How to Choose the Best Credit Cards

If you are looking for a credit card then you will soon find that there are lots to choose from. It is a good idea to make sure that you think hard about which credit card you choose because it can be really important. This is because the costs vary as well as benefits that you might get from the card.

Interest Rates

Card issuers will have different interest rates. The interest rate is what you will be charged if you do not repay your card in full each month. This rate will be variable and this means that the card issuer can change it if they want to. This means that it can be a good idea to compare the rates and see who is charging what. It is also wise to compare them regularly as you may find that they change and that you will benefit from switching to a different lender.

There are some people who always repay their card in full though and so they will not see interest rates as something that is really relevant to them. However, if you are picking a brand new card, then you may as well look into it. This is because you never know when you might be in a situation where you will not be able to manage to repay the card and this will mean that you will have to pay the interest. Therefore, considering it could be worthwhile, although you may find that there are other things that you might want to consider as well.

Benefits

Some cards have benefits or rewards for using them. This might be cash back or vouchers which the borrower is given when they spend money on the card. Often it is calculated as a percentage and the more they spend, the more rewards they get. This can sound fantastic as it means that they will be able to get something back. However, it can be wise to be wary. Firstly, if you choose a reward card, it is likely that the interest rates will be higher as the card issuer will need to cover the cost of the reward. This means that if you do not repay the card in full each month, you could find that you will end up paying out more in interest than you have gained in the reward compared to the interest that you would have paid had you taken out a standard card. Therefore, it is a risk using this sort of card if it is likely that you will not be able to repay the full balance each month.

Rewards can also be a risk because people might use them as an excuse to justify spending more money on the card than they normally would. They might think that because they get a reward for spending more money that it actually makes sense to spend more. It is well worth realising that the reward is tiny. It will probably be less than 1% cashback. It can be easy to think about what you have saved and concentrate on that and ignore the fact that you are actually spending more money rather than saving money. You might be spending a little bit less because of the cashback but you are still spending and that is money that you will have to repay. It is so easy to forget that you have to repay it at the end of the day and that it is not money that you are being given for nothing. If you think that you are likely to be tempted to overspend, then it could be a good idea to be very careful and perhaps to avoid a reward credit card.