Top Tips on Choosing the Best Credit Card for you

Image courtesy of stockimages at FreeDigitalPhotos.net

Image courtesy of stockimages at FreeDigitalPhotos.net

There are so many credit cards on the market these days, it can be difficult knowing which one to apply for. You may not want to apply for lots, just in case it has an effect on your credit status listing and so you want to get it right the first time. The type of card you choose, is very much dependent on the way that you are going to use it. Some of the most common types are listed below to help you to decide.

Cash Back Credit Card

A cash back credit card will give you money back on purchases. Some will give you a percentage back on everything that you spend, and others will give you money back on certain types of purchases. The percentage of cashback is usually extremely low and therefore you need to compare them if you can, to get the best rate. It is also worth noting that the amount of interest you are charged monthly on outstanding balances, will be far higher than what you get back in cash back. The interest charges also tend to be higher than on other types of credit cards. Therefore, if you do not plan on paying back the full outstanding balance each month, then this is not the right type of card for you.

Rewards Credit Card

In the same way as the cash back card, reward credit cards tend to be more expensive than other types. This means that again, you should only chose one if you plan on paying back the outstanding balance in full, each month. Make sure that you choose one that has rewards that you will benefit from. Some have loyalty point schemes, discounts from certain shops or air miles. It is worth looking into what is available and choosing something you will use.

0% Credit Card

The 0% credit cards can be risky, so it worth being very cautious with them. They are also quite rare these days, having been much more easily available a few years ago. With these cards you get charged no interest for a fixed period of time. This can be anything from 6 months to a few years, however, there are usually charges if you transfer a balance form another card onto one. Some people use them to pay off a credit card, then when the interest free period is up transfer to another free interest card etc. It can be a way of borrowing money very cheaply. Some even invest the money that they borrow so they make even more out of it. You need to be very well disciplined with these cards though as once the free interest period is over, they can be very expensive.

Store Credit Card

There are some stores that issue their own credit cards or store cards. These can sometimes offer loyalty points or good deals on things that you buy in store. However, the interest rates can be very much dearer than bank issue cards so it is worth checking the terms and conditions very carefully. You may also only be able to use that card in the one shop, which means that you cold be tempted to shop there more often when there could be shops with better deals or cheaper items that you would be better off shopping at.

Fee Credit Card

Some credit cards charge you a yearly fee to use them. You may feel that this is too expensive and tend to shy away from them. However, they could be a good option if you feel that the interest rate is lower than other options or you get other perks from using it. It is worth taking a look at the terms and conditions, just to be sure.