How to Get the Best and Most Appropriate Credit Card for You

By: Robert Thomson

Credit cards have made shopping so much easier and convenient. Choosing the right card can get tricky with so many different options and offers. What are a few tips to help you decide which card will suit you best?

How do the Types of Credit Cards affect your Choice?

The two largest credit card companies are MasterCard and Visa which are known worldwide. In the USA, Discover cards are accepted locally and regionally, and American Express is a well known premium brand which is internationally recognized. If you will only be using the card locally you will have a wider choice, but if transacting online or internationally you may need to research what type of card is most widely accepted where you'll be making the transaction. With each brand of card there are generally two types of accounts: basic accounts, and prestige accounts that offer gold or platinum cards. Prestige accounts typically have stricter qualifying criteria, higher annual fees, lower interest rates and higher credit limits. Deciding on which one to choose will largely depend on what you qualify for and how you'll be using the account.

Consider what you will use your Credit Card for?

If you intend to use your card to simply make general day to day purchases or transact on-line, then look at a basic account with minimal fees and low interest rates. If you'll be using your credit card to entertain business associates, you may want one that's associated with a level of prestige which will reflect well on you. If traveling internationally you will need a card that is widely accepted around the world. On certain continents Visa is accepted more than Mastercard and American Express. In other destinations the converse is true. Do your research to find what card is most widely accepted where you will be going to. If you travel frequently to various places you may want more than one type of card so that you never have problems with card acceptance. Credit card accounts have been tailored for different types of usage. By knowing what you need from the account you can discard options that offer frills that have no real benefit to you.

What Benefits would you want from a Credit Card?

As a basic standard, you should look for a card that offers easy account management, a reasonable credit limit, low interest rates and minimal fees. Credit limit is not a real deciding factor, as the limit you receive is generally linked to your personal credit record rather than a credit card provider.

Many cards nowadays offer additional benefits. Affinity cards allow you to earn rewards as part of a loyalty program. This could be in the form of miles to use for travel or cash back benefits for you to use on other purchases. Don't undervalue these types of benefits. If you have a family that lives far away, then consistently using a credit card that offers air miles as a reward could earn you enough miles to get a discounted or free ticket home. Some cards are linked to non-profit organizations which receive a donation each time you transact on your card. Banks do this because it enhances their public image and fulfills part of their obligations of corporate responsibility. As a cardholder you will also indirectly be making a contribution to a good cause. You may choose this type of card because philanthropy is important to you.

How good are you at managing your Finances and how does that affect your Card Choice?

There is always the risk of overspending on credit cards and landing in debt if you can't make the payments. Some charge cards like American Express offer unlimited credit, however they require you to settle your account in full at the end of each billing cycle. If you are good at managing your finances and need the larger limit then you may find this convenient. However, if you typically spend and then pay only the minimum amount due, you may need a card that offers low interest and easy repayment terms. If you are really bad at managing your finances then the safest option is to apply for a prepaid credit card or debit card. This means that you can only spend what you have in your account. It generally makes you think twice about extravagant purchases.

How do you calculate Card Account Fees and Interest?

Many credit card companies make attractive offers like "no interest" or "no annual fees," but beware of the fine print. Often the "no interest" offer is only applicable for a period of six months, after which the rate increases to a relatively high interest rate that is linked to your credit record. It could be as high as 20%. The interest is also calculated on an annual basis and then divided pro-rata based on your current balance. If you pay only the minimum balance each month you may find yourself paying interest on interest, and that is a costly exercise. Most people simply aren't aware of this and get hit hard in the wallet. Annual fees are no longer regulated in the USA, and many card companies dropped them in order to attract new customers. If you are in the market for a prestige card, you will find that these usually have higher annual fees. Unless you have a genuine need for a prestige card, it may be best to opt for a card with a low or no annual fee.

Once you have decided what you need it's a good idea to go on-line and do comparisons of accounts, fee structures and benefits offered. Because you already know what you need it will narrow the choices considerably and make deciding much easier.

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