While applying a credit card, people go for best deal. Some people think that credit card charging the lowest rate is the best one. While deciding to purchase a credit card, you must consider its lower rate, rebate points, annual fees and mileage points as well. Follow the following given points that will be helpful for you.
Types of Credit Cards
· Unsecured cards are not backed by security and are issued on your creditability.
· Secured cards are issued against a security and the credit limit is usually up to the amount of security.
Credit Cards with additional features
· Rebate cards gives you the facility of rebate based on your purchases and are usually 3% to total amount of purchase. Rebates are processed at the end of year.
· Point cards facilitates you be offering points which can be used to purchase discounted merchandise and tickets. These points are processed quarterly and accumulates to next quarter if unused but are voided after certain period.
· Affinity cards are a partnership between a services company or institution and offers you discount while using their services.
· Co-branded cards are usually issued by two companies. This facilitates you to get discounts on the products of other company.
Factors to be kept in mind
Following factors must be considered for judging credit card costs:
Finance Charges
Interest Rate: Credit card companies sets interest rate based on past history of the customers. Go for the card which offers you lowest rate and try to maintain good credit history.
Introductory Rates: Check out for introductory rates, because some companies offer you less rates as scheme of promotion but just for a specific time. Check if this offer expires, still you are paying low charges.
Calculation of Interest: Various methods are used by card companies to calculate interest. you must be aware of those methods.
a. Adjusted Balance Method: It is the most advantageous method for calculating interest. Here your current month purchases are not included to calculate interest.
b. Average Daily Balance Method: Here interest is calculated on daily purchases and it the interest amount is high in this method.
c. Previous Balance Method: This method simply computes finance charges on the ending balance of the preceding billing cycle.
Annual Fees and other Fees
Look out for the annual fees by the card issuing company. High be the amount of services offered, high be the annual fees. consider other fees as well, such as late payment fine, over the limit fine and cash in advance fee.
Other Considerations
Also consider the grace period offered by the company. Internet is a great resource for matching and comparing credit cards, based on your data. Also look for the US Federal Reserve Board’s credit card survey. So read the agreement before signing it.
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