Common advice today is to shop around for the best credit card deal. This advice does make sense, as the number of providers, and different offers from each, seems to be growing each month as they all strive to attract your business. But how can you know what’s the best card for you? The first thing that you need to do, is analyze what you need or want the card for, and also think about how likely you are to pay off the bills in full each month. Your individual user habits might make what is the perfect card for someone, an absolute disaster for you.
Do you pay the balance off in full each month?
This is a pretty key question, and don’t just use wishful thinking here. Think about your credit history…and what patterns have emerged over the course of it. If you always seem to be leaving a balance month after month, then a low interest card should be a priority for you. The rates on offer vary pretty considerably, so you might see cards with interest rates as low as about 6%, and those that climb up towards 20%, but seem to offer a lot of other perks instead. Don’t get sucked into free gifts or any other malarkey; if you think you’re going to leave balance on that card, always go for the lowest year round rate. No matter what!
What about balance transfers? Differing terms on balance transfers can make a pretty substantial difference on the total you’ll end up paying. A lot of cards offer an introductory low or even no interest rate promotional period. This can be like manna from heaven for anyone with a giant credit card debt hanging over their head, but always read the fine print. Some cards will let you transfer the entire balance from your other cards onto the new card for free, and some others will charge some pretty substantial fees for the same privilege. Make sure you know the total costs involved in a balance transfer before signing up.
What if you pay off the balance in full every month? Well there aren’t too many people like you out there (and the credit card companies are thankful for that!). For you the balance transfer fees don’t matter, because you have no need for that, and a period of low interest is irrelevant, because you never pay any interest anyways! You should be looking for the card that offers the best rewards for usage, and forget about the annual rate. Cards will vary pretty substantially on the rewards or gifts available for use, but if you shop around you’ll find something that really appeals to you; and since you’ll never pay those high interest fees, you’re really getting something for nothing!
Don’t feel that you owe any loyalty to your credit card company. It’s a cutthroat financial world, and you need to make sure you get the card that benefits your usage patterns. While leaving a balance on your card month after month is not a great idea, if you know that you’re likely to do that, be smart and get a low interest card. Choose the card that fits, and save a bundle!