Credit Cards

How do I Choose the Best Credit Card?

There are lots of credit cards out there and it can be difficult know which one you should pick. There are lots of factors that you should be considering when you are picking between different cards as well and it is worth thinking through what might be important to you before you make your decision.

There are different types of credit cards and it is important to know what types there are and what the differences are between them so that you can make the right choice for you. You may think they are all pretty alike, but there are cash back credit cards, interest free credit cards and reward credit cards, which may be called different names to this, depending on the lender.

A cash back credit card will give you a small percentage of cash back as a credit on the card. This cash back will be higher, the more you spend and so it encourages you to use your card more. This can be a great thing if you know that you will always pay off the full balance of your card each month. You will be able to take advantage of the cash back and be paid for using the card. However, the interest charged on these types of cards tends to be higher than with standard cards. This means that if you are not going to pay off the full balance, you may actually be better off going with a cheaper card that offers no cash back.

An interest free card can be really handy. You can spend on it and only pay back a minimum amount for a certain period of time without being charged any interest. However, after the interest free period runs out, the interest charge gets added on and it can be significantly higher than with a standard card. If you can pay back everything that is owed before that time, then you can take good advantage of the free payment period, but if not, then it could work out dearer than having a standard credit card.

A reward card works similarly to a cash back card, but instead of being given cash you get some sort of reward. This could be loyalty points that you can exchange for goods, airmiles or other similar things. These can be useful as long as they are the type of thing that you would normally use anyway or you can spend them on things that you would normally buy. Again though, these cards can have higher interest on them compared to standard cards. Therefore if you do not pay back the balance in full each month you could end up paying more, even taking the rewards into account, than with a standard card.

As well as choosing the type of card you need to decide which lender to go with. If you are planning on paying back the full balance each month then the interest rate may not be that important to you. Therefore you might be more interested in thinking about the reputation of the lenders. You may want to go with a company that you have heard of or that you trust. It may be that you would rather go with your bank or that you want a place that has a branch in your local town. It can be worth talking to others or reading reviews about various credit card providers so that you can find out more about them.

Even if you do not think that you will end up paying interest on the card, it is worth taking a look at the interest and any other charges that the card has. They will charge for drawing out cash on the card, for using it abroad and things like that so it is worth seeing what those charges are and which is best. Think about whether these are services that you might use or ones that you think will not be relevant to you, if they are unlikely to be relevant then you can disregard them, but you may want to consider them if you think that there is a risk that you may want to use them at any time. The same as the interest rate, as even if you think that you will always be paying off the full balance each month and therefore not paying interest it can be a useful factor to consider if you are trying to pick between two similar cards.