit cards have APRs that do not change or stay more or less "fixed" for a long period of time. If the credit card company decides to change the "fixed rate", they should inform you first. Always be on the lookout for information on the card application and agreement to know how often the APRs change.
There is always a "Grace Period" which is the time given by the company to pay your bill fully without charging you anything. The statement date is mentioned on the bill and this grace period applies mainly to new purchases and not for balance transfers and cash advances. Furthermore, if you have carried a part of your balance over from the month before, you might not be eligible for the grace period and interest may be charged the moment you make the purchase (that is in addition to the interest on the previous balance you have not paid).
The dollar amount paid by you to use credit is called the finance charge and this depends on the APR and the outstanding balance. Companies used many methods to calculate your outstanding balance:
1. By using the average daily balance, previous balance or adjusted balance
2. Over one or two billing cycles
3. Either by excluding or including the new purchase in the balance