Factors to Consider When Deciding on the Best Credit Card

There are so many credit cards available today that it’s often hard to make the decision about the best one to use.

One thing you should never do is respond to all offers so that you have three or four different lines of credit.

This only gives you false hope that you have plenty of money at your fingertips and when you use all of them, you run into financial difficulty when you can’t make the monthly payments.

Take your time when deciding on the best credit card. What may be a good credit card for one person may not be the best one for everyone. First you have to be quite clear on your reasons for needing a credit card.

For making online purchases, one of the acceptable ways of doing so is through a credit card. Many hotels will only take a credit card number to hold a reservation and you do need to use the credit card when you check in, although you can pay in cash. Airlines require credit cards for purchasing flights online.

Maybe you need to have the option of using a credit card when you see something on sale what you really need to buy. These are all legitimate reasons for having a credit card, but you do save money when you can pay off the outstanding balance before the month’s end and save yourself the interest charges.

The amount of interest a credit card company charges is one of the things you have to be mindful of. How often have you received promotional material in the mail advertising a very low or no interest rate for an introductory period

“Introductory” is the operative word here because this grace period for interest relief is usually only for six months.

Read the fine print to find out what the interest rate reverts to after that period has expired. Quite often it is very high – in excess of 10%. You also have to read all the information to determine if the interest rate is fixed or variable. If it is a variable interest rate, you need to know how often the company does adjust the rates.

Some credit cards carry an annual fee. Whether you use the card or not, you have to pay a fee each year for the privilege of being able to use the card. If you don’t use a credit card very often, this may not be a good choice for you because it only costs you extra money.

There are credit card companies that do charge a high annual fee in return for certain privileges, such as obtaining air miles that you can exchange for free flights or for other items. You do have to decide if the privileges associated with using the card have any meaning for you. If they don’t, this is not the credit card for you.

The fine print of the rules and regulations regarding the use of the credit card will also contain details of any other transaction costs associated with the use of the card. You may be allowed a set number of transactions per month free of charge and then you will be charged an exorbitant fee for every transaction after that.

There may be fees involved for using the card to obtain an advance from an ATM machine and late fees attached if your payment does not reach the company by the specified due date.

There are also advertised promotions from credit cards encouraging you to combine all your debts into one credit card payment. They will send you checks to use to pay off other bills and offer a reduced rate of interest on these amounts.

While it is a good idea to have only one monthly payment, you do have to check the interest rates charged by your other creditors to ensure that you won’t end up paying more than you already are in finance charges.

Another factor that you have to consider when deciding on the best credit card is the credit limit offered by the company. Usually introductory cards do not carry a very high limit, but once you establish yourself by making your payments on time, the limit will increase in increments. This information is usually not included in the fine print, though.

You should do some research on the company to find out if other customers have had problems in getting disputes settled. This is one aspect of using a credit card that you should be aware of, especially with all the occurrences of credit cards being stolen or used illegally.

You do need to make sure you are protected just in case you do become a victim. When you do use your credit card to make purchases, hold on to the receipts until the transaction is posted to your account to ensure there are no discrepancies.