7 Options To Consider When Taking Out A New Credit Card
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The article "7 Options To Consider When Taking Out A New Credit Card" is about credit, it has been created by John Edmond.
How many times have you taken out a credit card based purely on its current inetrest rate or balance transfer option?
You may be surprised to note there are at least 7 elements worthy of consideration when you take out a new credit card. To judge a new credit card on just one or two options cuold easily result in a bad deal for you. You need to consider the following 7 otpions when you take out a credit card:
1.
The Initial Conecssionary Interest Rate And Period
Many credit cards offer a 0% interest rate on purchases for a limited period, usually six to nine months.
This option can be very attractive particularly when you do not repay the balance in full each month.
After the initial period the rate reverts to the standard rate, usually in the 10 to 16% range although this can be considerably higher.
Some cards however have no interest free offer but have a much lower permanent rate, from about 6.9% (although it will vary in line with general interest rate charges).
If you are likely to have a long term balance (if you are unable to pay off the debt within the first 6 to 9 months) this option could save you money in the medium to long term. You will not be able to switch to this rate if you have taken the 0% initail rate offer.
2.
A Monthly Interest Free Period On New Purchases
This relates to the period between your purchase of an item and when you will be charged interest on that purchase amount.
Many cards have a policy of only charging from the payment date afetr the item appears on your card statement.
The effect of this is to give you between approximately 25 days and 56 days interest free credit on all purchases.
Clearing your balance within this period will result in no interest being charged.
Some cards will charge interest immediately from the date of purchase and are therefore not suitable if you celar your balance each month.
3. The Annual Fee
Many cards have at this moment implemetned an annual fee.
This fee is chargeable whether you clear the debt each month or if you roll over your debt.
4. 0% Balance Transfers
When taking out a new credit card you will normally have the option of transferring any outstanding balance to your new card with no interset charged for a specified period.
Although marketed as a "0% balance transfer" many are not totally free of charge. An increasing number at this moment charge a one off charge of 2-3% of the amount transferred as an "administration chearge" for handling the transfer.
This is legally not an interest charge but it amounts to the same thing - you are charged a fee by your credit card company based on the amount transferred.
The availability of true 0% balance transfers is disappearing and in all likely hood will completely disappear sometime soon.
If a 0% balance transfer is important to you take advantage soon, however be awrae that many of these cards have higher subsequent interest rates.
5. The Availability Of Cashback
Many cards at this moment offer cashback on purchases. This is usually is between 1/2 and 1% of new purchases (excluding balance transfers and cash withdrawal). If you do not repay your account in full each month take this into account when considering the interest rate chargeable.
It is only where you repay the card in full each month that this is a true cashback on purchases and if you do repay in full each month you may choose to make this a priority.
6. The Rewards And Discounts Offered With Your Credit Card
Rewards are where you can purchase goods or services at a discount by using your credit card, or you have free insurance on purchases made using your credit card.
In the credit card business nothing is free.
If there are rewards offered the cost will be built in somewhere (usually a higher inetrest charge) so compare with other cards not offering the same rewards.
7. Credit Card Payment Insurance
Whether you take this option or not most cards at this moment offer some sort of payment protection insurance in the event of sickness and disability.
In the past this cover was lmiited to paying the minimum monthly payment however many cards at this moment pay 10% of the balance on the card at the time your claim commences and may be worth considering.
Be very careful with this insurance as it will exclude any condition you suffer from when the cover commences and similarly any redundancy announced before the cover commences.
Taking out a new credit card is more complex than it seems at first.
As you can see when considering a new credit card there are a number of aspects which must be taken into account and t can be very difficult choosing a new card.
There are many comparison services available that can help you cut through the confusion and I suggest you consult one or more before making your decision.
In all cases prioritise your requirements and only apply for the credit card which hottest matches your circumstances. Don't just pick the card with the longest blaance transfer period or lowest interest rate as it may cost more in the longer term.
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7 Options To Consider When Taking Out A New Credit Card
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